The Duterte administration’s “Build, Build, Build” (BBB) program and efforts to boost food and petroleum production will allow the Philippines to sustain a double-digit growth in manufacturing output in the next few months, according to the National Economic and Development Authority (Neda).
Based on the latest Monthly Integrated Survey of Selected Industries (Missi), the Philippine Statistics Authority (PSA) said the Volume of Production Index (VoPI) grew 19.8 percent in May 2018, from a contraction of 0.6 percent in May 2017.
Data showed that of the 14 major sectors that exhibited increases in VoPI, seven sectors registered two-digit growth led by printing with a growth of 117.8 percent; 33.3-percent growth in petroleum products; and 32.5 percent in food manufacturing.
“Higher demand due to school enrollment and harvest periods, expansion of businesses and new product lines, and ongoing rollout of public infrastructure projects are anticipated to further increase manufacturing production,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
Neda Undersecretary for National Planning and Policy Rosemarie G. Edillon, for her part, noted that food manufacturing has been “very robust” in the past few months.
In the medium term, she said, the government aims to establish more backward linkages of the food manufactures in the agriculture sector.
Pernia added that the manufacturing sector will also benefit from the recently ratified free-trade agreement (FTA) between the Philippines and the European Free Trade Association (Efta).
Upon the FTA’s entry into force, the Efta member-states will accord duty-free market access to all industrial and fishery products from the Philippines.
“Despite the optimism, the government must not waiver in addressing factors that may hamper growth, including rising trade tensions and higher interest rates. Enhancing the production capacity of enterprises and addressing infrastructure gaps to decrease production costs will be important,” Pernia said.
Meanwhile, the recent increase in the manufacture of printed materials was linked to the recent barangay elections, which is common on election years.
Edillon added that due to the opening of classes, at least for elementary and high-school students, the increase in printing may have been due to the printing of education materials, such as text books.
Apart from the VoPI, the country’s average capacity utilization rate increased to 84.2 percent in May 2018, the same rate in April, but higher than the 83.8 percent posted in May 2017.
Pernia said that, while this rate is higher than usual, it still leaves room for expansion and would not lead to any overheating of the economy.
“[This rate] suggests there’s still headroom for expansion. So its not a threat to overheating, that’s for sure. I think the highest was 89- percent capacity utilization. So its quite high, but not yet hitting the ceiling so we should be okay,” Pernia said.
The PSA said the response rate for May 2018 was registered at 79.4 percent.
The Missi provides timely flash indicators that monitor the performance of growth-oriented industries in the manufacturing sector.
The earliest version of the Missi is the SKEM or Survey of Key Enterprises in Manufacturing, which was created in 1981 as a project of the Neda.