Costs daunt manufacturing

THOUGH manufacturing has the potential to provide more jobs, industry leaders say that high labor and power costs continue to hinder the sector.

“We have to reduce our power cost. Our labor cost is not competitive as well. These are what we should address,” said Arsenio N. Tanco, president of Coats Manila Bay, Inc., at the 3rd Philippine Manufacturers’ and Producers’ Summit, held by the Federation of Philippine Industries in Makati City yesterday.

Semiconductor and Electronics Industries of the Philippines, Inc. President Dan C. Lachica held the same view: “Unless the government resolves the power problem, recovery of the manufacturing sector is going to be difficult.”

For Bernadine Siy, chairwoman of Fil-Pacific Apparel Corp., minimum wage “is not supposed to be permanent wage. It’s meant to get you started.”

“Minimum wage in the country is too high to attract foreign investors,” Ms. Siy said.

This was echoed by Maritess Jocson-Agoncillo, executive director of the Confederation of Garment Exporters of the Philippines: “Minimum wage is too high. There is no room to grow anymore.”

Antonio C. Olizon, president of the Philippine Wood Producers Association, also cited the government’s “unstable policies”.

“If policies are unstable, who would go into this business? Every time a new secretary comes in, he is always better than the old one. What happens to those who are investing, then?” Mr. Olizon said.

“Wood industry is one of the biggest employers in the country. We are employing both unskilled and highly-skilled workers. There must be a mechanism for us to reach the proper government offices,” he said.

Calixto V. Chikiamco, a political economist, said: “For all the talk about high economic growth, employment and underemployment have been intractable, remaining at more than quarter of the labor force. That’s about 17 million Filipinos who are forcibly idle or partially idle because there are not enough jobs, particularly in the manufacturing sector.”

To boost the competitiveness of the sector, the government was urged to remove foreign ownership restrictions in the Constitution, particularly on public utilities; amend the labor code, with less emphasis on minimum wages and labor security to more emphasis on labor flexibility, training, and productivity; abolish the National Food Authority monopoly on rice importation and allow free trade in rice; and undervalue the exchange rate.

“Tackle these four, and the Philippine manufacturing and industrialization will take off like a rocket,” Mr. Chikiamco said.

The Joint Foreign Chambers, in a letter to the Regional Tripartite Wages and Productivity Board in the National Capital Region in August, said that Metro Manila’s $10.74 minimum wage towers over daily minimum wage in other countries, with Myanmar’s $0.52, Cambodia’s $2.03, Vietnam’s $3.15 and Thailand’s $9.75.

Manila is also said to have one of the highest power rates in Asia. — D.E.D. Saclag, Businessworld