Phiippine manufacturing up 4.7% in May

The Philippine manufacturing industry has sustained its growth in May as shown by the 4.7 percent hike in the value of production index (VAPI).
The National Statistics Office (NSO) reported in its monthly integrated survey of selected industries a slowdown in production values in furniture and fixtures and publishing and printing.
However, a three-digit increase in production values were exhibited by transport equipment and footwear and wearing apparel sectors, registering a growth of 128.8 percent and 121.8 percent, respectively.
On the other hand, on a monthly comparison, VaPI grew to 4.6 percent in May 2012, showing an improvement from its previous month’s decline of 9.6 percent. This was contributed by 18 major sectors, with two-digit increase in footwear and wearing apparel (23.1%), fabricated metal products (20.0%), machinery except electrical (14.7%), petroleum products (13.4%) and leather products (12.5%).
On a year-on-year basis, Volume of Production Index (VoPI) likewise posted a minimal increase of 3.1 percent in May 2012. This was accounted for the three-digit growth in production output of footwear and wearing apparel (124.7%), transport equipment (118.2%) and furniture and fixtures (103.4%).
On a month-on-month basis, VoPI recovered as it posted an increase of 4.9 percent in May 2012 from the previous month’s drop of 9.1 percent.
Among the 16 major sectors that reported increase in production output, five major sectors significantly contributed to the growth — footwear and wearing apparel (23.1%), fabricated metal products (22.2%), petroleum products (19.2%), machinery except electrical (13.8%) and leather products (12.5%).

Alternative dispute mechanisms required for all projects

Philippine national and local implementing agencies are required to include the provision on the use of alternative dispute resolution (ADR) mechanisms in all contracts involving projects with the private sector.
 
President Benigno S. Aquino III signed recently Executive Order (EO) 78 which requires all contracts involving public-private partnerships (PPP), build-operate and transfer projects, joint venture agreements entered by the national and local government units with private firms to include provisions of ADR mechanisms.
 
The parties are given the choice to use all available ADR mechanisms, allow them complete freedom to choose the venue and forum to govern disagreements that might crop up, as well as the rules and procedures to be followed to resolve dispute cases.
 
EO 78 stressed the need to provide a more inviting climate for private investors by ensuring that the resolution of disputes arising out of a contract is inexpensive, less tedious, and simple exercise especially for large-scale, capital-intensive infrastructure development contracts.
 
“We see EO 78 as a major development in our continuing efforts to improve the PPP policy framework and ultimately send a positive signal to investors that we are initiating moves to make business in the Philippines easier, ” said PPP Center Director for Policy Formulation, Evaluation and Monitoring Atty. Sherry Ann Austria.
 
The use of ADRs has been previously promulgated under Republic Act No. 876 known as the Arbitration Law and Republic Act No. 9285 or the ADR Act of 2004.
The Supreme Court also circulated the Special Rules of Court on ADR in 2009, which encourages the use of ADR, particularly arbitration and mediation as an effective resolution to disputes.

Faster Philippine economic growth seen in second quarter

Higher electricity sales growth, easing inflation rate, improving exports, better agricultural output and the creation of a million jobs are pointing towards an even faster output growth in the second quarter of 2012 from the 6.4% gross domestic product (GDP) growth posted in the first quarter.
 
The latest report of FMIC and UA&P capital market research predicts that with better agricultural harvests and more infrastructure spending, GDP growth in the second quarter to even exceed the 6.4% expansion recorded in the first quarter.
 
“The upgraded outlook for the second quarter GDP expansion is more remarkable given the slowdown of the U.S. economy and China and the lingering banking and debt crisis in the Euro-zone.”
 
“The outcome was fairly positive with no Greece exit from the Euro-zone followed by some concessions by Germany in favor of growth for beleaguered Spain and Italy,” the report noted.
 
The report expects an even better GDP growth performance in the second quarter with Meralco electricity sales rising by 11.8% in May from 8.3% recorded in April.
 
With the economy’s strong rebound in the first quarter, labor employment also increased by  one million for the year ending April 2012.
 
“Despite an increase in the labor force participation rate to 64.7% from 64.2% a year ago, the labor force survey (LFS) of the National Statistics Office (NSO) showed a decline in the unemployment rate to 6.9% down from 7.2% in January 2012 and April 2011 even as total labor force expanded by 2.5% over the same period.”
 
Inflation would likely average 2.9% as compared to year-on-year growth as well as quarter-on-quarter mainly due to the unabated fall in oil price for the whole of June, the report said.
 
“Exports are likely to average a 5% growth in the second quarter with slightly better prospects in the second semester. The latter period will be characterized by domestic demand stimulus in China and election spending in the U.S.”
 
FMIC and UA&P forecasts that monetary policy to remain neutral for the rest of the year, even though the BSP has scope and need for further easing in order to narrow the differential between domestic and foreign interest rates.
 
With favorable conditions in the financial markets, and stable gains in remittances from overseas Filipino workers (OFWs), the peso-dollar rate will have an appreciation bias for most of the second semester, the report added.
 
                                                                            

Philippines to improve competitiveness ranking

The National Competitiveness Council (NCC) is optimistic that the Philippines would move to 30 or higher in the world competitiveness ranking by 2016.

NCC private sector co-chairman Guillermo Luz said that country started inching up last year after slipping down the ladder for over a decade.

In four more years, Luz targeted that the Philippines will have moved up to number 30 or better from its 75th rank last year out of 142 countries that were rated by WEB Global Competitiveness report. In that report, the country was number seven out of eight rated ASEAN countries, beating only Cambodia.

In the ASEAN region, Luz targeted the ranking of the Philippines to pole-vault from number seven to either second or third overall.

In the International Finance Corporation (IFC) doing business survey, Luz boldly projected that the country will jump to number 50 or higher from its present rank of number 136 out of 183 surveyed countries. It landed in the ranks of the bottom-notchers.  The IFC is the investment arm of the World Bank.

The Philippines fared poorest in the area of doing business, Luz said, in five major areas led by corruption, inefficient government bureaucracy, inadequate infrastructure, policy stability and high tax rates.

In that survey, Singapore was rated number one in the world. Thailand came in number 17, Malaysia number 18, Brunei number 83, Vietnam number 98, and Indonesia number 129. The Philippines was ranked number 136 or only two notches higher than Cambodia at number 138.

All of these areas fall in the general category of governance which has emerged as the top priority of the Aquino administration.

TESDA gets US$3-M grant from KOICA

The Korea International Cooperation Agency (KOICA) will provide US$3 million grant to fund the renovation of existing training center facilities and construction of new buildings for the  Technical Education and Skills Development Authority (TESDA).

KOICA resident representative Kim Jinoh and Sec. Emmanuel Joel Villanueva signed an agreement for the Phase II Project of Upgrading and Enhancement of Training Programs of the Regional Training Center – Korea Philippines Vocational Training Center (KPVTC) in Davao City.

The RTC-KPVTC Davao, a well-known TESDA managed vocational training center,  will be establishing an integrated training provision to respond to the agri-mechanization thrust and manpower requirements of Davao and Mindanao Region  promoting a value proposition of KORPHIL — Key Organizational Response for the achievement of Productive and Healthy Industries and Liberating employment.
The grant would also cover  two incubation centers, a multi-purpose hall, a Korean Language center, the provision of equipment, training of Filipino officials and staff in Korea, and the dispatch of Korean experts for the transfer of operational skills at the center.
“The Phase II Project of KorPhil Vocational Training Center that will rise is Korea’s way of continuously helping replicate our success in socio-economic development in the Philippines,” said Jinoh.

Chemical manufactuers ask government help

The Philippine chemical manufacturers are asking for government support to keep foreign exchange rate competitive and help boost the manufacturing industry.

PHILEXPORT trustee for the chemical sector Oscar Barrera stressed that exporters would earn more revenues with weaker currency, as locally-produced goods could be sold cheaper as compared to imported goods. 

 
Millions of Filipinos working abroad, on the other hand, could send more money to their families and relatives in the country.  “They have families here who will have more capacity to pay for goods and that will stir up the economy,” adding that they prefer a P44 to the dollar level against the current P42 level.

To improve the country’s trade competitiveness, Barrera also underscored the need to rationalize the rules and laws affecting business.

He cited the perennial problem of local government ordinances which allow local governments to tax even trucks that pass through their barangays or cities. These add to the cost of doing business and distribution around the country, said Barrera.

 
Barrera urged the government to provide the manufacturing companies using locally-made products a rebate equal to the tariffs that would have been paid if the goods are imported.

With adequate support, he expressed optimism that manufacturing, particularly the chemicals industry could grow as much as 15 percent a year compared to only three to five percent it posted in 2011.