With the Philippine economy posting an unprecedented 6.6 percent growth in 2012 (Manila Bulletin, February 1, 2013), there is reason to believe Canadian Prime Minister Stephen Harper’s declaration that the country can now be considered “an emerging Asian tiger.”
In addition, business news site Market Watch of Dow Jones & Co. has christened the Philippines and Indonesia as “new tigers” with the potential to impact more on global growth for years to come while the developed world struggles with excess debt, and traditional regional heavyweights China and India lose momentum.
Amid these projections, it is my opinion that manufacturing should be given the right impetus since it is a key sector in ensuring that the direction of the country’s growth shall be inclusive. Manufacturing provides alternative jobs to the agricultural labor force, thus addressing rural unemployment and mitigating the further exodus of Filipino talent in favor of foreign markets.
Manufacturing, too, has a high multiplier effect – any increased production in one industry results in increases in production in other industries. It is necessary to develop these strong linkages within and among industries to build a self-sustaining manufacturing base in the country that would be less dependent on imports.
But to ensure long-term and sustainable growth in manufacturing, the government needs to take an active role in promoting it as a key sector for both local and foreign investments.
This means providing subsidies and incentives to industries where the Philippines can develop competitive advantages, improving infrastructure and fast-tracking pertinent Private-Public Partnership projects.
The government also needs to support important sectors that provide key inputs to manufacturing such as labor and power, which are two primary considerations of big-ticket investors.
Talking about the power sector, it is reassuring to note that some private companies have been doing their part in helping key industries accelerate business activities.
A case in point is Meralco which, according to my sources, has been undertaking various initiatives to facilitate business operations which have contributed to a 1% growth in the company’s industrial customer count or net additions of 80 customers – most of whom are from the small and medium enterprise segment.
In one initiative, for instance, I read in the papers that Meralco is strengthening its core business by allotting R44 billion from 2012 to 2015 to upgrade the distribution infrastructure throughout its franchise areas, including the entire Metro Manila.
This could lead to improved capacity and reliability of the distribution network (which includes power lines and substations) so it can deliver quality power to end-users, particularly in areas with a clustering of high-power consumption such as business districts and special economic zones.
Such increased capital expenditure is meant to improve system performance, which should lower system loss and translate to savings for customers. Meralco’s system loss rate was recorded at 7.31 last year, down from 9.28 in 2008.
Meralco also strives to secure the best rates for its customers. The company recently got the ERC’s nod for Power Supply Agreements with five power generation companies. The implementation of these new contracts can result in lowering the generation charge component of the total electricity rate by an estimated average of 19 centavos per kwh.
I’m no great fan of Meralco but there’s enough reason for me to laud the power utility for its various initiatives that enable businesses, particularly manufacturing, to operate more efficiently and contribute better to further boost the Philippine economy’s position as a new tiger in Asia.