Manufacturing sector outlook remains upbeat in 2015June 10, 2015From the National Economic and Development AuthorityProduction of the manufacturing sector increased slightly in April 2015 but the outlook remains upbeat with expectations of robust private consumption and public spending, according to the National Economic and Development Authority (NEDA).In the Philippine Statistics Authoritys Monthly Integrated Survey of Selected Industries (MISSI) released today, the manufacturing sectors Volume of Production Index (VoPI) slightly grew by 1.4 percent in April 2015, lower than the 16.1-percent expansion last month and the 10.8-percent growth a year ago.Meanwhile, the sectors Value of Production (VaPI) contracted by 4.2 percent in the period, down from the 9.7-percent growth in the previous month and the 10.9-percent expansion in April 2014.Despite the April 2015 numbers, investors remain confident of the growth prospects. Proof of this is the recent expansion of Taiheiyo Cement Philippines, Inc.s facilities in San Fernando, Cebu to boost productive capacity in anticipation of higher demand for construction materials, said Economic Planning Secretary Arsenio M. Balisacan.A number of Japanese firms are also poised to relocate to the country. In addition to the supply of skilled labor, some firms also want to maximize duty-free benefits in the Philippines under the European Unions Generalized Scheme of Preferences Plus, he added.Meanwhile, average capacity utilization remained at 83.2 percent during the period. The basic metals subsector had the highest average capacity utilization at 88.8 percent in April 2015, slightly higher than the 88.5 percent last year.Since basic metals are among the backbone industries with high forward linkages, its high average capacity utilization will enhance firms capacity to respond to the increasing demand of other subsectors, particularly the rapid growth in private construction and the expected realization of government infrastructure projects, said Balisacan, who is NEDA Director-General.Among the surveyed firms, 26.4 percent operating at full capacity (90-100%), 55.3 percent at (70-89%) and 18.3 percent operating at below (70%) capacity.The chemicals and tobacco industry sustained their strength for the period, countering the slowdown in the production of food and petroleum products. Also, leather, printing, basic metals, and machinery (except electrical) registered double-digit growth.However, Balisacan said that despite the positive outlook, the adverse effects of El Nio and uncertainties in the global market still pose significant risks.The government must encourage more value-adding activities, especially those that increase the linkage between agriculture and manufacturing. Production would need to diversify further to areas and subsectors, for this to be realized, an efficient transport and logistics network should be put in place, he said.He also reiterated the countrys need continuously undertake efforts in improving business climate, address its long-standing power security issues, and diversifying the countrys range of products.We need to enhance the ability of SMEs to participate in regional and global markets, in line with the ASEAN economic integration, and pursue diversification of export products and markets, given uncertainties in global demand. This is vital to sustain the global competitiveness of the country and survive the low demand from the countrys top export markets, said Balisacan.neda.gov.phThis entry was posted underBriefing Room,National Economic and Development Authorityand taggedmanufacturing,National Economic and Development Authority,Philippine Statistics Authority,press releases,statistics. Bookmark thepermalink.Source: http://www.gov.ph/2015/06/10/manufacturing-sector-outlook-remains-upbeat-in-2015/

Overview of the Manufacturing and MSME sector at the Philippine Economic BriefingDepartment of Trade & Industry (DTI) Undersecretary Adrian Cristobal Jr. (right) gave an overview of current state and latest developments in the manufacturing and SME sectors in the Philippines at the Philippine Economic Briefing on September 30, 2014. Undersecretary Cristobal said this years briefing theme The Philippines: Shaping Our Future aptly describes what the DTI has been actively pursuing, in close coordination with its stakeholders, private sector and civil society, in further pushing the development and growth of the manufacturing and MSME sectors. Guided by a Manufacturing Industry Roadmap, Undersecretary Cristobal said the Manufacturing Resurgence Program is priority undertaking of the administration that targets 30% increase in gross value-added and 15% increase in employment by 2025. Parallel to the manufacturing sector, Undersecretary Cristobal also said MSMEs, which form the backbone of the Philippine economy, are also growing and that key policy reforms were enacted to institutionalized support including the signing into law of the Go Negosyo Act recently.He said the DTI also follows an integrated approach in supporting and empowering SMEs and that programs and projects were designed to promote an enabling business environment, encourage entrepreneurship to have access to finance and markets, activities to enhance efficiency and address gaps and bottlenecks in the value chain. These programs include the SME Roving Academy, the Shared Services Facilities, the Access of small entrepreneurs to sound lending opportunities or ASENSO program, and the Nationwide Industry Cluster Capacity Enhancement Program or NICCEP program. The Doing Business in Free Trade Area sessions are also being conducted aimed at empowering local businesses on how to take advantage of the countrys free trade agreements with foreign countries. Photo shows Undersecretary Cristobal conferring with Secretary Rene Almendras at the sidelines of the economic briefing. (DTI-PRU)Source: http://investphilippines.gov.ph/overview-of-the-manufacturing-and-msme-sector-at-the-philippine-economic-briefing/

Status of ManufacturingRSS feed for this sectionThis category contains 39 postsThe Rising Economic Complexity of thePhilippinesPOSTED BYBOBBY BATUNGBACALJUNE 11, 2015 LEAVE A COMMENTEconomic ComplexityEver since I hearedDr. Norio Usuiof the ADB talk about Product Space, Ive been fascinated by the work ofHausmann and Hidalgoand how economic complexity drives growth. Ive also seenDr. Fita AldabaAssistant Secretary of the DTI, use Product Space in the development of the Philippine Manufacturing Roadmap. Since then, Ive been following a web-based tool that Harvard and MIT created called Atlas of Economic Complexityhttp://atlas.cid.harvard.edu/and I wanted to share with you how these tools characterizes our economic development and how we can use these tools to identify paths for growth by increasing the complexity of our economy.Product Tree Map

These charts clearly show a break-down of our exports, organized by industry or product groups, it covers more than a decade so you can see how our exports change over time. In terms of complexity, we do have an advantage over a number of economies due to the size of our electronics and semi-conductor exports. However, as many economist point out, weve gone too narrow and too specialized, resulting in the under-development of other important sectors. Annual product tree maps shows these changes, where we see the hi-tech sector reached its highest share (electrical and machinery) of export at 73% in 2003 . In the suceeding years, weve seen better diversification, with the hi-tech sector share at 60% in 2013, even as the sectors export continue to increase.Product Space

These maps are even more interesting, since it doesnt simply show a breakdown of our exports, it actually show how each product (or product group) is linked to each other. By looking at a countrys product space, you find out which products are already competitive and which are the nearby products that the country can move to in order to grow, diversify and increase the countrys economic complexity. Attached is the latest product space map of the Philippines. Going through the years (in the tool), you will see how our complexity has changed, how many products have gained or lost its comparative advantage in the world market. Its also useful to compare product space of different countries. I tend to compare Philippines with Thailand which has a very complex profile that we can aspire for, or Vietnam with a rapidly growing industry sector.Sectoral AnalysisAs an industry participant, I may want to drill down on our specific sector, in my case this would be the chemical sector to find nearby products that I can move to from my existing business.

You can get a profile for any industry, for any year from 1002 to present, for any country.Rapid rise in Country RankingThe tool also providescountry ranking of economic complexity over the time period. The countries with the highest rank in Economic Complexity Index (ECI) is Japan, Switzerlandand Germany. The Philippines ranks #45 in the latest list, but its rise in the country rankings is among the fastest in the list. From rank #72 in 1992 to #45 in 2013, jumping 27 notches. The line chart below shows our ranking vs peer countries in SEA.

Future growthMore interesting is how economic complexity can project future growth rates.The Atlas of Economic Complexity website just recently published their 2023 growth forecast,http://atlas.cid.harvard.edu/rankings/growth-predictions/and it shows that the Philippines can be among the fastest growing economics of the future. Looking at their table, were projected to be growing faster than China in the near future.

LimitationsUseful as it is, I would not blindly follow these numbers and call it a growth strategy, I would seek the experience, knowledge and insights of individuals, entrepreneurs and firms and their first hand knowledge of their specific industry. However, rarely do you findan individual with enough knowledge across multiple segments, let alone the entire industry that this tool represents. So, the tool is an extremely valuable guide to businessmen, firms, industry associations and industry planners, when combined with their real world knowledge. Lastly, the tool comprehensively describes products that country exports, it tells use little about domestic production, which in the Philippines continue to be the bigger part of the manufacturing sector. Bobby

Building a Manufacturing Value Network in thePhilippinesPOSTED BYBOBBY BATUNGBACALAPRIL 19, 2015 LEAVE A COMMENTLast March 13, 2015, I attendedA Gathering of Industry Championsorganized by the Board of Investments. Led by DTI Secretary Gregory Domingo, Undersecretary and BOIManaging Head Adrian Cristobal, BOIGovernor LucitaReyes, Asec. FitaAldaba, Director CoriehDichosa, its the third annual gathering ofindustry associations who are currently implementing their industryroadmaps in coordination with the BOIand wide range of government agencies. Private sector and BOIindustry champions were all present, with a number of sector leaders providing testimonies on their roadmap implementation, successes and challenges.

This reminded of what Dr. Ricardo Hausmann called,value networks.Hausmann points out that the secret to economic growth is diversity and complexity, and they can be attained by networking a variety of activities, instead of focusing on a few existing, tried and tested things.Looking back at the past decade, we had a few very strong sub-sectors, like electronics and semi-conductors, but it had little connectivity to the other manufacturing sub-sectors. We had a fragmented collection of sub-sectors without the benefit of networks that would have provided a wide range of suppliers, customers, service providers as well as generate new opportunities, new products and even spur new sub-sectors.Individual companies craft their ownstrategies. But when they participate in creating an industry or sectoral roadmap, collaborations are formed, as they find new customers, suppliers and even partners. A value network extends beyond sub-sectors, and enabling firms to network faster with those in other sub-sectors. Its difficult for individual firms to engage an entire sub-sector, but through value networks, facilitated by industry andumbrella associations and government agencies, more firms are engaged, faster.Emerging Manufacturing Value NetworksOne example I heard in the forum is how the BOIconnected the construction supply producers to the mass housing sub-sector. While its certainlypossible for individual firms to connect to the builders of mass housing, networking at a sub-sector level, with a government agency facilitating, brings the collaboration to whole new level. Another example is how auto and metal part makers in the Philippines are jumping to aircraft parts and other new applications, enabled by DOST MIRDC new investment on state of the art metal working laboratories.It is at the intersections and connections where great value is created. Think about how auto-parts, fiberglass, electronics and batteries yield a new industry called e-trike. How the new naphtha cracker drives the expansion of plastic resins, which enables world-class quality packaging for our largest sub-sector the food manufacturing industry.Nodes are getting connected, no longer randomly, but in a more coordinated fashion, making it faster than ever. As more firms get connected, the network broadens, encouraging more entrants instead of hinderingthem.There is no single firm, nor industry association, nor government agency has a broad enough perspective to guide our entire industry. Only through extensive collaboration and networking can we achieve long term, inclusive growth.In our next post, well talk about these nodes and connections, in what is known as theProduct Spaceof the Philippines.

Philippines Product Space 2012Philippine manufacturing grew 8.1% in2014POSTED BYBOBBY BATUNGBACALMARCH 9, 2015 LEAVE A COMMENT2014 is another growth year for Philippine manufacturing, with a full year growth rate of 8.1%. While its slower than 2013 growth of 10.5%, it was high enough to bring the three years average growth to 8%. See the bar chart below for the quarterly and annual growth rate in the last three years.

Food manufacture continues to be the largest subsector with 36% share, followed by radio, tv, communication equipment with 17% share, chemicals is third with 11% share of total manufacturing value added (MVA) in 2014.

As weve done in previous post, we classified the subsectors into technology groups to understand the profile of the manufacturing subsectors. Low tech group continues to dominate given the size of food manufactures. Were seeing some diversification with the growth of beverage and furniture. Contribution of the medium technology group seems limited last year. While radio,tv, communication and chemicals continue to provide much needed diversification into the high value, high technology sector, though both sector experienced low but positive growth this year.

In our next post, we will see which are the fastest growing sectors in manufacturing, and more important, look at the bigger growth trends by technology group bearing in mind that we need a more diversified profile, with a bias towards higher value, higher technology sector for faster overall growth of the manufacturing sector.

Reversing the decline of manufacturing in thePhilippinesPOSTED BYBOBBY BATUNGBACALDECEMBER 7, 2014 LEAVE A COMMENTReversing the trendFrom 1960 to 2000, manufacturing share of GDP has averaged around 24.6% (Authors calculation based on World Bank databank figures). However, from 2000 to 2009, this share went on a rapid decline, raising concern on the future of manufacturing in the Philippines. Fortunately, in the past four years, we seen fastergrowthin manufacturing sector.But whats the impact of this renewedgrowth to manufacturings share of the economy? Is itsignificant enough to reverse the declining trend of the previous decade?First allow me to point out that the sector has always been growing,thru thedecades, as weve pointed out in previous posts. So, decline is a tricky word when describing the manufacturing sector. But what is factual is that manufacturings share of GDP has been declining for some timeuntil recently.The table below shows that manufacturings share of GDP has rapidly declined from 24.47% in 2000 to a low of 21.47% in 2009. A huge 3 percentage point drop in one decade. It was due to a combination of rapid growth of the services sector and the relatively slow growth of the manufacturing sector. However, the trend has reversed in 2010, and by the third quarter of 2014 it had reached 23.16% of GDP.

Catching up with the Services SectorThe next table is a familiar one to our readers. This table shows a comparison of the growth rate of the manufacturing versus the services sector. The latest GDP numbers in Q3-2014 extends the lead of the manufacturing sector over services in terms of growth rate to seven consecutive quarters.Not to be misunderstood, I am not hoping for a slow down of the services sector! But I am advocating a catch-up for the manufacturing sector so that we have a more balanced and robust economy, that can provide a wider range ofemployment opportunities to Filipinos. We need both engines of growth. Three would even be better, with the agricultural sector.Growthis not mutually exclusive, it doesnt have to be. In fact, researchers have pointed out that manufacturing can drive a further expansion of the services sector due to manufacturings high multiplier effect.

A bold visionWhile the increase in manufacturing share of GDP is encouraging, this ratio is still far from what we desire, and still far from reaching our true potential. The newPhilippine Manufacturing Roadmapcrafted by the government and the various industry sectors provided a challenging and bold visionfor manufacturing to reach 30% of GDP.Its a vision that goes beyond our historical performance. But it is a vision that can free us from economic underperformance that has plagued us for decades.Understanding Philippine manufacturingsub-sectorsPOSTED BYBOBBY BATUNGBACALOCTOBER 4, 2014 LEAVE A COMMENTManufacturing Subsectors by technology classificationThe manufacturingsector is highlydiverse, composedof a wide range of subsectors. These subsectors can be groups into three technology groups: low, medium and high. Below is the gross value added of each of these subsectors at the end of2013, grouped by technology level.Food manufacturesis still by far the largest manufacturing subsector, followed byradio, tv and communication equipment and apparatus, which we know better as electronics and semi-conductor, and third is thechemical and chemical productssub-sector.

Low-tech sectors are generally less capital-intensiveand more labor and/or resource intensive. While medium and high technology sectors are generally more capital-intensiveand less reliant on labor cost and/or resources. Note the word generally since the products within this subsectors can have very varied characteristics in terms on capital and labor requirements.Low technology subsectors has less entry-barriers, require less skills, and provide huge employment opportunities, butsubject to strong competitionfrom lower cost countries specially when theyre highly globalizedwith low trade barrier, like garments and footwear. Higher technology subsectors require higher skilled labor, and more sophisticated use of technology and capital.By classifying the sub-sectors intro these three technology groups, it becomes easier to understand their needs, allowing us to identifytargeted interventions that will enable them to be competitive. For instance, low-technology sub-sectors would require the availability of low labor cost migrating from the basic sector, whereashigh-technology would need innovative talent and skills upgrading.This classification alsoallows us to understandwhere to direct our human resources, which is tohigher value sub-sectors, which willraise the total productivity of the manufacturing sector in the long-term.Shifting to higher technology levelsAs countries progress and climb up the value chain, you see a consistent reduction in share of low tech secttors, for instance food manufactures, and an increase in the medium to high-techsubsectors. See from the charts below taken from UNIDO 2103 Industrial Development Report, howSouth Korea evolved from 1963 to 1998, reducing their share of theirlow tech sector in favor of theirhigh-tech sector. Compared to Kenya that hardly changed their structure through out the same period.

The relativesize of the Philippine high-technology sector which includes electronics, semi-conductor and chemicals is encouraging. Growing our machinery and transport sector should accelerate our growth as well as diversify our high-tech sector. There is of course, a lot ofvaluein expanding our medium technology sector which represents key industries that enable us to integrate the various subsectors. These medium technology sectors are easier to develop compared to high-tech sectors, and can provide employment for our low-skilled labor that maybe not find opportunities in the low-tech sector due to competition from lower cost countries.This is why we have more than 20 sectoral roadmaps today. Each sector has a role to play in our economy. The more sectors we participate in, the more opportunities we provide to our investors, both foreign and local, to our entrepreneurs and to our workers.Growth of the manufacturing subsectorsFinally, lets take a look at the growth of each of these sub-sectors in the last three years, from 2010-2013.

Furnitures and fixtures is the fastest growing sector, averaging 57% in the last 3 years, followed by chemical and chemical products at 39% per annum, and wearing apparel who seems to be making a come back at 11% per annum. One needs to take into account the actual size of these sub-sectors to put the growth into context. So while food manufactures is the largest, it a low growth industry. Chemicals has both scale and high growth. Furnitures and wearing are relatively smaller industries, but are gaining ground.Radio, TV, communication equipment and apparatus (electronicand semi-con) has experience low but still positive growth the last few years. Interestingly, transport equipment has seen a contraction in the last three years, in spite rapid growth in motor vehicle sales. Hopefully, this translates to the expansion of the local production of motor vehicles in the next few years.I hope this short note helps us understand the value ofclassifyingmanufacturing sub-sectors by technology level, and howthey contribute to the overall growth of the manufacturing industry.

Manufacturing leads growth inQ2-2014POSTED BYBOBBY BATUNGBACALSEPTEMBER 12, 2014 LEAVE A COMMENT2014 growth, the fastest sector in the PhilippinesPhilippine manufacturing continues its rapid growth pace as it now leads all sectors of the economy, growing by 10.8% (constant prices) in the 2ndquarter of 2014. Manufacturing was the fastest growing segment of the Industry sector which grew 7.8%, the services sector grew by 6% and the agricultural sector grew by 3.6%. Data source: NSCB.

The latest quarters manufacturing performance was characterized by double-digit growth of the largest manufacturing sub-sector which is food manufactures which grew 10.7%. Food manufactures represents 37% of the entire manufacturing sector. The 2ndlargest sub-sector is called radio, tv, communication and equipment and apparatus which represents the electronics and semiconductor industry. They grew by 9.4%. Third largest sector is the chemical sector, which grew at a slower pace of 4.4%.Philippine Manufacturing grew 2X faster than global average(2010-2013)POSTED BYBOBBY BATUNGBACALJULY 28, 2014 LEAVE A COMMENTInour post last July, 2013,(see the-philippine-manufacturing-sector-is-the-24th-largest-in-the-world)we showed how the Philippine manufacturing sector is growing vis-a-vis the other countries in the period between 2005and 2010. Recent data from UNIDO now allows us to compare our performance in the last three years.Did you know that in the period of 2010 to 2013, the Philippines manufacturing sector, (based on manufacturing value added, MVA)grew faster than the average growth rate of ASEANsmanufacturing sector? And that it grew more than2 timesthe global average? World, 208 countries(2010-2013):2.17% ASEAN, 10 countries(2010-2013):4.97% Philippines (2010-2013):5.77%For more info, go to UNIDOs database on Industrial Performance.http://www.unido.org/Data1/IndStatBrief/A_Industrial_Performance_MVA_GDP.cfm?print=no&ttype=A&Country=PHI&Group=ASEAN

Latest NSO Census reveals 57% more manufacturing companies in thePhilippinesPOSTED BYBOBBY BATUNGBACALJULY 13, 2014 2 COMMENTSTwo days ago, the NSOreleased a preliminary report on the2012 Census of Philippine Business and Industry Manufacturing Sector for Establishments with Total Employment of 20 and Over. Compared to the last census in 2010, data shows a signficantly larger manufacturing sector. The NSO attributes this tonewly listed manufacturing establishments in the 2011 and 2012 Updating of List of Establishments.57% more Establishments:Compared to 2010,the census shows thattheres 57% establishments,reaching 7,313 in 2012. Note that this does not include establishments with employment of 20 and below. Top Subsectors were Other food products, 908 establishments, 221% increase, Wearing apparel, 668 establishments, 192%, Plastic products, 454 establishments, 133%, Printing 365 establishments, 138%, Furniture, 315, 146%.21% more Employment:The same report showed a 21% more manufacturing employment compared to 2010. Top employers were Electronic components, Wearing apparel, Other food products, parts and accessories for motor vehicles.24% higher Value of output:Manufacturing establishments with TE of 20 and overgenerated a value output ofPHP4.3 trillion in 2012, 24.5 percent from the amount generated in 2010.For more details, go to the NSO report athttp://www.census.gov.ph/content/2012-census-philippine-business-and-industry-manufacturing-sector-establishments-total

Expansion of large manufacturers in thePhilippinesPOSTED BYBOBBY BATUNGBACALJUNE 21, 2014 LEAVE A COMMENT

Source:FuelandSands.comWere often asked by people from both private and government sector on whether manufacturing is really growing. In spite of all government statistics pointing to rapid industrial growth, the questions continue. I suppose, given the diversity of the sector, we cant possibly see the growth in each and every sector, but to help us appreciate the growth, let me list down recently announced expansion plans in the media, Ill just cite a few from the largest manufacturers in the Philippines: Petronnew refinery complete by 2015, Businessworld, May 20, 2014 Shell, Php12billion refinery, Philstar, Dec 3, 2013 Toyota mulls capacity expansion, ABS-CBN, May 4 Unilever, GMA7, May 14, 2014 Nestle to double size, Inquirer, May 23, 2014 Mitsubishi invest Php10billion in PH, May 19, 2014 JG naphtha cracker ready by 2014, Inquirer June 2013 Pepsi sets expansion, Business Mirror, Jun 2013 Coca-cola commits US$1.3B investment, Inquire, March 2014So were seeing both local and foreign investments from reputable companies in wide range of industries. Theres so much more companies who expand without much fanfare or media release.More to come!

Manufacturing grows 6.8% in spite of slower Q1,2014POSTED BYBOBBY BATUNGBACALJUNE 15, 2014 LEAVE A COMMENTI know this is post is quite late, but I wouldnt want to miss commenting on our manufacturing performance on Q1-2014. After an exhilarating growth in 2013,we saw a slowerquarter at the start of 2014.

The manufacturing sector grew by 6.8% (at constant prices) in Q1-2014. This growth is slower than last years 10.3%, but still faster than 2012s 5.4%. The data suggestthat the biggest drag to the growth was the food manufactures sector which contracted by -0.3% (at constant prices). This is significant becausethis sub-sector is the largest in manufacturing. Many reasons have been suggested by analysts and businessmenimpact of Yolandoon agriculture which is the main raw material of food manufacturers, the on-going truck ban in Manila, to name a few.For NSCBs report on manufacturing, go to:http://www.nscb.gov.ph/sna/2014/1st2014/2014mfg1.aspFortunately, in spiteof the slowdown in food manufactures, total manufacturing still managed to keep pace with the services sector which also grew at exactly 6.8% in the same period.

Source: https://philippinemanufacturing.wordpress.com/category/status-of-manufacturing/