Manufacturing growth seen at 8-10% until 2022

“Around 8% to 10%,” he told reporters yesterday on the sidelines of the Manufacturing Summit 2016 when asked for the growth target in the next six years.

“There is great improvement in manufacturing compared to services. It used to lag,” he said.

“We will try to hit that level, the high single digits realistically,” he added.

During the forum, Mr. Lopez compared the manufacturing industry’s growth in each third quarter since 1999, describing the Philippines as being “on the verge of economic transformation.”

“The Philippines is now on the verge of economic transformation; while services was the main driver of growth in the past decades, manufacturing has been playing an important role and has been contributing substantially to economic growth since 2013. In the third quarter of 2016, manufacturing grew by 6.9%, more than one percentage point higher than the rate posted in the same period in 2015 (5.8%),” he said in his speech.

Mr. Lopez added that from 1999-2012, services registered an average third quarter growth of 5.5% while manufacturing grew at an average of 3.2%. This changed from 2013 onwards as the average third quarter growth of manufacturing was 7.3% while services posted an average of 6.7%.

Moving forward, he also said that the Trade department will prioritize five sectors: manufacturing, agribusiness, information technology-business process management (IT-BPM), tourism, and infrastructure and logistics.

The economy expanded 7.1% in the third quarter. According to the Philippine Statistics Authority, the manufacturing industry was one of the main economic drivers from the July-September period. Among the specific industries under manufacturing, food manufacturers led with 9.6% growth.

Meanwhile, Mr. Lopez warned that one of the threats to the growth of the sector may be the current push to remove contractualization as a solution to endo, short for “end of contract,” an employment practice that denies workers a path to benefits to which permanent workers are entitled. The law requires permanent status for workers after six months.

This problem-solution mismatch may scare away business, he pointed out.

Mr. Lopez said that four firms have informed him that they are considering suspending their expansion plans or even leave the Philippines if the government eliminates the possibility of contractual work arrangements.

“If contractualization is removed, investors will leave. There are those who told me that once it’s gone, they will want to leave or stop expanding.”

He said that a Japanese company approached him during President Rodrigo R. Duterte’s visit to Japan in October.

“In Japan, one company spoke to me. They are a huge employer here. They are employing 30,000. They want to add 30,000 more but they are looking at the contractualization issue. If contractualization is removed, that’s what will happen.”