THE GOOD news: Net foreign direct investment (FDI) inflows increased by 21.4 percent to a record high $10 billion in 2017 compared to $7.9 billion in 2016.
According to the Bangko Sentral ng Pilipinas (BSP), investors continue to view the Philippines as a favorable investment destination on the back of the country’s sound macroeconomic fundamentals and growth prospects.
Another good news: FDIs in manufacturing accounted for $1.15 billion of total FDIs in 2017, and represented an increase of 244 percent compared to $334.25 million posted in 2016.
The BSP said manufacturing had been the major destination for foreign direct investments last year, together with gas, steam and air-conditioning supply, real estate, construction and wholesale and retail trade.
This trend is also reflected in trade statistics. According to the Philippine Statistics Authority (PSA), imports of raw materials and intermediate goods (which are used in the manufacturing subsector) comprised the largest share of 40.9 percent of total imports in January 2018. The amount went up by 14.9 percent to $3.49 billion in January 2018 from $3.04 billion in January 2017.
Semi-processed raw materials, valued at $3.12 billion, accounted for 36.6 percent share of the commodity group. Import of this commodity increased by 20.4 percent from the $2.59 billion posted in January 2017.
Imports of capital goods in January 2018 amounted to $2.73 billion, accounting for a 32.0 percent share of the total imports. It went up by 16.9 percent over the previous year’s import value of $2.33 billion.
This is a very pleasant thing to note, not only because of the contribution of manufacturing to economic growth, but also to employment. I want to point out that while we are still developing our industrial capacity, manufacturing is already a very big employer.
Based on the latest Labor Force Survey (LFS), the country’s employment rate stood at 94.7 percent as of January 2018. Workers in the services sector comprised the largest proportion (55.9 percent) of the population who are employed.
Workers in the agriculture sector comprised the second largest group making up 26.0 percent of the total employed in January 2018, while workers in the industry sector made up the smallest group registering 18.1 percent of the total employed.
In absolute terms, the number of employed Filipinos as of January 2018 totaled 41.455 million, with the services sector accounting for 23.173 million workers, agriculture 10.778 million and industry 7.503 million.
The January 2018 LFS results also showed that in the industry sector, workers in the construction and manufacturing subsectors made up the largest groups, accounting for 48.2 percent and 47.0 percent of the workers in these subsectors, respectively.
These translate to 3.617 million construction workers and 3.526 million workers in the manufacturing subsector.
That compares well with the 1.7 million estimated number of workers in the business process outsourcing (BPO) industry in 2017.
Countryside development, including industrial dispersal, has been a primary policy thrust of President Rodrigo Duterte since he assumed office in 2016.
The government’s massive infrastructure development program, which is in line with that policy, will open up new areas in the provinces where manufacturing investments are expected to come.
The worsening congestion in Metro Manila is also expected to encourage investors to look for alternative locations for their factories.
Also, the Philippines continues to enjoy investor confidence. According to a US News & World Report published early this month, the country has continued to attract investments despite the overall decline in inflows to other countries in Southeast Asia.
Based on a survey of more than 6,000 business decision makers, the report said the Philippines is the best country to invest in 2018, and is expected to continue receiving FDIs from powerhouse countries like China, which are looking for competitive labor in developing nations.
In its study, the US News & World Report focused on the following attributes of a country: entrepreneurship, economic stability, favorable tax environment, innovation, skilled labor, technological expertise, dynamism and corruption.
If the upward trend in FDI inflows in manufacturing continues this year, then we can say that, finally, we’re getting closer to our goal to become an industrialized nation.
This is what we need for a more balanced development. Manufacturing offers employment opportunities to workers who have not finished college education, which would have barred them from getting white-collar jobs. Yet jobs in the manufacturing subsector are generally fairly compensated and provide security of tenure.
My point is, manufacturing helps the economy provide employment opportunities across all sectors of the population, so that no Filipino who wants to make a decent living is left behind.
Isn’t that we all want?
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This piece first came out in Business Mirror on March 26, 2018 under the column “The Entrepreneur.” For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
