By Bernie Cahiles-Magkilat

The Philippines used to have the 10 basic industries that the then strongman Ferdinand Marcos initiated on hopes the private sector could latch on, build on and become the backbone of the country’s development.

Sadly, these industries died down leaving the country exporting raw materials and importing the finished products.

This time, taking the cue from the previous Aquino administration, the Duterte government has pursued another attempt at industrial revolution as it seeks to rebuild the domestic industries under the Manufacturing Resurgence Program (MRP).

With MRP, we will rebuild existing capacity of our local industries, strengthen new ones, and maintain their competitiveness. More importantly, this program—among the many initiatives under the Duterte administration—will help us create more jobs and income opportunities for our people,” said Trade and Industry Secretary Ramon Lopez.

MRP will close the gaps in industry supply chains, provide access to raw materials, and expand domestic markets and exports for local manufactured products.

At the heart of the MRP is the Comprehensive Automotive Resurgence Strategy (CARS) Program. Already, more than P10 billion are being poured by its two participants, Toyota Motor Philippines and Mitsubishi Motor Philippines Corp.

With government tax incentive package, the two Japanese carmakers are going to churn out 200,000 units each of locally produced cars over the six-year CARS Program. MMPC is producing Mirage/G4and TMP, Vios.

But, it is more than that. There will be more capital infusion and more job opportunities among the domestic auto parts suppliers, which are all scrambling to become part of the automotive value chain.

Lopez said that Mitsubishi Motors Corporation (MMC) Chief Executive Officer Osamu Masuko has expressed support for the government’s vision to become production hub of certain models for export to the ASEAN region and help address Philippines’ trade deficit, especially with two ASEAN vehicle exporters—Indonesia and Thailand.

The CARS program, which aims to attract investments, stimulate demand, develop a vibrant local auto parts supplier base, and implement industry regulations that will revitalize the country’s automotive industry to turn it into a regional automotive manufacturing hub.

Masuko relayed MMC’s plans to produce more units of Mirage/G4 and L300 in PH and to start exporting these to the ASEAN market by 2019.

He also mentioned their intention to collaborate with the Philippine government to develop the electric vehicle industry in this country.

Another industry that is getting a much needed boost is the steel with the entry of the $4.4 billion integrated steel manufacturing project of China’s HBIS Group Co. Ltd. and Huili Investment Fund Management Co. Ltd. in partnership with Filipino industrialist Benjamin Yao’s SteelAsia Manufacturing Corp. The Chinese investors seek to go into the backward steel integration to produce the raw materials for local steel manufacturers. The Yao Group is also investing P100 billion as it seeks to produce more downstream products from its mostly rebars operation.

The garment and textile manufacturing sector, which used to be the country’s largest dollar earner, is not left behind as it has been attracting foreign investors following the trade war between the US and China.

Garment manufacturers in China are shifting their operations to the Philippines to avoid the high tariffs imposed by the US on Chinese goods.

The country’s garment and textile export is expected to grow between 10-20 percent increase this year as some orders are now being shifted from China to the Philippines.

Complementing the manufacturing sector’s resurgence is the government’s support to investors through reduced corporate income tax rate at a level much closer to neighbors under the proposed Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) bill. It would also rationalize the country’s fiscal incentives to make them targeted, time-bound, performance-based, and transparent, consistent with our Inclusive Innovation Industrial Strategy.

These efforts have shown initial progress. The manufacturing sector grew at an average quarterly growth rate of 7.6 percent in 2017. Manufacturing growth continues to banner the country’s growth in 2018.

“We remain confident and optimistic that the manufacturing sector will pick up by the end of 2018 and in 2019 and in the years ahead, as we continue to formulate and implement policies and programs that support industry development, attract strategic investments, and generate more and better employment and entrepreneurship opportunities in our country,” Lopez said.

The encouraging outlook in the manufacturing sector is evident in the P907.2 billion investment approvals by the Board of Investments in 2018. The 2018 strong performance of BOI easily surpassed the previous all-time mark of P616.8 billion in 2017. The unprecedented figure was up 47.1 percent year-on-year.

“We hit another record-breaking investment in BOI’s 51-year history, beating the P617 billion in 2017 by a wide margin,” said Lopez, who is also BOI chairman.

Lopez pointed out that what more important than the record-breaking investment level is the strategic importance of these approved projects. This will result in industrial empowerment, particularly with the upstream, heavy industrial projects that will allow industries to expand capability to manufacture finished goods currently not produced in the country. Together with the investments in key logistics, infrastructure and power projects including LNG terminals, these approved projects will strengthen the local industrial production base as it impacts on improving the general level of competitiveness of Philippine industries and pushing development to the regions.

“Equally significant is the positive effect of these projects in addressing the problem of widening trade deficit. As the country continues to grow, demand for industrial products increases. Currently, for certain key categories, demands are mainly met thru imports. The agency firmly believes that the best trade strategy is a robust industrial development policy. In addition, BOI also approved projects critical to addressing social issues—including housing and availability of health services. Special attention was also given to enhancing the productivity and competitiveness of agricultural commodities, for instance thru Triple A slaughterhouses as well as modern cold-chain facilities,” said Lopez.

The investment surge in 2018 was led by the manufacturing sector which rose more than four-fold to P409.3 billion from just P96 billion last year.

Given the epic surge in investments for 2018, BOI Managing Head Ceferino S. Rodolfo sais it is but inevitable to aim for another historic milestone—the trillion mark next year.

“We are confident of hitting yet another growth in investment registrations next year with the impending entry of big-ticket projects as concrete fruits of the Administration’s investment roadshows,” said Rodolfo.

All these efforts are aligned with the goal of MRP to enhance the competitiveness of domestic manufacturing industries. These industries can then be integrated in higher value-added, ASEAN-based production networks, and global value chains.

The MRP will help contribute 30 of total value-added and 15 percent of total employment by 2030.

Manufacturing will generate jobs not only for skilled workers but also for semi- and low-skilled workers. This program will allow the movement of workers from the informal to the formal sector, as well as from low value-added activities to high-value added activities.