Industrial production in the Philippines fell in May in both volume and in value from the previous month. The decline was largely in manufacturing leather products, according to the latest Monthly Integrated Survey of Selected Industries (MISSI) the Philippine Statistics Authority (PSA) released Tuesday.
The volume of production index (VoPI) in May dropped 1.2 percent from than the revised 11.8 percent growth in April. The negative growth was also worse than the 1.1 percent fall recorded a year ago.
The value of production index (VaPI) slumped 4.9 percent from the revised 8.4 percent growth in April. The drop was smaller than the 8-percent fall in May 2015.
Five major industries contributed to the reduction of VoPI, the PSA said. These were: leather products (83.2 percent); chemical products (48.8 percent); petroleum products (31.3 percent); fabricated metal products (24.5 percent); and textiles (19.1 percent).
Meanwhile, seven major sectors reported VaPI decline, including leather products (83.3 percent); chemical products (48.8 percent); petroleum products (36.8 percent); fabricated metal products (23.7 percent); textiles (18.2 percent); furniture and fixtures (17.4 percent); and footwear and wearing apparel (10 percent).
However, the Socioeconomic Planning Secretary Ernesto Pernia is optimistic that the manufacturing sector will benefit from the economic agenda of the Duterte administration particularly on increasing competitiveness, easing business processes, accelerating infrastructure spending, and attracting foreign direct investment.
“This drop in manufacturing production is the first for 2016. As business sentiment remains optimistic and supported by stable consumer confidence, industrial output is expected to improve towards the end of the second quarter,” he said.
Pernia attributed the production slow down to high levels of inventories in leather goods, drugs, and medicines posted at the beginning of the year which continued to meet the demand for these products.
However, he warned, however, that subdued global economic prospects, weaker-than-expected economic performance of major trading partners, and weather shocks such as La Niña and typhoons remain risks to the manufacturing sector’s growth.
“The provision of adequate, sustainable and reliable infrastructure must be accelerated, and the capacity of MSMEs [micro, small and medium enterprises] m must be further enhanced by strengthened linkages with large corporations and through knowledge and technology transfer,” he said.
“Public and private investments in research and development activities must be encouraged. Engagement in high technology endeavors, as well as attracting foreign direct investments, will be influential to paving the way for the much needed blossoming of high-tech manufacturing sub-sectors in the country,” Pernia added.