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Manufacturing growth seen to breach 10%

By Riza Lozada

The local manufacturing industry’s growth is expected to exceed 10 percent next year.

“It is possible to sustain 10 to 11 percent growth,” Lopez told reporters on the sidelines of the Manufacturing Summit 2017 held at Hotel Fairmont Makati on Wednesday.

It was noted that the government eyes an eight to 10 percent manufacturing growth until the end of the Duterte administration.
In the third quarter, manufacturing had the highest contribution to gross domestic product (GDP) growth, as the sector rose 9.4 percent year-on-year.

Lopez said the manufacturing sector may breach the 10 percent growth starting 2018.

He cited policies to encourage local production of products that the country imports.

In 2012, the Department of Trade and Industry (DTI) launched the Industry Development Plan (IDP) to increase the manufacturing sector’s contribution to GDP and employment.

DTI Assistant Secretary Rafaelita Aldaba said the average growth of the manufacturing sector in the post-IDP period was only at 3.8 percent in 2007 to 2011.

Manufacturing growth was boosted in 2012 to 2016 after the introduction of IDP, with the sector’s average growth at 7.3 percent.

Likewise, the average GDP growth in 2007 to 2011 was at 4.6 percent, compared to the 2012 to 2016 average expansion of 6.6 percent.

Ayala Corp. Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala said the fourth industrial revolution that will be driven by technology will further support the manufacturing growth of the country.

Ayala stressed the need to invest in technology, such as digital transformation, automation, and connectivity, to improve production capacity, increase competency, and make manufacturing more cost-efficient.

The automotive industry, meanwhile, is expected to breach the one-million annual unit sales starting 2025.

“The growth of the industry has continued to increase with sales reaching 400,000 units in 2016, four times the sales a decade ago, while growth rate is at 24 percent,” Aldaba said.

“By 2025, 2026, 2027, forecasts show that the Philippines will be reaching one million units (in sales),” Aldaba added.

Among the policies introduced by the DTI to support the local manufacture of vehicles is the Comprehensive Automotive Resurgence Strategy (CARS) Program, which targets to revive automotive manufacturing, increase employment in the sector, attract investments, make the country a regional car production hub, and build domestic scale.

The government is allocating P27 billion over a period of six years to support the local production of vehicles and the manufacture of strategic parts, particularly those that are not yet produced in the country.

Two major car companies have joined the program -Toyota Motor Philippines (TMP), for the manufacture of its Vios model, and Mitsubishi Motors Philippines Corp. (MMPC), for the production of its Mirage cars.

Vehicle manufacturers aim to sell 450,000 units by the end of the year.

Accelerating investment in education and infrastructure could further boost growth and allow the economy to realize its full potential, Edwin Bautista, president and chief executive officer at UnionBank of the Philippines, said.

A study released by professional services firm PricewaterhouseCoopers (PwC) indicated the Philippines could become the 20th largest economy by 2050 among 32 countries.

PwC forecasts the Philippine gross domestic product outpacing even that of Spain, Australia, Colombia, Argentina, Poland, and the Netherlands.
Bautista also noted a World Bank (WB) study ranking the Philippines among the top five in terms of productivity index and growth potential index.

“So the opportunities are there, the potential is there, how can we realize that potential? It all boils down to infrastructure and medium-term education,” he said.

Bautista said the country also needs to scale up investments, particularly in infrastructure.
“There is still a lot of room to grow, that is why it is correct the government is embarking on Build, Build, Build because that’s the missing link,” he added.

Richard Bolt, Asian Development Bank Philippines Country Director, said apart from focus on infrastructure, the country should increase investment activity all over the country.

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