ADB urges manufacturing

THE PHILIPPINES and other countries that have moved from agriculture to services must reassess the importance of manufacturing in their economies and are urged to look at developing higher-productivity and complementary services, a new report from the Asian Development Bank (ADB) said.

In its Key Indicators for Asia and the Pacific 2013 report, the ADB noted, “economies that have failed to industrialize in employment (e.g. Bangladesh, India, Pakistan, and the Philippines) and are undergoing a transition from agriculture into low-productivity services need to reassess the importance of industrialization.”

“An advanced and sophisticated manufacturing sector is key for developing advanced complementary services sectors (e.g., logistics, transport, and finance). Such countries may wish to consider continuing to develop these more productive segments of the service sector, while not neglecting manufacturing,” the report said.

“In this sense, the Philippines needs to complete and implement successfully its manufacturing road map,” it added.

Services currently make up the largest sector in the economy and employment, according to data gathered by the ADB.

The Trade department is in the process of creating industry road maps to develop various sectors. The manufacturing road map was released Aug. 13.

Industry groups and government agencies are now meeting to determine the best way to implement the master plans.

The ADB said that the Philippines failed to capitalize on manufacturing due to incoherent policies, especially as it remains constrained by “narrow export specializations.”

“The reasons include macroeconomic policies, flawed incentive structures, and lack of nationalism among the ‘captains’ of industry. In addition was the discord in trade, investments, domestic regulation, human resources, and science and technology policies that were supposed to complement the industrial programs during the 1960s-1980s,” the report said.

It added that the overall lack of policy coherence during the 1980s “as well as poor implementation left the Philippines with a much weaker economic structure than that in some of its neighbors.” — Emilia Narni J. David, Businessworld