Growth in manufacturing, exports has not trickled down – PhilExport

Exporters have urged to sustain growth in the manufacturing sector and ensure it should really trickle down to real progress and jobs creation, even as they lamented why the positive pre-pandemic performance of these sectors did not really make a significant impact on the domestic economy.

Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. (PhilExport) emphasized in a speech at the 2ND General Membership Meeting the need to ensure the resurgence of the manufacturing sector because it is a key factor to maximizing the gains the domestic economy is experiencing now.

“While the export and manufacturing pre-pandemic performance has generally been positive, though not as robust as we wanted, we are puzzled why this progress has not trickled down,” said Ortiz-Luis.

In fact, he agreed with the economists and analysts in pointing out to the resurgence of the manufacturing sector.

Thus, he cited, the need to protect and sustain the growth in the past months following the lifting of restrictions under Alert Level 1. Manufacturing surged 122 percent in February, the highest level in five months and marked the 11th straight month that the manufacturing output performed positively.

“We believe that this is still part of the revenge purchases that is going on globally as more economies and enterprises resume operations or expand from the pandemic level. There is however cautious optimism possibly until the Russia-Ukraine conflict is resolved,” said Ortiz-Luis.

Meanwhile, the manufacturing growth also translated to improving export performance which reached its fastest pace in six months in February due to stronger demand.

Merchandise exports climbed 15 percent year-on-year to $6.159 billion. It picked up from the revised 9 percent growth in the previous month and a turnaround from the 1.4 percent decline in February last year. The value was the highest level in two months or since the $6.279 billion in December last year.

“But whether such performance created new, better and/or more jobs should be a subject of more detailed analysis,” said Ortiz-Luis as he noted that based on government report there are still more than three million Filipinos are still jobless, with the unemployment rate remaining at 6.4 percent, unchanged from January but much improved than the 8.8 percent recorded in February last year.

“Local and Asian economic data have proven that the manufacturing sector is a big generator of jobs and livelihood, thereby able to reduce poverty,” he said.

Recovery started safely when the government placed most of country under Alert Level 1, the most relaxed form of restriction, only to be threatened by the Russia-Ukraine conflict that revived some uncertainties and deepened remaining pandemic issues.

As such, he said, “The next months will indeed be a critical test if we were efficient and effective in building up our resilience and recovery targets.”

Exporters said that efforts to integrate with the regional and even global production networks arising from the ASEAN economic integration and other free trade agreements are a big push to this direction.

PhilExport likewise see the manufacturing sector as the bearer of structural changes to the economy, as this will transfer resources from less productive to the more high-value adding activities. Manufacturing, after all, is also linked to the two other “legs of the domestic economy – agriculture and services. “If fully maximized, this sector should be able to help diversify and upgrade production and increase labor productivity,” he said.

At PhilExport and the Export Development Council (EDC), Ortiz-Luis said, they are actively engaged in addressing the challenges that affect the competitiveness of the industry. This includes among others the inadequate and expensive power and water supply, continuously increasing logistics, particularly shipping costs, declining raw materials, red tape and labor-related issues, all of which get a different twist each time there is a new crisis.

Meanwhile, they also lauded landmark laws that have recently been passed and are expected to attract investments that can help address these bottlenecks. Two of them, the Corporate Recovery and Tax Incentives for Enterprises Act or CREATE and Public Service Act are in our legislative agenda.

For the 19th Congress, Philexport and EDC are preparing towards the approval of other business and MSME-friendly bills that include the Magna Carta for MSMEs, amendments to the Charter of the Philippine Ports Authority, Open Access in Data Transmission Act, International Maritime Trade Competitiveness Act, National Quality Infrastructure, Creative Industries bill and a number of agriculture sector-related bills.

There are unfortunately negative implications for MSMEs and the BPO sector from the CREATE Act which they continue to find solutions for with assistance from the Department of Trade and Industry.

In job generation, Philexport is part of the One Million Jobs project led by its Trustee for the Electronics Sector, Ferdinand Ferrer, who also chairs this activity under the Employers Confederation of the Philippines. Ferrer and his team facilitated the achievement of the one million job target last month. “This is certainly one project worth sustaining,” said Ortiz-Luis.

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