DTI optimistic of recovery in manufacturing

MANILA, Philippines — The Department of Trade and Industry (DTI) is optimistic about a recovery in manufacturing starting this year as it sees demand and production picking up with the easing of quarantine restrictions, and as investments are expected in the sector with key reforms lined up.

Trade Secretary Ramon Lopez said during the Security Bank Economic Forum yesterday that he shared the view of the majority in a poll conducted during the event, which showed 73 percent feeling optimistic about the overall recovery of the manufacturing industry within 2021 to 2022.

“With easing of quarantine restrictions, factory operations are resuming and demand is picking up, fueled by increase of domestic and international orders,” he said.

Lopez said despite the enhanced community quarantine and modified ECQ implemented in Metro Manila and nearby provinces, the government allowed manufacturing to continue to operate at 100 percent.

He said those considered as essential industries in manufacturing such as food, pharmaceuticals, personal care products and other fast-moving consumer goods have shown resilience and are expected to drive growth.

Some manufacturing firms in the country also continue to expand even amid the pandemic.

Lopez cited Yamaha’s expansion in Batangas to produce new motorcycle models and create 1,000 more jobs, as well as Honda Philippines Inc.’s start of motorcycle exports to New Zealand this quarter.

He said the continued reopening of the economy, which would allow more people to go out, return to their jobs and earn income would drive demand for production of goods and lead to recovery.

Apart from the easing of restrictions, he said the DTI also expects the passage of legislative measures to encourage investments into the country.

He said the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) recently signed into law would make the country more attractive for investments as it offers more relevant incentives to investors.

In particular, CREATE will reduce the corporate income tax rate and allow qualified activities to enjoy an incentives package for a maximum of 17 years, including four to seven years of income tax holiday, five percent special corporate income tax rate for domestic enterprises, and 10 years for export-oriented enterprises.

Lopez said the DTI is also backing proposed amendments to laws including the Retail Trade Liberalization Act, the Foreign Investments Act, and the Public Services Act which have been certified urgent by President Duterte.

“Together with CREATE, these reforms – and the review of other economic restrictions being conducted by Congress with the intention of removing barriers for entry – will attract more investments and create more jobs in the Philippines,” he said.

To further prepare Philippine manufacturing for the future, he said the DTI is pushing for smart manufacturing and digitalization.

In line with this, the DTI is planning to establish an Industry 4.0 Pilot Factory to facilitate the adoption of Industry 4.0 technologies in production operations of business, especially micro, small and medium enterprises.

“We are also developing the Smart Manufacturing Transformation Support Program to provide support to manufacturers to sustain their Industry 4.0 adoption,” Lopez said.

To protect local industries, the DTI is also working on setting manufacturing standards, as well as implementing safeguard measures to help domestic manufacturers hurt by a surge in cheap imports.