The country’s manufacturing sector posted its 12th consecutive month of decline in November, thus the National Economic and Development Authority (NEDA) said an industrial policy propelled by innovation is needed to drive the country’s manufacturing growth amid the bleak near-term outlook of the sector.
Latest data from the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries released yesterday showed the year-on-year volume of production index declined by 6.1 percent in November 2019, while the value of production index was 5.8 percent lower relative to the same month the year before.
“Industries need to be encouraged to innovate and adopt efficient technologies. This is a key strategy to entice more investments, similar to the experiences of the country’s Asean peers such as Thailand, Malaysia and Vietnam,” Ernesto Pernia, socioeconomic planning secretary, said in a statement yesterday.
Nonetheless, NEDA pointed out that 12 out of 20 subsectors posted positive growth, led by food manufactures and chemical products, which have significant shares in manufacturing.
Food manufacturing subsector marked its fifth consecutive month in the positive territory while chemical and chemical products continued to post double-digit growth for the third consecutive month.
Moreover, the agency said for the first time since May 2018, the production value of vegetable and animal oils and fats turned positive, possibly influenced by robust import demand of palm oil, sustained demand from the biofuel sector, and ramping up of production given expectations of a tightening vegetable oil supply in 2020.
Pernia also said the passage of this year’s budget is a welcome move in ensuring the continuity of critical government projects.
“The signing of the 2020 budget into law by the President ensures the continuity of projects aimed to attract local and offshore investments to boost growth and create more and quality employment opportunities for Filipinos,” Pernia said.
Furthermore, he said the passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) and the proposed amendments to the Foreign Investments Act, Public Service Act, and Retail Trade Act are critical to eliminate policy uncertainties that affect the country’s business climate.
Pernia explained that the industry sector will benefit from CITIRA as it will lower the corporate income tax from 30 percent to 20 percent over the medium term.
Meanwhile, the easing of foreign ownership limitations in domestic industries will be crucial to increasing investment. This will allow for tighter integration of value and supply chain across industries and provide opportunities for technology transfer, thus boosting the manufacturing sector.