Saturday, June 23, 2012

‘PH needs to beef up manufacturing’

THOUGH the business process outsourcing industry has been hailed a success in generating quality employment and continues to have a high growth rate, the National Economic Development Authority (Neda) believes there is still a need to strengthen the country’s manufacturing performance.
Assistant Neda 7 Director Efren Carreon, said during the Micro, Small and Medium Enterprise Development Council meeting that the building of manufacturing sector will bring in more inclusive growth.
While he acknowledged that the BPO industry is one of the key economic drivers of Central Visayas, which posts an average growth rate of 46 percent annually, Carreon said the jobs available are limited to those who are well-educated.
He pointed out that those in dire need of work are in poverty and have had no access to education and that the services sector has not been able to create enough jobs for the lesser educated.
He said manufacturing brings “highest inter-sectoral linkages” in the economy and that it will pave the way for higher, sustained and inclusive growth.
Citing a study from the Asian Development Bank, Carreon said the Philippines could learn tips in manufacturing from nations like South Korea, Malaysia and Singapore.

In South Korea, large-scale enterprises began subcontracting with small and cottage producers, which allowed for industrial policies to integrate SMEs.
Malaysia and Singapore established a local industries upgrading program, which encouraged transnational companies to “adopt” a group of SMEs and transfer their technologies and skills to them. Experts got to work with the adopted firms to help upgrade the production management capabilities to meet international standards.
Of the over 700,000 registered MSMEs in the country, only 14.4 percent are engaged in manufacturing, figures from the 2010 list of establishments of the National Statistics Office show.
Food and beverage manufacturing comprises the bulk of these enterprises, accounting for 47 percent. Wearing apparel comes in second at 16 percent while fabricated metals follow at 12 percent. Electronics and machineries make up 10 percent while furniture make only three percent.
Still, Carreon is positive about the BPO growth, given the high compensation jobs it provides.
In 2008, the average monthly compensation of a BPO employee reached P27,000, the highest being paid as much as over P66,000 for those in software publication and the lowest at P12,000 for medical transcription activities.
Cebu’s outsourcing revenues reached P1.2 billion last year and Carreon said the industry will continue to grow with the high demand for outsourcing and the accolades Cebu and Dumaguete have been getting in the realm of outsourcing. Cebu has been placed in the Tholons list of top 10 emerged cities for outsourcing while Dumaguete has been identified as one of the top new wave cities for outsourcing locations.

Growth drivers
There are over 100 BPO companies in Cebu and over 12 in Negros Oriental.
After BPO, Carreon also identified tourism, real estate and retail trade as the remaining growth drivers of Central Visayas’ economy.

He noted that booming tourism activities pave the way for other businesses such as banking, restaurants, accommodation and transportation to thrive.
As for real estate, he largely attributed its success to remittances from overseas Filipino workers. He said that 30 to 40 percent of remittances are invested in real estate. In 2011, remittances grew 7.2 percent to $20.117 billion. For the first quarter of this year, he said remittances reached $4.842 billion.

The successes of BPO, tourism and OFWs have been attributed to the growth of the fourth industry--retail trade. He said the influx of foreign and domestic tourists, steady flow of remittances and the growing outsourcing industry has paved the way for the expansion of a consumer base with a high purchasing power.