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Philippine manufacturing

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The Philippine manufacturing sector recorded decreases in both volume and value in September 2019, its 10th successive month of decline, according to the Philippine Statistics Authority (PSA).

Based on the preliminary result of PSA’s Monthly Integrated Survey of Selected Industries (MISSI), the Volume of Production Index (VoPI) fell 3% in September 2019 from the 1.31% growth in the same month last year. The Value of Production Index (VaPI) likewise dropped, contracting 2.3% from the 3.2% increase in September 2018.

The slowdown in VoPI was due to declines in eight major industries, of which five had two-digit decreases, namely, furniture and fixtures (-30.1%), leather products (-22.3%), petroleum products (-17.3%), miscellaneous manufactures (-13.5%), and electrical machinery (-10.4%).

Nine out of the 20 major industry groups registered annual declines in VaPI in September 2019, with two-digit decreases noted in leather products (-28.0%), petroleum products (-25.2%), electrical machinery (-14.6%), and miscellaneous manufactures (-11.9%).

Despite the total manufacturing index recording negative growth in September 2019, the National Economic and Development Authority (NEDA) said manufacturing subsectors have shown improvements.

“Despite the slowdown in the overall performance of the manufacturing sector for September 2019, we have observed improvements in various subsectors which can be attributed to the upcoming holiday season alongside lower inflation, stable exchange rate, and lower interest rate,” said NEDA undersecretary for regional development Adoracion Navarro in a statement.

Navarro cited positive growth in beverages; tobacco products; basic metals; fabricated metal products; wood and wood products; machinery except electrical; chemical products; paper and paper products; printing; and rubber and plastic products.

To boost the manufacturing sector over the near term, Navarro said the government will need to push for high-impact and implementable infrastructure projects under the “Build, Build, Build” program.

She added that this will sustain demand for construction-related manufactures as more infrastructure flagship projects reach the construction phase. Moreover, she said the program will contribute to more employment and higher disposable income, resulting in increased demand for consumer goods.

“We need to sustain infrastructure spending to achieve the national government’s target disbursement performance for the year. An extension in the validity of the 2019 budget, and the timely passage of the proposed 2020 national budget should be considered to avoid delays in the implementation of construction-related projects and activities,” Navarro said.

Citing the need to strengthen linkages between manufacturing and agriculture, Navarro said the government must also scale up efforts to improve shared service facilities. This will help farmers consolidate and engage in higher value-adding activities, which can also bolster manufacturing.

Regulatory bottlenecks in the manufacturing sector will also have to be addressed, Navarro said.

“Turn-around periods for processing and issuing clearances, permits, and other required certifications have to be shortened. Continuous investments on ICT connectivity and innovation are also needed,” she added.

Meanwhile, the upcoming holiday season and strong macroeconomic conditions are seen to boost the performance of the manufacturing sector in the last quarter of 2019.

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