DTI appeals for manufacturing sector support in Bayanihan 2

DTI Secretary Ramon Lopez (File Photo By Philippine Information Agency – Philippine Information Agency, Public Domain)

MANILA – The Department of Trade and Industry (DTI) appealed to Congress to provide support for the manufacturing sector under the Bayanihan 2.

As both Senate Bill 1564 and House Bill 6953 excluded the manufacturing sector for government assistance, DTI Secretary Ramon Lopez wrote a letter to House of Representatives Deputy Speaker Raneo Abu on August 9 proposing policy interventions for the sector.

Lopez noted that manufacturing and construction sectors accounted for 40 percent of the 16.5-percent gross domestic product decline in the second quarter of the year, adding that manufacturing recorded the largest decline among all economic sectors.

The manufacturing sector is also facing other challenges such as decline in demand, decline in workforce productivity and cost escalation, and foreseen intense competition from imports.

This was also echoed by Semiconductor and Electronics Industry in the Philippines Foundation, Inc. (SEIPI) President Dan Lachica in his letter to Senate President Vicente Sotto III.

“The electronics industry has been significantly crippled by the Covid-19 pandemic. Exporters have not been able to operate at full capacity due to global and local supply chain disruptions, reduced manpower due to concerns with infection and lack of public transportation, as well as the rise of Covid cases, which necessitated tighter quarantine procedures,” Lachica said.

He noted that the electronics industry, which accounts for more than 60 percent of the country’s merchandise export, contracted its revenues by 20 percent from the USD43.3 billion in 2019.

SEIPI also called on Congress to include DTI’s proposed policy interventions in Bayanihan 2 to prevent companies from shutting down and displacing workers.

Policy proposals

Lopez proposed for domestic preference for government purchase including personal protective equipment (PPE) and other health-related products, “Build Build Build” and other infrastructure projects of national and local governments, modernization of public utility vehicles with Covid-19 proofing, and modernizing and expanding telecommunication infrastructure to better support work-from-home and blended learning arrangements.

“Government expenditure to effectively stimulate the economy should create demand for the domestic manufacturers. We should maximize the use of government funds to save Filipino jobs and not foreign jobs,” Lopez added.

He also sought incentives for those expanding the domestic value chain like adoption of inclusive business models such as, but not limited to, sourcing from micro, small, and medium enterprises (MSMEs) and marginalized communities.

Lopez urged to enhance perks for businesses locating or relocating outside Metro Manila and one year fiscal incentives for all companies that will not lay off workers or will maintain at least 90 percent of workforce in 2020 and 2021.

He also requested for other support such as facilitating land conversion and liberalizing requirements for export zone proclamations for industrial and service facilities, easing nationality restrictions under Executive Order 226, liberalizing the use of satellite services, and unleashing the employment generation potential of business process outsourcing (BPO) sector under work-from-home arrangements.

He urged Congress to allocate a “modest budget” of PHP50 million for efforts enabling industrial sectors to better respond and adapt to Covid-19.

With the PHP50 million budget, Lopez eyes PHP15 million for the establishment of testing laboratory for PPE.

“This is to assist domestic manufacturing firms in acquiring the required certifications to produce and market PPEs and, equally important, to ensure the quality of imported PPEs used by our medical frontliners and enforcers of health protocol procedures,” he explained.

The PHP30 million will be allotted as subsidy for MSME construction companies to finance polymerase chain reaction (PCR) testing.

DTI also eyes PHP5 million for Board of Investments (BOI) to offer free PCR testing and sponsor two-day hotel quarantine while waiting for test results to top-level executives and technical officials of prospective foreign investors.

“[T]here is an urgent need to include the abovementioned proposed provisions in Bayanihan 2 given the immediate objective of arresting economic recession and reinvigorate the economy through revitalizing consumption and enhancing production capacity,” he said.