Domestic manufacturing expands 31% in April

The domestic manufacturing sector grew at a faster 31.1 percent pace in April as producers cash in on high consumer demand, high commodity prices, and a stronger dollar, the National Economic and Development Authority (NEDA) said yesterday.

The Philippine Statistics Authority (PSA) reported that factory output, as measured by the Volume of Production Index (VoPI), rose significantly from 0.1 percent in April 2017. The index has been registering positive growth since January.

Solid expansion in output were seen in printing, petroleum, miscellaneous manufactures, machinery, textiles, beverages, food, electrical machinery, non-metallic mineral products, chemicals, leather products, rubber and plastic, fabricated metals, wood and wood products, and tobacco.

The Value of Production Index (VaPI) for manufacturing, meanwhile, grew 31.7 percent in April, reversing the 1.6 percent decline in April 2017.

Thus, the three-month moving average growth rate of both indexes registered at 23.3 and 23 percent, respectively.

NEDA said higher government spending on infrastructure in the months leading to April sustained the growth in construction-related manufactures such as cement.

NEDA Undersecretary Rosemarie Edillon said increased production capacity among domestic manufacturers could help ease inflationary pressure amid increased demand as Filipinos receive higher take home pay following the implementation of the new tax reform law.

“We’ve been talking about too much money chasing fewer goods. So we’re seeing goods coming in. We’re seeing increased production,” she said.

Sustaining growth in production capacity among firms, she said, is also important to sustaining price stability amid high demand.

Edillon said the recentlysigned Ease of Doing Business and Efficient Government Service Delivery Law and the second package of the yet to be passed Tax Reform for Acceleration and Inclusion (TRAIN) are both capacitybuilding initiatives to help the manufacturing sector. The first streamlines the processing of transactions with the government, while the second introduces corporate income tax cuts alongside the rationalization of incentives.

“We are giving them (manufacturers) the opportunity and the instruments to expand capacity. We’re hoping they will take it,” she said.

She also noted that the central bank has also trimmed the reserve requirement for banks to free up more cash in the economy.

“The Bangko Sentral is also reducing its reserve requirement ratio so there is capital they can also take advantage of. So we hope that is how they will respond to increased demand, that they expand capacity,” said Edillon.