Manufacturing output extend year long decline in November

Czeriza Valencia (The Philippine Star) - January 8, 2020 - 12:00am

MANILA, Philippines — Manufacturing output declined for the 12th consecutive month in November, both in terms of volume and value, as lower prediction was seen in eight major industry groups, the Philippine Statistics Authority (PSA) reported yesterday.

Factory output, as measured by the Volume of Production Index (VoPI), declined by 6.1 percent in November, reversing the growth of 1.9 percent in November 2018.

Negative growth was seen in the following industry groups: electrical machinery, petroleum products, basic metals, transport equipment, miscellaneous manufactures, furniture and fixtures, non-metallic mineral products, and textiles.

The Value of Production index (VaPI) likewise declined by 5.8 percent in November, reversing the 2.3 percent growth in November 2018.

Among the nine major industry groups that reported decreases in VaPI, five major industry groups had two-digit decreases:  basic metals, petroleum products, miscellaneous manufactures, transport equipment, and electrical machinery.

Both the VoPI and the VaPI have been on the downtrend since December 2018.

In November, manufacturing facilities operated at an average capacity utilization rate of 84.5 percent.

Only a fourth of manufacturing establishments operated at full capacity during the month.

An industrial policy propelled by innovation is needed to drive the country’s manufacturing growth amid the bleak near-term outlook of the sectors, said the National Economic and Development Authority (NEDA).

“Industries need to be encouraged to innovate and adopt efficient technologies. This is a key strategy to entice more investments, similar to the experiences of the country’s ASEAN peers such as Thailand, Malaysia and Vietnam,” said Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia.

Pernia added that the passage of the 2020 budget is a welcome move in ensuring the continuity of critical government projects.

“The signing of the 2020 budget into law by the President ensures the continuity of projects aimed to attract local and offshore investments to boost growth and create more and quality employment opportunities for Filipinos,” Pernia said.

The passage of the Corporate Income Tax and Incentives Rationalization Act (CITIRA) and the proposed amendments to the Foreign Investments Act, the Public Service Act, and the Retail Trade Act are also critical to eliminate policy uncertainties that affect the country’s business climate.

Pernia explained that the industry sector will benefit from CITIRA as it will lower the corporate income tax from 30 percent to 20 percent over the medium term. Meanwhile, the easing of foreign ownership limitations in domestic industries will be crucial to increasing investment.

This will allow for tighter integration of value and supply chain across industries and provide opportunities for technology transfer, thus boosting the manufacturing sector.

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