Factory output drops 3.7% in Sept

MANILA, Philippines — Lower production of petroleum, transport equipment and export-oriented products led to a decline in factory output in September, the National Economic and Development Authority (NEDA) said yesterday.

Industrial output, as measured by the Volume of Production Index (VoPi), dropped 3.7 percent in September, reversing the double-digit growth in the same month last year. The Value of Production Index (VaPi) also declined 4.3 percent in September from a 5.9 percent growth in the same month last year.

NEDA said the decrease in the production volume of petroleum products can be attributed to the lower production of coke and other fuel products. Fewer production of transport equipment, meanwhile, resulted in lower volume of imports of raw materials.

For export-oriented products, declines were seen in the output of textiles, footwear and wearing apparel, chemicals, rubber and plastic and wood products.

Output rose, however, for construction-related manufactures and food products.

Factories operated at an average capacity utilization rate of 83.8 percent in September, with facilities for petroleum products operating at the highest capacity among industries at 88.8 percent.

Eleven out of 20 major industries operated at 80 percent and above capacity utilization rates. These include basic metals, non-metallic mineral products, machinery except electrical, food manufacturing, electrical machinery, chemical products, paper and paper products, rubber and plastic products, wood and wood products, and printing.

NEDA Undersecretary Rosemarie Edillon said a rebound in the manufacturing sector is expected in the succeeding months on the back of higher consumer confidence and business optimism.

“The Consumer Expectation Survey of the Bangko Sentral ng Pilipinas reported high consumer outlook optimism for the fourth quarter, with respondents expecting additional income, employment opportunities, and improvement in the peace and order of the country,” she said.

She also noted that the 2017 APEC CEO Survey results showed that Philippine top corporate officers and business specialists are “very confident” about their companies’ revenue growth in the next 12 months and are more likely to increase their investments in the country.

Edillon stressed the need to further improve the ease of doing business in the country to attract more investments in the manufacturing sector. Such efforts include implementing online application procedure and electronic processing of transactions.

“Elimination of redundancy in the process and lowering the cost of doing business is expected to attract new entry players and expand existing firms,” she said.

To help small businesses gain access to capital, Edillon said a comprehensive credit information system also needs to be developed to help financial institutions make more informed lending decisions.

“This should go hand in hand with efforts to implement an effective investment incentive system to attract more multinational manufacturers and parts suppliers to set up in the country,” she said.