October 4, 2019

A speedy implementation of infrastructure projects is seen to help sustain demand for construction-related manufactures towards the end of the year, the National Economic and Development Authority said.

In the Philippine Statistics Authority’s Monthly Integrated Survey of Selected Industries for August 2019, the Volume of Production Index (VoPI) was down by 9.3 percent while the Value of Production Index (VaPI) contracted by 7.9 percent. This is the eighth consecutive month for 2019 where total manufacturing indices are on the decline.

The weak performance of heavily weighted petroleum products, furniture and fixtures, transport equipment, electrical machinery, beverages, and miscellaneous manufactures accounted for the contraction in manufacturing.

Nonetheless, production indices in construction-related manufactures grew, with notable increases in the volume and value of non-metallic mineral products (8.9% for VoPI and 12.7% for VaPI) and basic metals (16.5% for VoPI and 6.8% for VaPI). The sub-sector growth was attributed to the construction of new cement plants and also in part to the expansion in infrastructure spending of the government.

Socioeconomic Planning Secretary Ernesto M. Pernia said that fast-tracking the implementation of infrastructure projects will help the manufacturing sector recover even with less optimistic business outlook as uncertainty in the global market remains.

“The completion of infrastructure projects will improve transport and logistics, crucial in supporting the manufacturing sector. An extension in the validity of the 2019 budget, particularly for infrastructure projects, and the immediate passage of the proposed national budget for fiscal year 2020 will assure sustained implementation of construction-related projects and activities,” Pernia said.

Pernia added that infrastructure projects are seen to contribute to the increase in employment and disposable incomes, which will result in increased demand for consumer goods.

“Domestic demand is seen to be more favorable in the third quarter of 2019, with production of consumer goods such as food and beverages, tobacco, footwear and wearing apparel, and furniture and fixtures are expected to increase,” he said.

Moreover, Pernia said that increasing efforts to promote technology and innovation through the adoption of digital solutions across sectors and the amendment of the Foreign Investment Act of 1991 will prop up the manufacturing sector in the long run.

Pernia said that digital solutions will reduce logistical bottlenecks, thus encouraging expansion of market access and improving labor productivity. Improving telecommunication services and building technical capacity and skills of the workforce both in the private and public sector will be crucial in this regard.

Pernia also cited efforts in Congress to amend the Foreign Investment Act of 1991 as a step in the right direction as this can facilitate technology transfer and provide opportunities for domestic manufacturing firms to integrate into the global value chain.

MISSI is a report that monitors the production, net sales, inventories, and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.