Cristobal: Manufacturing ‘resurgence’ underway
The Philippines has been gradually reaping the rewards of its “manufacturing resurgence” plan, as shown by the manufacturing sector’s outpacing the services sector in growth over the past four years, the Trade Secretary said.
According to Department of Trade and Industry Secretary Adrian Cristobal Jr., the country’s manufacturing sector has grown faster than the services sector from the first quarter of 2013 to the first quarter of 2016, having an average quarterly growth of 8.1 percent compared with the average 6.6 percent of services.
This compares favorably with the 1999 to 2012 period, which recorded an average of 5.5 percent growth per quarter for the services sector, while the manufacturing sector saw 4 percent quarterly growth.
“The growth of manufacturing has outpaced services in the past four years after more than a decade…We really can see a manufacturing resurgence going on. Manufacturing, in short, has been surpassing the growth of services for nine quarters already since first quarter of 2013,” Cristobal said.
“Looking at the data, we believe that the economy is on the verge of a transformation. The sources of growth have become more diversified, showing changes in the structure of the economy,” he added.
Another way of looking at the manufacturing resurgence in the country is by way of looking at physical “on the ground” investments in manufacturing such as plants and facilities, machinery and equipment, or in other words capital formation, Cristobal said.
As of the first quarter of 2016, the DTI chief said overall capital formation grew by 23.7 percent, while fixed capital formation rose by 25.6 percent, the highest year-on-year quarterly growth in more than 10 years. This is faster than the 7 percent growth in consumption and 9.9 percent growth in government spending.
The growth in capital formation was driven by investments in sugar mill machineries that soared by 873 percent during the first three months of 2016, followed by the 81 percent growth in agricultural machineries, 49 percent in air-conditioning and refrigeration equipment, 86 percent in water transport, and 111 percent in office machinery and data processing equipment.
Meanwhile, food manufacture took up the largest share, or 36 percent, of the total manufacturing growth in the first quarter, followed by radio, television and communication equipment (23 percent), and chemical and chemical products (9 percent).
According to data by the Philippine Statistics Authority, the country’s volume of production index (VoPI) in the first quarter — which measures manufacturing volume in the country — increased by 11.3 percent. Value of these factory output in the same period — known as value of production (VaPI) — also went up by 5.37 percent.
The country is continuing to empower the manufacturing sector through the Manufacturing Resurgence Program, which seeks to increase the sector’s contribution to GDP to 15 percent by 2025, Cristobal said.
The government has set aside P289 billion for MRP implementation in 2016.