Revival of labor-intensive manufacturing sectors urged

THE Philippines should aggressively regain and expand low-cost and labor-intensive manufacturing to generate much-needed employment in the country and enhance inclusive growth.

A policy brief on manufacturing released at the Arangkada Philippines Forum identified key product sectors that need strengthening, including food and beverages; garments, footwear, leather goods and textiles; and furniture, toys and household items.

“This can be accomplished by harnessing the country’s large pool of workers through introducing special zones enabled with a combination of supportive government policies to make the zones attractive and competitive sites for both domestic and foreign manufacturing investors,” it said.

To attract more manufacturing investors to locate in the special zones, the paper proposed the need to provide special or low electricity rates and the like, in addition to existing incentives offered by the Philippine Economic Zone Authority (Peza).

Targeted government training programs, low-rent standard factory buildings, low-cost long-term land leases and relaxed policies on hiring and firing are also imperative, it noted.

The paper said the proposed industrial scholarship program of the Technical Education and Skills and Development Act (Tesda) could generate a large pool of trained new workers.

The program prepares new high school graduates apprenticeships of up to two years in low-cost, laborintensive manufacturing firms.

“Domestic/export enterprise zones for targeted sectors should be located outside major urban areas (of Metro Manila and Cebu) to provide employment in rural areas as well as attract urban unemployed to new productive labor zones,” it added.

The policy brief said publicprivate partnership (PPP) projects are also important in attracting real estate industrial zone development companies to invest in these zones, and providing factory space at low rent for several years to target lowcost, labor-intensive manufacturing firms.

It noted that reviving laborintensive manufacturing, while also expanding high value-added manufacturing, could create more employment in the sector.

The paper stressed that the twopronged approach targets to create an average of 500,000 new jobs a year in manufacturing starting next year for a total of four million by 2022.

It also aims to attain 30 percent of gross domestic product (GDP) share of manufacturing by 2022.