Study: Phl needs policy reforms to capture foreign manufacturers

CEBU, Philippines -  A study conducted by the Philippine Institute for Development Studies recommended that the country should implement reforms to facilitate the expansion specifically of labor-intensive foreign manufacturing companies  that can create job opportunities for a greater number of  Filipinos.

The study,  entitled “Labor Policy Analysis For Jobs Expansion and Development”  authored by Vicente Paqueo, Aniceto Orbeta Jr., Leonardo Lanzona Jr. and Dean Gerard Dulay, emphasized that the Philippines will benefit from looking at those industries that China is becoming less competitive in.

“These are labor-intensive industries that employ millions of workers. The Philippines can choose those industries that are suitable to its super abundant labor endowments and in which China and other more advanced countries do not have a leg up over the Philippines,” it added.

Results showed that there is an immediate need for the Philippines to accelerate labor-intensive production, particularly the manufacturing of tradable commodities.

Facilitation means not just moderating minimum wage mandates and other restrictive labor regulations, but also pushing reforms that go beyond the responsibility of the Department of Labor and Employment,”  it said.

The authors highly recommended that reforms should effectively deal with critical binding constraints and counterproductive policies, including infrastructure underdevelopment, elevated cost of subsistence due to rice import policy, high cost of doing business, high energy cost, weak enforcement of contracts and protection of property rights, and confusing laws.

They reasoned that relative food price is one of the key drivers of minimum wages. “This could be reduced by reforming regulations on the importation of rice.”

Apart from increased labor-intensive manufacturing, the PIDS study also cited the need to improve investments in education and other human capital development and sustain total factor productivity gains.

“These objectives require, inter alia,  minimum wage reform which should be undertaken immediately while investors are looking for new places to locate labor-intensive production and the Philippine economy is getting another look as a potential destination,” it said.

Meanwhile, even if the government has yet to magnify its clear blueprint in advancing the policies and programs to encourage more manufacturing companies to set up plants in the Philippines, the Cebu Chamber of Commerce and Industry will put its hands on this concern, initially by partnering with the Department of Science and Technology and other government agencies, and make possible programs that will fuel interests of both local and foreign manufacturing companies to set up plant or expand here.

In an interview, CCCI president Ma. Teresa Chan expressed belief that there are several programs in the government that are designed to further develop the manufacturing sector, but most of them are under used.

While the country needs to entice big foreign manufacturing investors,  she said there is also an equal need to bring forth aggressive support for the local manufacturing sector in order to grow the other side of the economy.

In his recent visit to Cebu, National Economic and Development Authority  director general Arseño M. Balicasan said that the Philippines government is now on its serious bid to attract more manufacturing investors to stir a stronger demand for blue-collar jobs.

Balicasan admitted that amid the good credit ratings of the Philippines, and rising Gross Domestic Product, poverty is still not properly addressed because of imbalance economic opportunity distribution.

Last year, the country’s GDP was at 7.2 percent and is targeted to reach within the  7 to 10 percent in the next two years.

“We are a developed country in terms of structure, but poor in terms of people (standard of living),”  the secretary for socioeconomic planning said.

While the Philippines had been successful in providing job opportunities for white-collar jobs via the upbeat services sector, it was not able to strengthen the manufacturing side, in fact it lost its attractiveness to multinational manufacturing companies over the past few years due to “sweetheart” deals offered by  neighboring countries including China.

“The revival of manufacturing is vital,” said Balicasan adding the government is now updating the Philippines Economic Development Program   to prioritize six blue-collar generating industries such as agri-business, manufacturing, tourism, construction, logistics, as well as Information Technology.

The revival of attracting manufacturing investments to the Philippines is deemed crucial in order to balance the economic expansion, enabling the poor to participate the growth process, the secretary said. (FREEMAN)