Manufacturing remains biggest GDP contributor

Manufacturing remains the biggest contributor to economy at 21 percent, growing at healthy rate of nine percent, but its contribution to total growth has been reduced by the brisker growth in the services sector.

The Federation of Philippine Industries (FPI), holding today the 2nd Philippine Manufacturers and Producers Summit at the Intercontinental Hotel, said the country ranks 20th out of 120 countries in terms of share of manufacturing in total growth.

The summit evaluates today its year-long campaign to hype up the contributions of the manufacturing sector.

In the past year, the FPI said, government initiative of creating industry roadmaps, has generated as many as 50 sectoral plans.

Roberto Batungbacal, chairman of the organizing committee of the summit, said

the 21 percent share of manufacturing in the GDP should not be belittled, saying it is not low compared with those in other countries.

Citing a 2009 study of the UNIDO, Batungbacal said the data would show that the Philippines ranked 20th out of 120 among countries with the highest manufacturing percentage to GDP.

Batungbacal said this means the Philippine manufacturing sector is competitive to those in other countries and its base still has a potential to grow to make the country as a manufacturing hub.

He said countries whose manufacturing posted a low percentage to GDP are those which lost business to China.

Batungbacal said the cost of manufacturing in the Philippines is high only because the country does not provide subsidies to its local industries compared with other countries.

Now that these governments are under pressure to lift those subsidies, the Philippines is well-positioned to be even more competitive. Batungbacal said while the Philippines still has one of the highest power costs in the region after Japan, different industries bear different costs on power.

For some, power cost is but a small percentage or about 4 percent of a company’s total production costs. Power-intensive manufacturing would necessarily incur higher power costs.

But the FPI is hopeful this would be resolved once open access is implemented.

Batungbacal cited data showing that the manufacturing sector has grown 9 percent per year in the last 10 years in terms of gross value added at current prices.

But when compared with services, the growth appears smaller because the former has been growing faster, Batungbacal said the Philippines remains a manufacturing country and therefore should not give up on it.

He noted that manufacturing can absorb unskilled labor like high school graduates that otherwise services like BPOs cannot hire.

Today’s summit is themed “Pursuing Industrialization for a Progressive Philippines.”

This year, the summit would discuss progress in industrial planning, emerging opportunities and binding constraints, sectoral roadmapping experience, and the critical horizontal and vertical policies for industry to create inclusive and sustainable economic growth in the Philippines.

FPI is the umbrella organization of manufacturers and producers in the Philippines. It is composed of 39 industry associations, 95 corporate members that are local manufacturers and producers of various products. –IRMA ISIP, Malaya