Opportunity for Philippine manufacturing in 5-10 years

The Philippine manufacturing sector should be ready in five to 10 years as an alternative site because China, Thailand and neighboring countries will raise their wages.

The World Bank said that the Philippines should focus on agriculture, manufacturing and infrastructure to increase jobs as countries like China, Thailand and Indonesia will raise their minimum wages in five to 10 years that will lead to investors searching for other potential markets or investment sites.

World Bank Philippines Senior Economist Karl Chua told reporters that the Philippines should improve its manufacturing and agricultural sectors, so that investors would look at the country as a potential manufacturing hub in the next five to 10 years.

“The good thing in about five to 10 years’ time, wages in China, Thailand, Indonesia and countries that have grown faster than us are rising. And so the 85 million manufacturing jobs in China can potentially go out and find other places, and the Philippines has a great potential in capturing them,” Chua said.

“We need to prepare. We need to have the infrastructure, we need to have the logistics [for easier shipping of products], and we need to have the skills,” he added.

In World Bank’s 2013 Philippine Development Report (PDR), agriculture and manufacturing was highlighted to achieve growth as it can generate jobs for the poor.

“The link between these two sectors is also very powerful because high food prices, agricultural costs, input cost is four times more expensive [than countries in the region]. According to World Bank data, [when our] manufactured goods [are] more expensive, it makes minimum wage higher and our competitiveness gets affected,” Chua said.

The senior economist also explained that agriculture is a priority because local retail prices are “double than other countries as well as double of the farm gate prices.”

“Logistics, roads, drying, milling–all of these contribute to the rise in the prices and high cost. If we can lower these inefficiencies so that high costs fall without farm gate price falling, then that could be a win-win,” Chua said.

In terms of employment, Chua said that the Philippines has “a long time to catch up,” adding the workers in the informal sector is not a negative factor, but the country should prioritize jobs in agriculture and manufacturing to build a strong base for the economy.

“But [jobs in informal sector] can be bad if [workers] do not have opportunities to go up because of structural issues. We look at these people and they are highly related to poverty and vulnerability,” Chua said.

According to the 2013 PDR, there are 10 million Filipinos who are unemployed (three million) and underemployed (seven million) at present. The report said that the country needs 14.6 million quality jobs for the next four years not only for the current 10 million unemployed and underemployed, but also for the 1.15 million annual labor force entrants until 2016. Quality jobs are classified as jobs bringing people out of poverty.

“There is no silver bullet that will solve the jobs challenge overnight as it is linked to resolving historical and deepseated structural issues in the economy. Only a comprehensive reform agenda that is owned and supported by a broad coalition can foster a business environment conducive to private sector job creation by firms of all sizes,” said World Bank Philippines Director Motoo Konishi. –Menafn – The Manila Times – McClatchy-Tribune Information Services via COMTEX