Aerospace

The Philippine aerospace industry aims to make the country a major hub for manufacturing of original equipment manufacturing (OEM) parts and allied services, such as maintenance, repair and overhauling (MRO), for the global commercial aircraft industry.

About Aerospace

Aerospace manufacturing is a high-technology industry that produces aircraft, guided missiles, space vehicles, aircraft engines, propulsion units, and related parts. The industry is comprised of government and private industries that perform the institutional roles of end-users, suppliers and manufacturers. The value chain consists of the government and airline companies as primary customers; OEM companies, a tiered chain of suppliers and manufacturers; companies that perform MRO of equipment and parts; and the consuming public as aircraft passengers.

Currently, the domestic aerospace industry has an estimated .15% share of 2013 GDP, and a projected 0.57% share of 2022 GDP projection given a positive program intervention spearheaded by the government. There are currently three tier 1 suppliers in the country located in economic zones. The industry is under the supervision of Aerospace Industries Association of the Philippines.

Among the industry’s strengths are:

Labor Force and Strategic Location. A pool of young, relatively cost-competitive, English-proficient, highly trainable and fairly knowledgeable manpower that makes up the aerospace-specific labor force, which is in turn supported by a chain of aerospace and aviation schools. At the same time, Philippines is located in a strategic location and could make the country serve as a potential vital link in the aerospace industry value chain.

Growing Commercial Airlines. The growth and expansion of domestic airlines such as Philippine Airlines (PAL), Cebu Pacific (CEB), and ZestAir are contributing to the development of the industry. PAL entered into a $7-billion contract with EADS (Airbus) in 2011 to acquire 34 units of A321ceo, 10 units of A321neo, and 10 units of A330-300s, and $2.5-billion to exercise an option to acquire 10 more units of A330 aircraft. On the other hand, CEB in 2011 announced that it was purchasing 30 units of Airbus A320neo and 7 units of Airbus 320 for $3.8-billion to more than double its fleet by 2021 and expand its international routes.

Presence of Suppliers and Linkages. Presently, three major original equipment manufacturing (OEM) are located in the country: Moog, which manufacture actuators; B/E Aerospace, which manufactures galleys; and JAMCO, which manufactures airframes and sub-assemblies. At the same time, the creation of the Association of Aerospace Industries of the Philippines (AIAP) is a positive factor in solidifying the initiatives for the growth and development of the aerospace industry because it presents a collective voice in helping shape the government policies and incentives affecting this sector.

Growth in Business Aircraft. Although the country lagged behind its regional neighbors in the growth of business aircraft (65% growth rate in the Asia-Pacific region), it grew by 45% over a ten-year period with 63 business aircraft in 2012 compared to 46 in 2002. The region increased from 947 units in 2002 to 1,566 units in 2012. Business aircraft are corporate jets that are not engaged in public transportation services. The country can capitalize on this trend by capturing more market-share in the overall demand in the region.

 

Facts and Figures

  • Currently, the domestic aerospace manufacturing industry has an estimated 0.15% share of 2013 GDP, and a projected 0.57% share of 2022 GDP.
  • The industry contributes 2,200 in direct-employment, generating an estimated $10 million as salaries of direct and allied workers.
  • In 2013, the industry contributed $2 million as income tax from compensation.
  • The industry has export projections of $1.5 billion in the next 10 years.

 

Policies

Philippine Aerospace Development Corporation

The Philippine Aerospace Development Corporation (PADC) operates under the supervision of the Department of Transportation and Communications (DOTC), and is mandated under P.D. 286 (as amended by P.D. 696), to undertake all development projects for the establishment of a reliable aviation and aerospace industry, including but not limited to the following:

  1. Design, assembly, manufacture and sale of all forms of aircraft and aviation /aerospace devices, equipment or contraptions, studies or researches for innovations and improvements there upon.
  2. Development of local capabilities in maintenance, repair, overhaul (MRO), and modification of aerospace and associated flight and ground equipment and components thereof in order to provide technical services and overhaul support to: government agencies owning aerospace equipment, the Philippine Air Force / foreign air forces , the national airline / foreign airline companies, and to the aviation industry in general.
  3. Operation and provision of air transport services, whether for cargo or passengers on a scheduled or charter basis, on domestic and/or international scale

IPP 2014-2016

The manufacture of aerospace parts and components, and support activities (e.g., R&D activities, research/testing laboratories, and technical vocational education and training institutions) is among the preferred activities listed in the IPP.

The maintenance, repair and overhaul (MRO) of aircraft is also among the preferred activities listed in the IPP. This covers R&D activities and the establishment of research/testing laboratories, Centers of Excellence and technical vocational education and training institutions in support of the manufacturing of aerospace parts and components (or maintenance, repair and overhaul of aircraft).

 

Programs

Project CREAMM (Clustering of the Regional Enterprises of CAR for Agri-Industrial Machinery and Parts Manufacturing)

Project CREAMM aims to improve the productivity and competitiveness of the metals and engineering MSMEs in the Cordillera Administrative Region (CAR) by organizing them into clusters and raising their competency level. This enables them to cater to the equipment and parts requirements of the Moog Controls Corporation, which has determined that tapping a local supply chain would improve its overhead costs and facilitate the company’s expansion plans.

Started in 2012, the project runs for a three-year period to support high precision manufacturing and equip and assist MSMEs to acquire aerospace standards and certification through trainings.

Industry Development Program

The aerospace industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its recent activities are:

  • 2nd National ASEAN Single Aviation Market (ASAM) Convention. The industry featured Tier 1 Aerospace Original Equipment Manufacturers (OEM) locators’ profile and future market expectations to the local aviation industry and members of the academe. Hosted by CAAP in September 2014, the Convention also showcased manufactured products of the aerospace locators.
  • Compliance with AS 9100. AS9100 is a widely adopted and standardized quality management system for the aerospace industry. AIAP and the DOST-MIRDC is targeting to have at least 6 member companies compliant with AS 9100 by 2016 with training assistance from DOST. In 2014, AIAP had five (5) member companies participate in the training and are in the process of documenting the requirements for certification.
  • MOU between AIAP and DOST-MIRDC. During the DOST Metals and Engineering (M&E) Week in June 2014, an MOU between AIAP and the DOST-MIRDC was signed to consolidate the MIRDC’s commitment to push for the competitiveness of the sector in light of the ASEAN economic integration, which includes the establishment of the Tool and Die Solution Center and the provision of capacity building activities to companies and its labor force. Through the MOU, the industry was included in the DOST’s Makibayan Program.

 

Champions

Aerospace Industries Association of the Philippines (AIAP)

Mr. John T. Lee
President

2nd Floor, Industry & Association Wing,

MIRDC Compound, Gen. Santos Ave.

Bicutan, Taguig City

Tel. No (+63) 918-888-0100 or (+63) 919-999-8303

E-mail address: [email protected]

Website: www.aiaphilippines.org

Board of Investments (BOI)

Mr. Amelito Umali
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City, Philippines

Tel. No. (+632) 897-6682

Email: [email protected]

 

Automotive

The automotive manufacturing industry aims to make the Philippines a competitive manufacturing base of motor vehicles and parts and components, serving both the domestic and export markets, and a global hub for automotive-related human resource development and process outsourcing.

The industry seeks to have a 70:30 CKD:CBU market share ratio by achieving full capacity utilization and achieving a 150% increase in nationwide capacity by 2022.

Its objective is to generate an additional P41 billion in investments, P151 additional production in related in related sectors, create 70,000 new jobs, and resume export operations.

For its development, the industry recommends the application of selective but wide application of fiscal incentives (to offset its cost handicaps) and implementation of industry-wide non-fiscal policy support measures (to nurture the domestic market).

 

About Automotive

The Philippine automotive manufacturing industry covers the assembly, importation/distribution, rebuilding of motor vehicles, and the manufacturing of automotive parts and components. It consists of highly diverse sectors such as metal, electrical, plastic, rubber, and composite materials. It is also characterized by heterogeneous firms with a few large, foreign-owned and modern firms (Toyota, Mitsubishi, Honda, Nissan and Isuzu) operating side by side with many small underdeveloped firms.

The industry players are serviced by the following industry associations: the Philippine Automotive Federation, Inc. (PAFI), the industry’s largest umbrella organization and recognized as the industry’s voice in international forums such as the ASEAN Automotive Federation and the APEC Auto Dialogue; the Chamber of Automotive Manufacturers in the Philippines (CAMPI), whose members include a core of manufacturers and second tier importers/distributors; and the Philippine Automotive Competitiveness Council, Inc. (PACCI), composed of four brands whose domestic operations account for 90% of vehicles manufactured in the Philippines and the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP).

There are currently fifteen vehicle manufacturers with operating plants in the country, seven of which are equipped with electro-deposition painting systems. There are a total of 272 parts and components manufacturers in the country. The industry has an annual capacity of 250,000 units, all vehicle types included, produced by plants rated as compliant with global standards and certified by the International Standards Organization (ISO). In 2011, the automotive industry generated production valued at P368-billion equal to 4% share in GDP.

In 2013, the industry estimates that it has directly employed 8,000 workers in automotive manufacturing, whereas approximately 68,000 jobs have been generated in auto parts manufacturing. An estimated 340,000 are employed in auto-supporting industries.

Among the industry’s strengths are:

Strong Industrial Linkages. Well-structured and with its network of production facilities, the automotive industry is one of the key drivers of the Philippine economy. Allied supporting industries encourage strong backward linkages such as capital-intensive production and testing equipment, machinery and equipment, dies and moulds, metal stamping, die casting and machining. Moreover, forward linkages in the forms of dealerships make a seamless flow of good and services in the industry by performing the main marketing and sales functions, car financing and insurance, and after sales service.

Comparative Advantage. The Philippines has comparative advantage in a number of products like ignition/other wiring sets for vehicles; radio receivers, external power; lead-acid electric accumulators; brake system parts; transmissions for motor vehicles; pneumatic tyres for motor cars and other parts and components.

Presence of global automotive brands. With the presence of global automotive brands, together with the abundant supply of highly skilled and technical manpower, the quality of final goods and services produced by the automotive industry is at par with regional and global standards. As a result, the country is currently enjoying stable automotive parts and components exports and is a favorable destination for future investments.

The industry’s current development plans call for the simultaneous and coordinated growth of both the vehicle assemblers and the parts manufacturers, in recognition of the interdependence and strong multiplier effects of these subsectors.  The strategy entails a cost-competitive solution, where the increase in assembly volumes can yield economies of scale and more affordable pricing along the entire supply chain, from resource-based raw materials to the car in the showroom.  Such a scenario will generate ample and quality employment opportunities, from the major brands all the way to small and medium scale enterprises.

 

Facts and Figures

Volume of Automotive CKD Sales vs. CBU Imports

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CKD Sales 58,566 56,050 61,128 61,513 64,498 74,984 67,742 71,562 78,784 86,218
CBU Imports 38,497 43,491 56,775 62,936 67,946 95,283 97,451 111,217 129,710 182,946
TOTAL 97,063 99,541 117,903 124,449 132,444 170,267 165,193 182,779 208,494 269,164

 

Percentage of Automotive CKD Sales vs. CBU Imports

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
CKD Sales 60% 56% 52% 49% 49% 44% 41% 39% 38% 32%
CBU Imports 40% 44% 48% 51% 51% 56% 59% 61% 62% 68%

 

Policies

IPP 2014-2016

The manufacture of  motor vehicle (excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components is among the preferred activities listed in the IPP.

This covers the assembly of motor vehicles, manufacture of parts and components, research & development, research/testing laboratories, and technical vocational education and training institutions.

For the manufacture of motor vehicles (excluding motorcycles, e-bikes and golf carts), including the manufacture of parts and components, any of the following may qualify as new:

  1. Projects that will involve the establishment of a factory complete with production machinery/equipment and facilities.
  2. Projects of an existing motor vehicle manufacturer/assembler of passenger car/commercial vehicle that involves the production of a new model or a full model change (FMC) provided there is new investment of at least Php 200 million.

Any of the following may qualify for pioneer status:

  1. Projects on the manufacture/assembly of alternative fuel vehicle and electric vehicles. Alternative fuel vehicles include hybrid vehicles, and flexible-fuel vehicles.
  2. Manufacture/assembly of brand new three or four-wheel Philippine utility vehicles for cargos and/or passengers.

The project’s ITH Rate of Exemption shall be proportionate to the Logistics Efficiency Index (LEI).

The manufacture of motor vehicle parts and components include:

  1. Body panel stamping
  2. Engines, transmissions, and transaxle
  3. Large injection moulded parts
  4. Bumpers; instrument panel; door trims; center console; grill; wheel house finisher; lamps; shock absorber; wiper motor/blade; engine mounts; electric power steering; combination meter; instrument cluster; chassis & sub-frame; interior finishing; switches; seat mechanism; retractable seat belts; window regulator; constant velocity joints/transmission; aluminium radiators; plastic fuel tanks; fuel pumps; brake system and components; evaporators and condensers; relays; flame laminated automotive fabric; door & rear view mirrors; automotive glass; engine parts & assembly; and transmission parts & assembly
  5. Controller assembly, motor, and battery (other than lead acid) for electric vehicle

Original Equipment Manufacturer (OEM) parts and components may qualify for pioneer status.

 

Programs

Comprehensive Automotive Resurgence Strategy (EO 182)

The Comprehensive Automotive Resurgence Strategy (CARS) Program is being implemented in order to attract new investments, stimulate demand and effectively implement industry regulations that will revitalize the Philippine automotive industry, and develop the country as a regional automotive manufacturing hub.

The thrust of the CARS Program is to provide time-bound, and output or performance-based fiscal support to attract strategic investments in the manufacturing of motor vehicles and parts thereof. Other non-fiscal measures already provided by existing laws, rules and regulations, shall continue to be systematically implemented by the relevant government agencies.

CARS is intended to augment and enhance the policy directions of existing motor vehicle development programs towards ensuring a resurgent automotive industry that supports innovation, technology transfer, environmental protection, and SME development; enable the country’s automotive industry to seize market opportunities opened by the ASEAN Economic Community and deepen its participation in the regional supply chain; and boost the manufacturing capability of the overall industrial sector, spur growth of SMEs and create more jobs in the country.

The CARS Program is limited to the manufacture of three (3) models of four-wheeled motor vehicles, covering the following activities:

  1. Production of the enrolled Models;
  2. Manufacture of Body Shell Assembly and Large Plastic Assemblies of the Model;
  3. Manufacture of Common Parts and Strategic Parts not currently produced in the country at Original Equipment Manufacturer (OEM) standards of the Model/s; and
  4. Shared Testing Facility for vehicles and/or parts.

Registered participants of the Program may be entitled to two (2) kinds of fiscal support during the enrolled Model Life, up to a maximum of six (6) years, namely: (1) Fixed Investment Support (FIS); and (2) Production Volume Incentive (PVI), following prescribed qualifications.

Read the full text of EO 182.

Comprehensive Motor Vehicle Development Program (EO 877-A)

The Comprehensive MVDP provides for the following:

  • Creates a Motor Vehicle Industry Development Council to oversee, coordinate and align all government policies and programs, rules and regulations, related to the motor vehicle industry.
  • Increases the level of progress achieved by EO 156 through the enhancement of the existing motor vehicle industry policy framework
  • Strengthens the used vehicle importation prohibition under EO 156
  • Provides for the restructuring of (1) tariff rates to be comparable to neighboring countries with similar motor vehicle development programs; and (2) excise taxation system for motor vehicles to be fair, transparent, and stable
  • Provides for granting of export incentives and support measures to encourage greater participation, diversification of exports, and capacity utilization of parts manufacturing and auto-support industries

Read the full text of EO 877-A.

Restructured Motor Vehicle Development Program (EO 156)

The restructuring of the Motor Vehicle Development Program provides for the following:

  • Ban the importation of all types of used motor vehicles and parts and components, except those that may be allowed under certain conditions
  • Restructure the Most Favored Nation (MFN) tariff rates for motor vehicles and their raw materials and parts and components at such rates that will encourage the development of the industry
  • Restructure the current excise tax system for motor vehicles with the end view of creating a simple, fair and stable tax structure
  • Continue the application of AICO scheme as may be adopted by ASEAN consisted with the implementation of the ASEAN-CEPT
  • Grant incentives to assemblers and parts and components makers for the export of CBUs and parts and components

Read the full text of  EO 156.

Industry Development Program

The automotive industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. These include the implementation of non-fiscal measures, especially on the importation of used motor vehicles and the need for a more productive fiscal package that can help local manufacturers to become more competitive in the ASEAN Economic Community.

Specifically, the TWG focuses on the following concerns:

  • Strict implementation of the Motor Vehicle Inspection Scheme (MVIS)
  • Enforcement of anti-counterfeit measures for vehicle parts and components
  • Implementation of full inter-connectivity between BOI, BOC, BIR and LTO
  • Abolition of the Certificate of Payment (CP) for CKDs
  • End-of-Life program for vehicles
  • Re-fleeting program to replace vehicles that are more than 10 years old

 

Champions

Federation of Automotive Industries of the Philippines

Mr. Vicente Mills
President

c/o Pilipinas Hino, Inc., Industrial Park Rd., Canlubang Industrial Zone, Calamba, Laguna

Board of Investments (BOI)

Dir. Corazon Halili-Dichosa
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City Philippines

Tel. No.: (632) 896-9239

Email: [email protected]

Auto Parts

The vision of the auto parts industry is to strengthen the position of the Philippines as a significant automotive player in the medium-term and become a regional hub for vehicles and parts in Asia supported by a strong domestic supplier base.

The industry’s objectives are: (1) to develop an internationally competitive and viable automotive parts industry, in terms of product range, price, quality, and on-time delivery; (2) to enhance value added and local capabilities in the automotive parts industry through improvement of processes, technology and human capital; and (3) to promote export-oriented parts and components manufacturers.

The industry targets are:

· CKD local content: 46% in 2013 to 68% in 2019-2020 (based on CKD production of 170,000 units in 2014-2015 to 330,000 in 2019-2020)
· Domestic OEM sales of P43 billion in 2014
· Domestic aftermarket sales of P183 billion in 2014
· Export sales of US$6 billion of international quality parts in 2015
· Employment of 150,000 (parts and assembly) and 50,000 in allied industries
· Taxes and duties of P50 billion

 

About Auto Parts

As a product, automotive is complex with large number of parts and components (textiles, glass, plastics, electronics, rubber, steel, and other metals) involving different production processes. The promotion of the automotive industry can lead to an expansion of many complementary investments by automotive parts firms, particularly because the automotive industry is a highly global industry, technology-driven and competition is intense among its players.

Currently, the Philippine domestic auto parts industry is composed of 256 companies producing around 330 different parts and components. With 4 Japanese automakers operating in the country, the industry represents some growing agglomeration economies in the Laguna and Cavite area.

The Philippine auto parts sector has continued to post respectable growth and contribute significantly to manufacturing value added (3%) and employment generation (5%). In 2009, it employed a total of 50,858 workers, generated value added of P28 billion and investment amounting to P5 billion. In 2010, auto parts exports reached US$3.3 billion which represented almost 7% of total Philippine exports and an export growth of 27%.

The auto parts industry has also remained a net exporter with balance of trade surpluses of US$3 billion in 2006 and US$2.7 billion in 2010. The Philippines has comparative advantage in a number of products like ignition/other wiring sets for vehicles; radio receivers, external power; lead-acid electric accumulators; brake system parts; transmissions for motor vehicles; pneumatic tyres for motor cars and other parts and components.

The auto parts industry is facing competitiveness issues due to the absence of economies of scale and a weak supply base. These are the fundamental issues that must be addressed in order to strengthen the industry and integrate it with regional production networks of global automakers. To help firms achieve this, there is a need for strategic industrial upgrading policy and carefully designed temporary subsidies that would target improvement of firm competitiveness. Political will is needed to address the illegal entry of used vehicles.

For domestic-oriented small and medium sized firms, the challenge is improving their competitiveness to enable them to compete in a more liberalized market. For export-oriented ones, it is important to identify ways and measures on how to maintain their competitiveness and take advantage of future opportunities. In both types of firms, expanding existing linkages and developing new ones would be crucial for the industry’s growth and development.

Amidst these challenges, there are market opportunities that globalization brings and which the industry can take advantage of. Forecasts show that Asia will be the most dynamic market in the world, especially with the steady growth of China, India, and the Southeast Asian countries. The creation of the ASEAN Economic Community (AEC) in 2015 along with other ASEAN+1 Free Trade Agreements (FTAs) offer increased trade and investment opportunities, as well as cooperative arrangements through joint ventures or mergers.There are also strong growth potentials in specializing in certain core processes and alternative fuel and E-vehicles and parts given growing environmental and safety concerns.

Within the context of these opportunities and challenges, the Philippine auto parts and components industry is envisioned to become a significant player in the medium-term and become a regional hub for vehicles and parts in Asia supported by a strong domestic supplier base. In line with the strengths and weaknesses of the industry, three major strategies are proposed to be implemented: (i) enhancement of the competitiveness of Filipino parts and components firms; (ii) creation of an incentive program to support the adjustment of the parts and components sector as the automotive industry is transformed from CKD assembly to full manufacturing; and (iii) creation of a more predictable environment for business operations.

Through the effective implementation of these policy measures, the auto parts industry can realize its potential of being one the key drivers of manufacturing growth by 2020, producing not only for the domestic market but also for the regional and world markets.

 

Facts and Figures

Exports and Imports of Automotive Parts, 2006-2013 (in million US$)

Year Exports % Change % of Total Exports Imports % Change Exports-Imports
2006 2,439 5.14 527 1,912
2007 2,981 22.22 5.91 442 -16.25 2,540
2008 3,502 17.5 7.14 462 4.66 3,041
2009 2,605 -25.63 6.78 429 -7.18 2,176
2010 3,319 27.43 6.45 578 34.83 2,741
2011 3,751 13.02 7.81 690 19.32 3,062
2012 3,506 -6.53 6.73 702 1.74 2,805
2013 3,675 4.82 6.81 728 3.81 2,947
Average for 2006-2010 10.38 6.28 4.01
Average for 2010-2013 9.68 6.95 8.29
Average for 2006-2013 7.55 6.80 14.93

Policies

IPP 2014-2016

The manufacture of  motor vehicle (excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components is among the preferred activities listed in the IPP.

This covers the assembly of motor vehicles, manufacture of parts and components, research & development, research/testing laboratories, and technical vocational education and training institutions.

For the manufacture of motor vehicles (excluding motorcycles, e-bikes and golf carts), including the manufacture of parts and components, any of the following may qualify as new:

  1. Projects that will involve the establishment of a factory complete with production machinery/equipment and facilities.
  2. Projects of an existing motor vehicle manufacturer/assembler of passenger car/commercial vehicle that involves the production of a new model or a full model change (FMC) provided there is new investment of at least Php 200 million.

Any of the following may qualify for pioneer status:

  1. Projects on the manufacture/assembly of alternative fuel vehicle and electric vehicles. Alternative fuel vehicles include hybrid vehicles, and flexible-fuel vehicles.
  2. Manufacture/assembly of brand new three or four-wheel Philippine utility vehicles for cargos and/or passengers.

The project’s ITH Rate of Exemption shall be proportionate to the Logistics Efficiency Index (LEI).

The manufacture of motor vehicle parts and components include:

  1. Body panel stamping
  2. Engines, transmissions, and transaxle
  3. Large injection moulded parts
  4. Bumpers; instrument panel; door trims; center console; grill; wheel house finisher; lamps; shock absorber; wiper motor/blade; engine mounts; electric power steering; combination meter; instrument cluster; chassis & sub-frame; interior finishing; switches; seat mechanism; retractable seat belts; window regulator; constant velocity joints/transmission; aluminium radiators; plastic fuel tanks; fuel pumps; brake system and components; evaporators and condensers; relays; flame laminated automotive fabric; door & rear view mirrors; automotive glass; engine parts & assembly; and transmission parts & assembly
  5. Controller assembly, motor, and battery (other than lead acid) for electric vehicle

Original Equipment Manufacturer (OEM) parts and components may qualify for pioneer status.

 

Programs

Comprehensive Automotive Resurgence Strategy (EO 182)

The Comprehensive Automotive Resurgence Strategy (CARS) Program is being implemented in order to attract new investments, stimulate demand and effectively implement industry regulations that will revitalize the Philippine automotive industry, and develop the country as a regional automotive manufacturing hub.

The thrust of the CARS Program is to provide time-bound, and output or performance-based fiscal support to attract strategic investments in the manufacturing of motor vehicles and parts thereof. Other non-fiscal measures already provided by existing laws, rules and regulations, shall continue to be systematically implemented by the relevant government agencies.

CARS is intended to augment and enhance the policy directions of existing motor vehicle development programs towards ensuring a resurgent automotive industry that supports innovation, technology transfer, environmental protection, and SME development; enable the country’s automotive industry to seize market opportunities opened by the ASEAN Economic Community and deepen its participation in the regional supply chain; and boost the manufacturing capability of the overall industrial sector, spur growth of SMEs and create more jobs in the country.

The CARS Program is limited to the manufacture of three (3) models of four-wheeled motor vehicles, covering the following activities:

  1. Production of the enrolled Models;
  2. Manufacture of Body Shell Assembly and Large Plastic Assemblies of the Model;
  3. Manufacture of Common Parts and Strategic Parts not currently produced in the country at Original Equipment Manufacturer (OEM) standards of the Model/s; and
  4. Shared Testing Facility for vehicles and/or parts.

Registered participants of the Program may be entitled to two (2) kinds of fiscal support during the enrolled Model Life, up to a maximum of six (6) years, namely: (1) Fixed Investment Support (FIS); and (2) Production Volume Incentive (PVI), following prescribed qualifications.

Comprehensive Motor Vehicle Development Program (EO 877-A)

The Comprehensive MVDP provides for the following:

  • Creates a Motor Vehicle Industry Development Council to oversee, coordinate and align all government policies and programs, rules and regulations, related to the motor vehicle industry.
  • Increases the level of progress achieved by EO 156 through the enhancement of the existing motor vehicle industry policy framework
  • Strengthens the used vehicle importation prohibition under EO 156
  • Provides for the restructuring of (1) tariff rates to be comparable to neighboring countries with similar motor vehicle development programs; and (2) excise taxation system for motor vehicles to be fair, transparent, and stable
  • Provides for granting of export incentives and support measures to encourage greater participation, diversification of exports, and capacity utilization of parts manufacturing and auto-support industries

Restructured Motor Vehicle Development Program (EO 156)

The restructuring of the Motor Vehicle Development Program provides for the following:

  • Ban the importation of all types of used motor vehicles and parts and components, except those that may be allowed under certain conditions
  • Restructure the Most Favored Nation (MFN) tariff rates for motor vehicles and their raw materials and parts and components at such rates that will encourage the development of the industry
  • Restructure the current excise tax system for motor vehicles with the end view of creating a simple, fair and stable tax structure
  • Continue the application of AICO scheme as may be adopted by ASEAN consisted with the implementation of the ASEAN-CEPT
  • Grant incentives to assemblers and parts and components makers for the export of CBUs and parts and components

Industry Development Program

Representatives of the automotive parts industry participate in the automotive industry Technical Working Group (TWG), which conducts meetings to discuss and address industry concerns and issues. These include the implementation of non-fiscal measures, especially on the importation of used motor vehicles and the need for a more productive fiscal package that can help local manufacturers to become more competitive in the ASEAN Economic Community.

Specifically, the TWG focuses on the following concerns:

  • Strict implementation of the Motor Vehicle Inspection Scheme (MVIS)
  • Enforcement of anti-counterfeit measures for vehicle parts and components
  • Implementation of full inter-connectivity between BOI, BOC, BIR and LTO
  • Abolition of the Certificate of Payment (CP) for CKDs
  • End-of-Life program for vehicles
  • Re-fleeting program to replace vehicles that are more than 10 years old

Champions

Board of Investments (BOI)

Dir. Corazon Halili-Dichosa
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City Philippines

Tel. No.: (632) 896-9239

Email: [email protected]

Philippine Parts Makers Association

Mr. Ferdinand Raquelsantos
President

3/F, Yazaki-Torres Building, 1043 Zobel Roxas cor. Bautista Sts., Singalong, Manila

Tel: 809-1469/0917-528-1946

Email: [email protected]

Biodiesel

The Philippine biodiesel industry aims to be a global provider of sustainable biodiesel. It advocates for greener fuel for a cleaner Earth.

By 2030, the industry hopes to:

 Maximize the contributions of indigenous biofuels in the country’s energy mix towards self-sufficiency and better environmental conditions;
 Establish the Philippines as a leader in sustainable biofuels feedstock development, technology generation, and market development;
 Harmonize research, development, demonstration, and commercialization efforts;
 Coordinate efforts towards the creation of new applications and markets for biofuels;
 Update national incentives and regulatory requirements to encourage production and use of biofuels; and
 Improve the quality of life of coco farmers and other workers in related and allied areas of work.

 

About Biodiesel

Biodiesel from coconut is the natural alternative to imported diesel in the Philippines. Coconut oil is transesterified into coco methyl ester (CME) and is referred to as cocobiodiesel when blended with fossil diesel.

Cocobiodiesel has a unique advantage over other forms of biodiesel because of its unique chemical properties, thereby making it more environment-friendly and economical. It may cost more than fossil diesel and other biodiesels in P/liter, but its unique features can do much more for engine performance. Its greatest advantage is in terms of cost reduction in P/km.

Cocobiodiesel serves as a high value/ high volume secondary product of the coconut industry which protects coco farmers from falling copra prices in the world market.

Following the enactment of the Biofuels Act of 2006, the Philippines  is now working to ‘clear the way’ to increase the biodiesel blend from 2% (B2)to 5% (B5) in 2015. This increase is likely to boost the demand for biodiesel in the country.

 

Policies

Biofuels Act of 2006 (RA 9367)

The Biofuels Act of 2006 aims to reduce the country’s dependence on imported fuels with due regard to the protection of public health, the environment, and the natural ecosystems consistent with the country’s sustainable economic growth.

It mandates the use of biofuels as a measure to develop and utilize indigenous renewable and sustainable-sources clean energy sources to reduce dependence on imported oil; mitigate toxic and greenhouse gas (GSG) emissions; increase rural employment and income; and ensure the availability of alternative and renewable clean energy without any detriment to the natural ecosystem, biodiversity and food reserves of the country.

The law also provides for additional incentives to encourage investments in the production, distribution and use of locally-produced biofuels at and above the minimum mandated blends.

The Department of Energy, in consultation with the National Biofuels Board, appropriate government agencies, and other stakeholders has issued, adopted, and promulgated the law’s implementing rules and regulations.

 

Programs

Industry Development Program

The sectoral working group for biodiesel has been working towards the promulgation of the Philippine National Standard (PNS) for B5 biodiesel, but is currently on hold. Oil companies have raised issues regarding the use of coco methyl ester (CME), including its corrosive effects on engines, and its implications on their storage, handling and distribution systems and facilities. An impact assessment study (on the increase from B2 to B5) is ongoing.

A related study to determine the real cause of contamination and microbial growth on CME-blended diesel fuel is ongoing. The study includes the impact of the increase of the increase from B2 to B5 on sectoral and national outputs, income, food and non-food consumption, international trade and prices.

 

Champions

The Philippine Biodiesel Association (TPBA)

Mr. Dean Lao, Jr.
President

C/o Chemrez Technologies

65 Calle Industria, Bagumbayan, Quezon City, 1110 Philippines

Board of Investments (BOI)

Ms. Lillian Cotaz
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City Philippines

Tel. No.: (632) 895-3977

Email: [email protected]

Ceramic Tiles

The Philippine ceramic tile industry envisions itself to have efficient, competitive and environment-friendly manufacturers with sustainable and profitable operations, contributing to society and to the country’s economic growth.

It seeks to maintain and sustain its competitiveness, its products to be the preferred choice of local consumers, level up the industry’s concern for the environment while ensuring its profitability.

 

About Ceramic Tiles

The Philippine ceramic tile industry currently consists of four major local players in the market, namely Mariwasa Siam Ceramics, Inc. (Mariwasa Tiles), Formosa Ceramic Tiles Manufacturing Corp. (Ten Zen Tiles), Eurotiles Industrial Corp. (Eurotiles), and Lepanto Ceramics, Inc. (Lepanto Tiles). The industry’s umbrella association is the Ceramic Tile Manufacturers’ Association (CTMA) – a member of the international group Ceramic Industry Club of ASEAN (CICA).

The industry has an estimated total installed capacity of around thirty (30) million square meters per annum. However, the industry’s market share is less than 50% of the total tile market, due to the influx and proliferation of imported tiles. But with the continued growth of the construction sector, abundant opportunities remain for the industry particularly given that the Philippine economy is projected to be the 16th largest economy in the world by 2050.

The industry faces many challenges, foremost among which is the uncompetitive cost of local players compared to their foreign counterparts. Local firms have higher costs as a result of high fuel and power cost, the limited local source of and high raw material cost, high repair and maintenance cost of aging machinery, and high domestic inland freight costs. The competition presented by the entry of  imported ceramic tiles is heightened by their non-compliance to product standards.

The industry is directly employing over 2,000 workers and several thousand more by industries that are directly and indirectly linked to it.

 

Policies

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists ceramic tiles as among the products for mandatory certification under mechanical/building and construction materials.

The certification of ceramic tiles are guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme and the implementing guidelines for the mandatory certification of ceramic tiles.

Imports of ceramic tiles must undergo the Import Commodity Clearance (ICC) certificationscheme, through which ICCs are issued to importers whose shipments have been found to conform to the requirements of the relevant Philippine National Standards or acceptable international or foreign standards, and be guided by the operations manual for the issuance of the ICC on imported ceramic tiles.

PNS for Ceramic Tiles

The mandatory Philippine National Standard for Ceramic Tiles specifies the rules and regulations on product certification under PNS ISO 13006:2007, which defines terms and establishes classifications, characteristics, and marking for ceramic tiles of the best commercial quality. It applies to both extruded tiles and dry-pressed tiles.

 

Programs

Industry Development Program

The ceramic tiles industry technical working group (TWG) meetings are convened to implement the ceramic tile industry roadmap’s goals and strategies. The TWG includes the Ceramic Tiles Manufacturers Association (CTMA), DTI offices such as the Regional Operations Group, Bureau of Import Services (BIS), Bureau of Philippine Standards (BPS), and the Department of Science and Technology – Philippine Council for Industry, Energy and Emerging Technology Research and Development (DOST-PCIEERD).

Among the initiatives of the TWG concern the following:

  • Trade Remedies Fund (TRF). A letter requesting the DBM for the reversal of the amount collected for the sector in the years that the Trust Fund has not yet been created. The industry aims to utilize the reversed fund for modernization purposes.
  • Mandatory certification. The industry wants to maintain ceramic tiles among the products for mandatory certification by the government, in the face of cheaper and lower quality imported tiles from China. A letter requesting for its retention has been sent to the DTI-BPS. In relation, the Bureau of Customs (BOC) is also requested to destroy seized non-compliant imported tiles, instead of being auctioned and finding their way into the local market. The TWG is also seeking clarification from the DTI-BPS regarding the policy treatment of items that failed mandatory standard testing.
  • Anti-smuggling. An action plan on anti-smuggling for ceramic tiles – covering the pre- to post-entry stages of imported products – was developed and adopted by the TWG, and involves the DTI Bureau of Import Services (BIS), BPS, and BOC. With their continuous coordination, the industry is able to identify and monitor the activities of technical smugglers.
  • Domestic promotion. The TWG is working to take part in the Reverse Trade Arrangement project of the housing industry TWG, by which preferential supply arrangements are entered into between housing developers and construction materials manufacturers and associations (including ceramics) in order to reduce cost and assure markets for industries. The CTMA also agreed to join the DTI Bureau of Domestic Trade activities in 2014 and 2015.
  • Human resource development. The TWG is coordinating with CHED and DOST on address the need for ceramic engineers in the country. It is noted that only Mapua and Mindanao State University produce these engineers.
  • Cost of local clay.As part of the competitive enhancement measures, the TWG has started discussions with small-scale quarry operators and eventually provide them technical assistance to modernize their operations towards reducing the cost of local clay.

 

Champions

Ceramic Tiles Manufacturers Association

Mr. Virgilio Antonio
Executive Director

c/o Mariwasa , C. Raymundo Avenue, Bo. Rosario, Pasig City

Tel.: 641-0720 / 628-3871

Fax: 628-1985

Board of Investments

Ms. Elizabeth Cristina Pahilan
Investment Specialist

385 Sen. Gil Puyat Avenue

Makati City

Tel. No.: (632) 895-3977

Email: [email protected]

Chemicals

The Philippine chemicals industry aims to engage in transforming the nation’s basic resources into a wide range of higher value products that serve domestic as well as global market needs with the best customer value. It is committed to attracting, developing and retaining the best talents who will be at the forefront of product and process innovations while adhering to sustainability and Responsible Care principles. By relentlessly improving products and processes, it will achieve sustainable growth and thus, contribute to the nation’s inclusive growth and socio-economic development.

The industry has agreed to pursue its vision that emphasizes the following goals: (1) the creation of a wide range of products with the best customer value; (2) satisfying domestic demand and becoming a leading contributor to the Philippine export basket; (3) promotion of a high level of workforce productivity; (4) becoming innovative, both in products and processes; (5) developing and managing the industry sustainably to protect the natural assets on which the industry depends; and (6) becoming competitive as an industry so as to provide benefits to the Philippine economy and to the Filipino people.

The industry envisions itself as a major player in the region by 2016. By 2022, it should have established itself as a leading exporter, and it should have developed a strong foothold in the global market by 2030.

To realize these targets, the industry seeks to implement a triple gear recommendation with the following pillars: (a) creation of Engineering and Science Advanced Technology Program (EnSAT) to develop the technical and scientific skill of Filipinos, (b) setting legislative policies that are based on sound technical and scientific studies that take into account the total system in which the chemical industry operates, and (c) establishment of the chemical industry cluster to enable cost-efficiency in production of chemical products. The government is considered as the major stakeholder in the three gears, where it serves the role as the enabling mechanism that will allow for smooth implementation of the recommended programs.

 

About Chemicals

The chemicals industry is a highly diverse industry that covers raw materials, such as oil, water, air, and minerals, which are converted into a wide array of substances for use by other chemical companies, producers in other industries, and other consumers. It has extensive links with other industries, including agriculture/agribusiness, automotive, cement, creative, construction, energy, fishing, health, housing, and pharmaceuticals industries.

With the global chemicals industry earning an output of US$4.12 trillion in 2010, the Philippine chemicals industry positions itself to contribute to the growing needs of the world economy. The Samahan sa Pilipinas ng mga Industriyang Kimika(SPIK, or the Chemical Industries Association of the Philippines) aims to further develop the industry in the next seventeen years, giving priority to the following sub-sectors: Oleochemicals, Petrochemicals, Inorganic Chemicals, Agrochemicals and Fertilizers, Consumer Care Products, and Chemicals Research and Development.

The prospects are bright for the chemicals industry. One of the primary advantages of investing in the Philippines is its young population. With a median age of 23 years old and a population of 92.3 million, the demographic characteristics of the Philippines point to a large domestic market and a strong manpower base. This young population is also increasingly spending on health and housing needs. More importantly, Filipinos are open to consume organic-based herbal medicines and consumer products. This consumption behavior provides a promising market base for pharmaceutical, personal care, cleaning substances, coatings and other chemicals businesses. Likewise, the amount of natural resources in the country provides an abundant yet cheap source of raw materials. These raw materials can be processed to produce valuable chemicals such as lauric acid.

Given the potential for developing coconut-based chemicals and other oleochemical products in the country, SPIK aims to promote research and development through inter-firm collaboration. In support of the innovative capacity of the industry’s small and medium-scale enterprises, SPIK aims to facilitate technology transfer between them and large-scale companies,especially for consumer care chemicals. Finally, SPIK seeks to strengthen its sustainability and environmental care practices by increasing their members’ compliance to the Responsible CareTM global initiative by 75%.

In line with industry efforts, the Philippine government is improving its research support for the different chemical subsectors. The Department of Science and Technology’s (DOST) current research and development programs on chemical products, through the initiatives of the Industrial Technology Development Institute (ITDI) and Philippine Council for Industry, Energy and Emerging Technology Research and Development (PCIEERD), are more open for partnerships with private organizations, particularly proposals for joint research projects with the private sector.

 

Facts and Figures

  • The 3rd Largest Manufacturing Sub-sector with revenues reaching PHP 330 billion in 2009
  • The combined chemical imports and the domestic production of the chemical industry is approximately US$ 14 billion, equivalent to 6.7% of Philippine GDP
  • Rapidly growing chemical trade imports growing 13% per annum and exports at 17% per annum
  • There are 1,400 registered chemical manufacturing firms employing more than 93,000 personnel directly. Domestic production of chemicals, chemical products, plastic and rubber products have been growing an average of 7% per annum in terms of revenues.
  • Active dialogue between the government’s Board of Investments, Environmental Management Bureau and the industry ensures effective coordination in areas of environment, health, safety, investment, and long term sustainable growth.
  • There are 32,000 chemical professionals and over 360,000 engineering students enrolled every year, with 60,000 graduates.
  • There are 33 universities and colleges offering Chemical Engineering and 50 school offering chemistry education in the Philippines. The Philippine chemical industry consists of two major industries under the manufacturing sector: (1) chemical and chemical products; and (2) rubber and plastics products.
  • Represented by the Samahan sa Pilipinas ng mga Industryang Kimika (SPIK) or the Chemical Industry Association of the Philippines with 69 company members representing the different chemical sub-sectors namely: agrochemicals and fertilizers; coatings, ink and adhesives; industrial gases; inorganic chemicals; oleochemicals and surfactants; plastic products; petrochemicals; petroleum; specialty chemicals; chemical traders and distributors; chemical storage and transport logistics; and chemical disposal and recycling.

 

Policies

IPP 2014-2016

The manufacture of chemicals is among the preferred activities in the IPP.

This covers the production of Oleochemicals, Petrochemicals and derivatives, and Chlor-Alkali Plants products, research & development, and research/testing laboratories.

(1) Oleochemical Products, including the manufacture of fatty acid and fatty alcohol.

(2) Petrochemical products and its derivatives, including, but are not limited to, the manufacture of derivatives from ethylene such as ethylene dichloride (EDC) and vinyl chloride monomer (VCM); olefins and polyolefins [Polyethylene (PE), Polypropylene (PP), Polystyrene (PS), and Polyvinyl Chloride (PVC)], derivatives from propylene, derivatives from mixed C4, and aromatic derivatives.

(3) Chlor-Alkali Plant Products including the manufacture of chlorine, alkali (caustic soda), and hydrochloric acid (muriatic acid).

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain chemical products as among the products for mandatory certification under chemicals and other consumer products.

The certification of chemical products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

 

Programs

Industry Development Program

The Technical Working Group (TWG) for the Chemicals Industry Cluster serves as the coordinating mechanism through which industry concerns are addressed. The TWG is organized into four action tasks, namely:

  • FOR TRADE & INVESTMENT MATTERS – covering issues regarding industry clustering, tariff concerns, smuggling, and trade and investment promotions;
  • FOR TALENT DEVELOPMENT & INNOVATION – covering issues on skills development and introduction of innovation and process;
  • FOR EASE OF DOING BUSINESS – covering issues on assistance that the government could provide the industry as regards streamlining the permit and documentary requirements which overlaps among various agencies; and
  • FOR ENVIRONMENTAL PRACTICES – covering issues on plastic banning, life cycle assessment (LCA) and the use of the same as basis of scientific and technological studies in crafting laws that would affect the industries.

Among the TWGs activities are the following:

  • Ease of Doing Business. With the release by the DENR of EMB MC 2014-003 (or the Supplemental Guidelines for DENR AO 2007-23, prescribing additional requirements for the issuance of the priority chemical list (PCL)), the TWG was able to obtain a PCL exemption for the industry. In addition, a series of workshops for Ease of Doing Business from January to February 2015 was conducted to come up with a roadmap to streamline the processes of issuance of permits and licenses by various regulatory agencies for the chemicals industry.
  • Human Resource Development. TESDA and SPIK conducted a workshop in consultation with the various chemicals industry associations in October 2014 to come up with Training Regulations for a) plant process operators and b) QA/QC laboratory technicians. These training regulations are currently being reviewed by TESDA. After finalizing the training regulations, TESDA and SPIK shall proceed to work on the Assessment Tools for the skills identified.
  • Life Cycle Analysis (LCA) for Plastic Packaging. In view of the increasing number of LGU’s banning the use of plastics, the conduct of LCA on plastics has become a priority. This is also pursuant to R.A. 9003’s mandate for DTI to come up with a non-environmentally acceptable products (NEAP) list. In December 2014, the initial results of the LCA Study were presented by the Chairman of the Plastics Industry TWG. The LCA Consultant from DLSU presented to the group his simulation results.
  • JGSOC Naphtha Cracker. The JG Summit Olefins Corporation (JGSOC) confirmed that the first Naphtha Cracker Plant in the Philippines started its commercial operations on November 1, 2014. Currently, the downstream polymer plants of JG Summit Petrochemical Corporation (JGSPC) are already using polymer-grade ethylene and propylene manufactured from the JGSOC Naphtha Cracker Plant to produce polyethylene (PE) and polypropylene (PP) resins, for sale to both domestic and export markets. JGSOC also started to export pyrolysis gasoline (pygas).
  • Greening the Industry Roadmaps. In the 2nd Scoping Mission for Greening the Industry Roadmaps project conducted by GIZ, the Plastics Industry was identified as one of the priority sectors. Following this, BOI and PPIA collaborated in conducting a workshop on ISO 14000-Environmental Management and ISO 50001-Energy Management System Standard for PPIA-member companies in February 2015.
  • Reverse Trade Agreement. Pacific Paint (Boysen) Philippines, Inc. has entered into an MOU with SHDA on September 26, 2014. BOYSEN would be supplying SHDA with white latex paint for their housing projects. There have been similar negotiations between SHDA and two (2) other paint companies (Davies Paints Philippines, Inc. and Campbridge Paint, Inc.).
  • Product Standards for Paints. In 2014, the BPS-TC on Paints re-convened and agreed that the priority products would include Semi-gloss Latex, Gloss Enamel, and Alkyd Metal Primer Products. The product standard for Semi-gloss latex topcoat for white and light tints was finalized.
  • Comprehensive Tariff Review. A Comprehensive Tariff Review (Line-by-line tariff review) for the chemicals industry was conducted, in preparation for ongoing and future FTA negotiations. The Chapters reviewed include Chapters 28, 29, 31, 32, 33, 34, 35, 36, 37, and 38. Chapter 39 remains under review, with the PPIA and APMP finalizing their position papers.
  • ASEAN-Japan Chemical Safety Database (AJCSD) Seminar. The AJCSD’s objective is to come up with a database of all regulated chemicals in ASEAN and Japan, as well as share chemical regulatory information among ASEAN countries. A mini-seminar on the AJCSD Project was facilitated by experts from the Japan Ministry of Economy, Trade, and Industry (METI) and the National Institute of Technology and Evaluation (NITE). The TWG, regulatory government agencies, and the private sector have also agreed to establish a national database containing the regulations for Philippine chemical products. BOI is currently coordinating with PEZA to assess the feasibility of using their Chemical Importation Tool (CIT) database facility for this purpose.

 

Champions

Samahan sa Pilipinas ng mga Industriyang Kimika (SPIK)

Mr. Joey Marcalain
President

Unit 2201 Cityland 10 Tower I,

6815 Ayala Avenue North 1226,

Makati City, Philippines

Tel. No: (632) 753-1752

Telefax: (632) 814-0970

E-mail: [email protected][email protected]

Website: http://spik.com.ph/

Board of Investments (BOI)

Dir. Evariste M. Cagatan
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 890-9329

Email: [email protected]

Copper

The Philippine copper industry envisions a sustainable and fully-integrated copper industry in the country from mining to downstream manufacturing, where value is maximized, together with the development of the several domestically manufactured copper-using commodities such as wiring harness, high efficiency motors and appliances that will serve both the local and global markets.

It is envisioned that in the upstream, one to two large world class copper mines (particularly Tampakan) are developed and starts production. At midstream, a revival of investor interest in the production of copper wire rods and the establishment of a copper rod casting facility. And at the downstream, development of new copper products that will link with the wire harness industry, as well as information gathering, research, forums, studies, and the like are conducted to explore the possibility of venturing into new copper applications.

In the short-term (by 2016), the specific milestone would be the establishment of a venue for industry stakeholders to work together in support of the roadmap aspirations. Within the medium-term (by 2022), the key goals are further increase in the production of copper concentrates as the one or two new mines start operations. Over the long-term (by 2030), the linkage between local mining and smelting is established; there is near self-sufficiency in copper rods; and the development of higher value copper products for both local and the global markets are in full steam.

The vision of a fully integrated copper industry by 2030 is to be fulfilled by the operation of select world class copper mines, development of a wire rod casting facility, and promotion of higher value copper products.

 

About Copper

The Philippines is one of the countries with vast amounts of mineral resources, including large reserves of metallic and non-metallic minerals such as gold, nickel, iron, copper, limestone, and marble. Among the metallic minerals, the largest reserve is copper, which is estimated at 4 billion MT, making the Philippines the fourth largest country in the world in terms of copper reserves.

From such vast reserves, the industry produces copper concentrates, cathodes, and wires. The production of such commodities is estimated to have contributed 9.74 billion pesos in 2011. Local demand for concentrates emanating from copper manufacturers is very high. The Philippine Associated Smelting and Refining Corporation (PASAR), which is a key player in the copper industry, has an annual demand of 720,000 MT, which is met through importation of copper concentrates given that local production of such inputs remains insufficient. The industry provides jobs for 7,300 Filipinos, with PASAR employing 1,000 workers.

The following are the copper industry’s major products: concentrates (from mineral extraction); cathodes and blisters (from smelting/refining); rolled products, tubes, rods, and other semi-finished products (from transformation); and wires and cables, harnesses, plating and foils (processing semi-finished products).

There are eight (8) products in the Philippines that define the copper industry. These are copper and ore concentrates; unrefined copper/anodes; refined copper and alloys which include cathodes; cast rods, bars and profiles; copper wires; plates, sheets, and strips; copper foil; and tube or pipe fittings.

There is high demand for copper products coming from Philippine industries, particularly electronics and automotive parts manufacturing. Electronics production makes use of copper foils, while automotive parts manufacturers utilize copper in automotive wires and harnesses. The industry also has linkages with metal fabrication (cutlery, hand tools, general hardware; metal containers), the manufacture of non-electrical machinery (metal and wood-working machinery; and pumps, compressors, blowers and air conditioners), non-ferrous foundries, and the manufacturing of transport equipment and land transport services.

Favorable economic conditions in the country and the region can serve as a catalyst for better prospects for the industry. The Philippines impressive economic performance in recent years bodes well for the growth of manufacturing industries, including the copper industry. The recognition of this growth by international organizations and the series of investment ratings upgrades granted by international credit agencies further attest to the country’s strong fundamentals which are the foundation for industrial development.

 

Facts and Figures

Estimated Value Added of Major Copper Products (in B pesos, at constant 2000 prices)

Product Value added % of GDP
2009 2010 2011 2009 2010 2011
Copper mining 2.14 2.5 2.67 0.04 0.04 0.05
Copper cathodes (non-ferrous smelting and refining) 5.12 3.74 4.26 0.1 0.07 0.07
Copper wire (insulated wires and cables) 2.65 2.73 2.81 0.05 0.05 0.05
TOTAL 9.91 8.97 9.74 0.19 0.16 0.17

 

Value of Copper Products, Exports (X) and Imports (M) (in US$ million)

2000 2005 2009 2010 2011
X M X M X M X M X M
Copper ore and concentrates 28.4 237.8 36.9 460.4 149.8 909.7 268.2 1,326.20 355.9 757.7
Unrefined copper; anodes 2.6 11.5 * 3.6 5.3 0.3 76.7
Refined copper and alloys 239.6 27.4 361.7 35 688.1 36.2 807 62.8 1,130.10 100.7
Cast rods, bars and profiles * 36.7 0.1 72.1 * 57.7 * 108.1 * 122.2
Copper wire 3.9 33.1 7.1 63 9.5 45.3 17.4 88.8 21.1 117
Plates, sheets and strip 0.1 53 0.6 78.4 0.4 82 0.9 69.1 0.3 112.2
Copper foil 29.6 6.9 35.3 2.6 86.6 17 143.3 29.8 150.9 19.7
Tube or pipe fittings 1.7 * 1.4 0.1 1.3 0.3 2.4 0.4 6.7
TOTAL 301.6 399.2 441.7 724.4 934.5 1152.8 1237.1 1692.5 1659 1312.9

 

Volume of Copper Products, Exports (X) and Imports (M) (in ‘000 MT)

2000 2005 2009 2010 2011
X M X M X M X M X M
Copper ore and concentrates 92.3 435.7 61.4 705.6 164 698 292.3 638.6 343.3 455.9
Unrefined copper; anodes 2.3 1.9 0.1 0.6 0.6 0.1 8.1
Refined copper and alloys 131.6 13.7 113.8 10.1 151.8 7.1 110.9 7.9 126.3 10.6
Cast rods, bars and profiles * 18.1 * 19.4 * 11.1 * 18.2 * 20.7
Copper wire 2.2 14.8 2.2 15.9 2.2 9.3 3.2 11.3 3.7 12.6
Plates, sheets and strip * 16.7 0.2 17.2 0.1 13.5 0.2 7.9 * 10
Copper foil 4.6 1.5 6.2 0.4 10 1.4 12.1 2.3 11.1 1.7
Tube or pipe fittings 0.4 * 0.4 * 0.3 0.1 0.6 0.1 0.9
TOTAL 230.7 503.2 183.8 770.9 328.2 741.3 418.8 687.4 484.6 520.5

 

Policies

Philippine Mining Act of 1995 (RA 7942)

The Philippine Mining Act of 1995 prescribes the rational exploration, development, utilization and conservation of the country’s mineral resources in public and private lands within its territory and exclusive economic zone. These are pursued through the combined efforts of government and the private sector in order to enhance national growth in a way that effectively safeguards the environment and protect the rights of affected communities.

The Department of Environment and Natural Resources (DENR) has promulgated the Revised Implementing Rules and Regulations of RA 7942.

The President issued Executive Order 79, providing policies and guidelines to ensure environmental protection and responsible mining in the country. The DENR promulgated its implementing rules and regulations.

IPP 2014-2016

The manufacture of copper wires and copper wire rods are among the preferred activities listed in the IPP.

This covers the manufacture of copper wire rods and enamelled wires, research & development, and technical vocational education and training institutions.

(1) Copper Wire Rod

Projects must have a minimum production capacity of 12,000 MT per year and would produce wire rods compliant with applicable international or Philippine National Standards for the production of copper wires and cables.

(2) Copper Wires

This covers the production of copper enamel wires. All enamelled wire products must be compliant with the applicable Philippine National Standards (PNS).

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain copper products as among the products for mandatory certification under electrical products.

The certification of copper products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme and the implementing guidelines for the issuance of PS certification mark license for insulated copper wire and flexible cords.

PNS for Copper Products

There is a mandatory Philippine National Standard covering electric copper wires, which covers thermoplastic copper wires and cables rated 600 volts, and copper and copper alloys.

 

Programs

Industry Development Program

The copper industry technical working group (TWG) conducts meetings to discuss and address industry concerns and issues. It includes representatives from BOI, PASAR, Philippine Electric Wires Manufacturers Association (PEWMA), copper miners, the Center for Research and Communication (CRC), National Development Corporation (NDC), Bantay Kita, and other concerned government agencies.

The TWG regularly meets the upstream and downstream stakeholders for updates on the industry roadmap activities. Among these are the following:

  • Establishment of an “Eco-Industrial Park.” The Industry Development Council approved the conduct of a pre-feasibility by the NDC on the establishment of a green domestic manufacturing zone (i.e., an eco-industrial park) in Leyte, as proposed by the TWG. The park is envisioned to be a critical component in the full integration of the industry.
  • Preparation of a pre-feasibility study on copper enamelling plant. The Wallace Business Forum (WBF) has submitted its Brief Market Study on Enamelled Wire, concluding that the focus of the development of the market for enamel wire should be on transformers and electric motors. Further research on the companies that exported transformers and electric motors is ongoing.
  • Sourcing of Raw Materials from Local Mining Companies. The MICC instructed DTI to explore the possibilities of sourcing PASAR raw material requirements from local mining companies to increase value adding in the industry. PASAR and copper mine companies suggested other action items to promote the integration of upstream and midstream copper industry.
  • Clarification re LOI 1387 (Copper Export Clearance). The TWG sought the opinion of the DOJ on the validity of LOI 1387, which required all copper exporters to obtain prior government clearance before shipping any product. The DOJ replied that it is only an administrative issuance and that PASAR lost the protection given by the LOI since it became a privately-owned entity.

 

Champions

Philippine Associated Smelting and Refining Corp. (PASAR)

Mr. Angel N. Veloso, Jr.
Chairman

11th/F, Zuellig Building

Makati Avenue cor. Paseo de Roxas,

Makati City, Philippines

Tel No.: (632) 889-6591 to 98

Fax: (632) 636-5263

Website: www.pasar.com.ph

Board of Investments (BOI)

Ms. Sandra Marie Recolizado
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 257

Email: [email protected]

E-Vehicles

The Philippine electric vehicle (e-vehicle) industry aims to have a nation where the use of electric vehicles is highly promoted, encouraged, and supported by its government and society in order to develop a transportation landscape that is one with the environment, ecologically and economically.

The Electric Vehicle Association of the Philippines (EVAP) aspires for the establishment of a national development program for electric vehicles that is anchored on the existing Motor Vehicle Development Program for the automotive industry. This is to be implemented in four (4) phases of within a ten-year-period. The first phase (2013) is the launch of the program, including technology upgrading needed by the industry; the second phase (2014 to 2015) involves the build up of the local market and enhancement of its production capacity; the third phase (2016 to 2018) will be for local and export market expansion, together with horizontal and vertical integration with the local automotive industry; and the fourth phase (2019 to 2023) will be the full integration, regional and global, developmental evolution in technological advancement and market size up.

Towards this, the industry seeks to pursue operational and regulatory reforms; strengthen the automotive policy environment; address industry supply chain gaps; and implement market development strategies.

 

About E-Vehicles

Currently, there are 28 firms engaged in the manufacturing of various electric vehicles. Complementing these companies are 11 parts and component manufacturers and seven importers. The industry currently provides employment to 14,840 individuals. As the government continues to support the use of electric vehicles, the industry is expected to grow in the coming years.

With sustainable development as one its main thrusts, the Philippine government has been promoting the use of electric vehicles across the country, including as a form of public transportation. Executive Order 488 (s. 2006) was issued to support the manufacturing of e-vehicles, as well as to further reduce the country’s fossil fuel consumption. This issuance reduced the tariff rate for e-vehicle components to zero, thereby allowing e-vehicle manufacturers to import components at a more affordable price.

In Metro Manila, major cities have started to make use of e-vehicles to transport local residents and transient workers. Electric jeeps and electric tricycles are also getting more and more common in the country’s major business districts and urban areas. The establishment of “green cities” is also expected to generate higher demand for e-vehicles for public transportation.

The steady increase in the number of tourist arrivals in the Philippines has led to an increased demand for environmentally sound transport services. Resorts and local government units have started to invest in e-vehicles, such as electric tricycles and electric jeeps, to reduce carbon emission, to preserve the natural beauty of the environment, and to provide transportation to the growing number of tourists. This trend is now gaining momentum due to heightened environmental awareness. E-vehicles can be found in key tourist spots such as Boracay and Palawan.

 

Facts and Figures

  • Employment
    Manufacturing Employment Number of Employees
    Electric Vehicle Manufacturing 8,600
    Electric Vehicle Parts Manufacturing 5,300
    EV Importers, Dealers and Traders 840
    Auto-Supporting Industries Employment 42,000
  • Market Outlook: 38,220 units in 2013 to 69,145 units in 2017
  • Domestic Sales in 2013: 214.2 Million
  • Potential Impact of replacing regular tricycles with 100,000 e-tricycles: Department of Energy estimates gasoline consumption to be reduced by 561,000 barrels a year or 260,000 tons of carbon dioxide emissions
  • Potential impact on tricycle drivers: 30% increase in income due to increased passenger capacity by 50% and 65% cheaper electric charging cost compared to fuel rates

 

Policies

IPP 2014-2016

The establishment of charging stations for electric vehicles is among the preferred activities listed in the IPP. The charging stations could refer to a ‘service station’ designed to simultaneously fast charge multiple vehicles similar to gasoline/diesel stations or a network of at least 5 charging stands.

Application for registration must be accompanied by an endorsement from the Department of Energy-Investment Promotion Office (DOE-IPO).

EO 488, s. 2006.

Executive Order 488 modified the rates of import duty on components, parts and accessories for the assembly of hybrid, electric, flexible fuel and compressed  natural gas motor vehicles to zero rate. 

PNS for Electric Vehicles

There are Philippine National Standards for electric vehicles.

PNS ISO 6469-1:2008 Electric road vehicles – Safety specifications – Part 1: On-board electrical energy storage

PNS ISO 6469-2:2008 Electric road vehicles – Safety specifications – Part 2: Functional safety means and protection against failures

PNS ISO 6469-3:2008 Electric road vehicles – Safety specifications – Part 3: Protection of persons against electric hazards

PNS ISO 8713:2008 Electric road vehicles – Vocabulary ISO published in 2005

PNS ISO 8714:2008 Electric road vehicles – Reference energy consumption and range – Test Procedures for passenger cars and light commercial vehicles

PNS ISO 8715:2008 Electric road vehicles – Road operating characteristics

PNS ISO 23274:2008 Hybrid-electric road vehicles – Exhaust emissions and fuel consumption measurements – Non externally chargeable vehicles

 

Programs

DOE E-Tricycle Program

The Department of Energy’s E-Trike Project aims to (1) deploy 100,000 e-trikes nationwide to replace the same number of traditional gasoline-fed tricycles; (2) reduce the transport sector’s annual petroleum consumption by 2.8% (equivalent to 89.2 million liters) per year; and (3) achieve 79% carbon dioxide(CO2) footprint avoidance.

The US$504-million project is being implemented for five years. Largely financed by the Asian Development Bank (ADB) and the Clean Technology Fund (CTF), the project seeks to help ensure energy security through the promotion of energy efficient and clean technologies.

Industry Development Program

The E-Vehicles industry Technical Working Group (TWG) holds meetings inviting stakeholders both from the public and private sectors to discuss updates and current activities, as well as address challenges being faced by the industry.

 

Champions

Electric Vehicle Association of the Philippines (EVAP)

Mr. Rommel T. Juan
President

2nd Floor, PDP Bldg. 1440 Quezon Ave.,

Quezon City, Philippines

Tel: (63) 923-943-2073

Email: [email protected]

Board of Investments (BOI)

Dir. Corazon Halili-Dichosa
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City Philippines

Tel. No.: (632) 896-9239

Email: [email protected]

 

Electronics

The Philippine semiconductors and electronics industry is the largest contributor to the country’s manufacturing sector. In 2013, the industry accounted for 41% of total exports, brought in US$ 918 million-worth of foreign and domestic investments, and employed 2.2 million workers. The potential for the industry remains high, as member firms intend to move to higher value-added manufacturing to meet global demand. These companies plan to improve current production capacities, to expand current research and development and design capabilities, and to further develop the labor force over the next several years.

The industry is working to drive up the semiconductor and electronics manufacturing index of the country by identifying customers’ needs, understand suppliers’ baseline, develop relevant capabilities, match industry supply and demand, and conduct periodic assessment of its performance. In addition, the industry recommends that the government continue with its scholarship program for operators and technicians, improving the country’s business environment, conducting R&D capability development, and aggressively promoting local industries and SMEs through investment missions abroad.

 

About Electronics

The Philippine semiconductors and electronics industry specializes in manufacturing assembly, testing, packaging and distribution. Among the firms investing in the country include Texas Instruments, Toshiba Information Equipment, Inc., Amkor, HGST (A Western Digital Company), and Fairchild Semiconductor (Phil.), Inc., Analog Devices, ON Semiconductor, Cypress, Maxim, NXP, STMicroelectronics, and IMI Electronics.

As of first-quarter 2013, there are over 424 electronics firms in the Philippines. Majority of electronic firms in major hubs such as those in Baguio, Calabarzon, Cebu, Clark, and Metro Manila are declared as special economic zones. About 73% of the total number of Philippine electronics companies provide SMS services and 27% provide EMS capabilities.

The Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) aims to strengthen the Philippines as a globally competitive business environment for semiconductor and electronics technology. It continues to enhance and promote the Philippines’ competitive advantages and growth opportunities in electronics manufacturing and technology business through Training, Research and Development, Advocacy, Information, and Networking and Services (TRAINS). The association regularly engages local suppliers, encourages member firms to participate in trade fairs, facilitates greater collaboration among large-scale, medium-scale, and small-scale companies.

In support of the industry, the Department of Science and Technology’s (DOST) established the Advanced Device and Materials Testing Laboratory (ADMATEL) to improve the industry’s current capabilities. The facility contains equipment for failure analysis and materials characterization, thereby lessening production costs and lead time for testing products abroad.

Moreover, the Philippine government and SEIPI are working to further develop the industry’s labor force, including strengthening industry-academe linkages through the promotion of more apprenticeship and immersion programs among firms and training schools.

 

Facts and Figures

Electronics exports 2008-2013, by electronics sub-group (in US$ million)

Electronics sub-group 2008 2009 2010 2011 2012 2013
Automotive electronics 810 532 380 780 218 545
Communication radar 291 393 695 338 234 206
Semiconductor components/devices 21,047 15,582 23,832 17,782 17,469 17,397
Consumer electronics 479 301 293 237 232 333
Control & instrumentation 135 94 72 94 420 248
Electronic data processing 5,214 4,932 5,485 4,242 3,037 4,497
Medical/industrial instrumentation 32 32 35 40 57 54
Office equipment 315 251 243 225 533 326
Telecommunication 261 118 78 101 526 326
TOTAL 28,582 22,235 31,112 23,860 22,725 23,931

 

Electronics imports 2008-2013, by electronics sub-group (in US$ million)

Electronics sub-group 2008 2009 2010 2011 2012 2013
Automotive electronics 29 22 23 18 16 13
Communication radar 18o 140 193 370 360 511
Semiconductor components/devices 6,394 5,212 6,861 5,281 5,673 4,281
Consumer electronics 325 326 331 364 369 374
Control & instrumentation 134 109 130 139 133 157
Electronic data processing 2,718 2,195 2,386 1,749 1,892 1,454
Medical/industrial instrumentation 52 61 78 78 71 83
Office equipment 79 81 65 74 57 92
Telecommunication 910 858 807 913 1038 900
TOTAL 10,820 9,004 10,873 8,985 9,610 7,864

 

Policies

IPP 2014-2016

The production and manufacture of electronics products for export are among the export activities listed in the IPP, specifically the production/manufacture of non-traditional export products and with export requirement of at least 50% of its output, if Filipino-owned, or at least 70%, if foreign-owned.

BPS Product Certification Scheme

The certification of semiconductor products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

PNS for Semiconductor Products

There is a Philippine National Standard for semiconductordevices.

 

Programs

DOST-PCIEERD ADMATEL

The Advanced Device and Materials Testing Laboratory(ADMATEL) is a DOST national testing facility equipped with state-of-the-art analytical equipment for Failure Analysis and Materials Characterization. The ADMATEL facility is based on the standards acceptable for a scientific laboratory to accommodate sophisticated equipment, such as Focused Ion Beam – Field Emission Scanning Electron Microscope (FIB-FESEM), Auger Electron Spectroscope (AES), and Time-of-Flight Secondary Ion Mass Spectrometer (TOF-SIMS).

The Php 378 million-facility was established to reinforce and upgrade the capabilities of the local electronics sector and its related industries. It reduces the delays and costs of having products tested abroad.

ADMATEL has already catered to 44 clients from the electronics and related sectors. It is currently being managed by PCIEERD, with SEIPI’s guidance.

DOST-ASTI EIAPI EPDC

The Electronics and Product Development Center(EPDC) is a planned facility to strengthen the local electronics and semiconductors industry by enabling local firms to conduct R&D, design, and prototyping of products. It will offer various electromagnetic compatibility services (such as electromagnetic interference pre-compliance testing and harmonics and flicker tests); provide design, prototyping, and testing capabilities for printed circuit boards; provide electronic product prototyping for 3D enclosure design, 3D scanning, and enclosure design simulation, and enclosure prototyping using 3D printer, restriction of hazardous substances (RoHS) analysis, and thermal imaging.

Industry Development Program

The electronics industry Technical  Working Group (TWG) holds meetings inviting stakeholders both from the public and private sectors to discuss updates and current activities, as well as address challenges being faced by the industry.

Among its activities are the following:

 

  • PATHS Project. Proposed by SEIPI, the Product and Technology Holistic Strategy (PATHS) project aims to identify product niches and an overarching industry direction for the industry over the next 5 to 10 years. Specifically, it seeks to (1) determine the global technology and industry trends in semiconductor and electronics devices and technology development, and identifying strategic electronics sectors, devices and products that the Philippine electronics industry can focus on; (2) identify the necessary or desired industry resources and advanced technological capabilities, as well as the policy and operating environment that will support the thrust for existing firms to go into or attract new investors to manufacture these identified devices in the Philippines; (3) review the current country factor resources and state-of-the-art technological capabilities and the business operating environment of the electronics and other industries and the country vis-à-vis the new product lines; and (4) formulate a product and technology strategy roadmap to close the gap between the current and the desired state of the country’s electronic industry identifying specific action programs for marketing (i.e., investment promotion), physical facilities (i.e., infrastructure), skills (i.e., education, training program) policy (i.e., laws and regulations), etc. that are needed to successfully resurrect the Philippine electronics industry.
  • Information Technology Agreement (ITA) Expansion. A Cost-Benefit Analysis (CBA) proposal on the ITA Expansion was approved for funding under the EU-TRTA project. A consultant has already been identified to conduct the study to be completed in 2015.
  • IC Design Roadmap and Training.The IC Design Roadmap has been completed and submitted to BOI in December 2014. The roadmap includes a rapid industry assessment, value proposition, marketing plan, and report on the technology assessment of six (6) private companies and one (1) private university.
  • Promotions. IC design was chosen as a priority for an investment promotions plan. The BOI is also working on an industry value proposition that involves initial supply chain mapping of high-growth subsectors such as auto electronics, consumer electronics, EDP, LED, and Photovoltaic cells. A presentation on the International Marketing Plan for the Philippine Electronic Sector was also conducted in December 2014.
  • Support Facilities. The TWG notes the DOST’s establishment of the Advanced Device and Materials Testing Laboratory (ADMATEL) that was in its Phase 2 of operations, the Electronics Product Development Center (EPDC), and the Philippine Institute for IC Design (PIIC).
  • Holding of the 5th IC Design Training Program – The 5th IC Design Training Program was held in October 2014 at UP Diliman in partnership with Taiwan Government and Philippine Institute for Integrated Circuits (PIIC). There were 29 participants to the training, mostly MS/BS students and faculty members in the Electrical Engineering/ Electronics and Communications Engineering/Computer Engineering (EE-ECE-CoE) courses from the consortium of top universities, which include the University of the Philippines (8), University of San Carlos in Cebu (4) and the Mindanao State University–Iligan Institute of Technology (3), Bulacan State University (1).  Also included in the training were representatives from the IC design companies such as Analog Device Inc. (10) and Zynix (3).

 

Champions

Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI)

Mr. Dan Lachica
President

14th Flr., Tower 2, Insular Life Corporate Centre,

Filinvest Corporate City, Alabang, Muntinlupa City, 1781 Philippines

Tel. No: (632) 236-5555 to 58

Telefax: (632) 236-5561

Website: https://www.seipi.org.ph

Board of Investments (BOI)

Dir. Evariste Cagatan
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 890-9329

Email: [email protected]

Furniture

The Philippine furniture industry aims to be the global design innovator or hub for products using sustainable materials by 2030, with thriving domestic and international markets and a competitive and motivated labor force.

To achieve this, the industry shall focus its programs on four (4) key development factors: 1) product development, 2) marketing, 3) capacity building and 4) advocacy. Under product development, the goal is to have access to markets with the government support to institutionalize a budget for trends gathering, forecasting and sharing; upgrade design education through early introduction of design awareness appreciation and information and training assistance for design students and professional designers and manufacturers; and establish sustainable and environment-friendly raw materials and establish supply hubs for semi process and raw materials from local and imported sources. Under advocacy, the objective is to build the group to be a strong force with a unified voice, strongly influence all appropriate sectors, and build support infrastructure to continue the gains. Under marketing, the targets are to make the Philippine furniture top of mind in Asia, to sell to traditional markets, and simplify marketing strategy to align furniture design to customer needs in local, glocal and global markets. Under capacity-building, the industry seeks to have a sustainable supply of raw materials; provide readily available skilled manpower to the industry; and to ensure availability of advanced and cost-effective machineries / equipment and production processes.

Towards the above goals, the industry intends to intensify promotions in non-traditional markets; establish links with foreign posts to address immediate buyer inquiries and seek their assistance to promote the industry abroad; organize focused offshore business matching programs; intensify product development programs to cover material manipulation, library of material sources, and development of design collections; implement continuous skills training; establish regional development programs to expand the subcontractor base of manufacturers; establish furniture quality standards; and institutionalize management education programs by linking design and manufacturing courses in selected schools.

 

About Furniture

The Philippine furniture industry is one of the most labor-intensive and artistic industries in the country. Furniture companies tap the hardworking, creative and enterprising qualities of Filipinos in manufacturing high-quality furniture. Because of this, the Philippines is known as the “Milan of Asia.” The industry, which is 98% categorized under SMEs, provides 2.1 million indirect workers nationwide and provides business to 5.4 million in its supply chain.

Philippine furniture is made using the finest sustainably-sourced raw materials such as hard wood, buri, rattan, bamboo, metal, and other indigenous products. The wood, box beds and mattresses, office and store fixtures, and plastic furniture subsectors are domestically, oriented while the rattan, and metal subsectors are export-oriented.

Ninety-five percent of furniture companies in the country are classified as SMEs and the three major furniture production areas in the country are in Metro Manila, Pampanga and Cebu. Metro Manila and nearby peripheral cities in CALABARZON (Cavite, Laguna, Batangas, Rizal and Quezon) consist of small, medium and large furniture enterprises which specializes in wood furniture and other mixed materials. Pampanga is associated with hand-carved wood, wicker and iron products, whereas Cebu, used to be the heart of rattan furniture making in the country, is now known for its fine wood furniture works.

The creativity and industry of the Filipino is the cornerstone of the longstanding success of the Philippine furniture industry. This gives agility and flexibility to produce furniture according to the needs and tastes of buyers. While the industry is also capable of mass production, many companies specialize in producing customer-specific furniture items, which have higher value and durability. Specialization enables contract manufacturing, allowing the industry to cater to the growing needs of families, hotels, restaurants, real estate developers, and tourism-based enterprises.

Various government and private training facilities enhance the natural talent of Filipinos for art and design. Skilled workers and designers widely practice apprenticeship, thereby ensuring that the business and artistic expertise of companies are well preserved and enhanced throughout the years.

There are various sources of demand for furniture items in the Philippines. Coupled with the consistent high growth of the country’s economy and Filipinos’ purchasing power, the United Nations World Tourism Organization and Philippines’ Department of Tourism report strong demand for tourism in the country. Since tourism-based enterprises – such as hotels, restaurants, museums and leisure service providers – face growing needs to update their amenities, the demand for unique furniture items is also increasing. At the same time, the property sector’s strong growth and families’ easier access to housing credit also increase demand for household items – most important of which is furniture.

Through the efforts of the Chamber of Furniture Industries in the Philippines (CFIP) and the Cebu Furniture Industries Foundation (CFIF), the industry is projected to make a global mark through the sustainable production of sophisticated, sturdy and environmentally friendly products.

 

Facts and Figures

Gross Value Added and Growth Rates of Furniture & Fixtures to Manufacturing per Quarter, 2011-2014

Note: Growth rates based on the same period of the previous year | Source: PSA, 2014.

Value and Growth Rates of Furniture & Fixtures Exports, 2010-Q1 2014

Note: 2014 Growth Rate based on 2013-2014 Quarterly Growth Rate | Source: PSA, 2014.

Value of Products and By-Products Sold by Market, 2010

Source: NSO ASPBI, 2010

Gross Value Added (GVA) in Manufacturing (constant 2000 prices)
2011 2012 2013 2014
In million pesos 39,326 53,346 77,078 96,173
% of Total Mfg GVA 2.97 3.82 5.01 5.78

 

Furniture & Fixtures Export Performance (annual, FOB,  in ‘000 US$)
2011 2012 2013 2014
165,139 179,709 251,048 362,730

 

Source: Philippine Statistics Authority

 

Policies

IPP 2014-2016

The production and manufacture of furniture products for export are among the export activities listed in the IPP.  This covers the production/manufacture of non-traditional export products and with export requirement of at least 50% of its output, if Filipino-owned, or at least 70%, if foreign-owned.

 

Programs

Manila FAME

In 1983, the Center for International Trade Expositions and Missions (CITEM) launched Manila F.A.M.E. (Furnishings and Apparel Manufacturers’ Exchange) International, “the country’s premier trade platform for exports and design, providing opportunities for small and medium scale entrepreneurs to showcase their products in the world market.” The show is the longest running trade event on housewares, furnishings, gift items, holiday decor, and fashion accessories in the Asia-Pacific Region. A biannual event, furniture and furnishings have been the highlight of Manila FAME until 2014, when the industry chose to shift away from the government program to establish an independent furniture only show.

Forest Products Research and Development Institute

Through the DOST Forest Products Research and Development Institute, the government generates information and technologies on the utilization of some industrial tree plantation species and non-wood forest products for export quality furniture and handicrafts.

Specifically, the FPRDI conducts research and development on furniture and furniture parts, as well as the testing of these products such as wood and non-wood preservation, wood seasoning/kiln drying, bleaching and dyeing, finishing, saw-milling, termite and power-post beetle treatment. There are currently two Furniture Testing Centers: one in Los Baños, Laguna and one in Lahug, Cebu.

DTI Support Programs

The DTI Regional Operations Group provides support to industries and companies in the regions (outside of Metropolitan Manila). It has the following support programs for furniture companies that can be accessed through DTI regional offices:

  • Product development and design through the Design Center of the Philippines (DCP)
  • FabLab (Fabrication Laboratory), a small scale workshop offering rapid prototyping and digital fabrication services in Bohol Island State University
  • Provision of Shared Service Facilities (SSF)
  • Marketing linkage and promotion
  • Raw materials manipulation

Industry Development Program

The furniture industry technical working group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its activities concern the following:

  • Product Development. The Design Center of the Philippines (DCP) launched the Product Development Sourcebook, a compilation/documentation of possible indigenous raw materials for furniture production in March 2014. For the Sourcebook, nine (9) designers were contracted to produce designs for 16 selected companies which financed/produced prototypes of the designs. The exhibit of prototypes was done in March 2014 during the Philippine Furniture Show.
  • Human Resource Development. BOI, CFIP and TESDA discussed the training programs required by CFIP. TESDA committed to offer scholarship programs for furniture training with CFIP’s commitment to absorb 70% of the trained students.
  • Raw Materials Highway/Supply Chain Project. CFIP has completed identifying suppliers and subcontractors in Quezon. DTI-ROG signed a MOA with Gumaca Woodcraft Association for the grant of 3 kiln dryers worth PhP 11 million under DTI’s Shared Service Facilities (SSF) program. DTI-ROG also approved SSFs consisting of a woodworking facility, bamboo production facility and metal fabricating machine worth PhP 9 million and CNC Multi-cam Machine and Spindleless Veneer Lathe.
  • Revision of DENR DAO 99-46. A meeting between CFIP and DENR’s Forest Management Bureau (FMB) was set to discuss the industry’s concern on the revision of the DAO 99-46, particularly on the importation of wood and the required authentication by Philippine Consular Offices since it is no longer implemented by other countries. FMB clarified that the proposed revision is still under consultation and recommended to concerned stakeholders to submit a position paper on the issue.
  • 1st Philippine Homestyle Congress. The event funded by the DTI IDP was conducted in September 2014 to formulate the strategies that would address the concerns of the Homestyle industry, particularly with the coming ASEAN integration. More than 200 exporters and manufacturers participated in the event.

 

Champions

Chamber of Furniture Industries of the Philippines

Mr. Nicolaas De Lange
President

CFIP New Office

# 250 Don Miguel Street corner Wilson,

Greenhills, San Juan City, Philippines

Tel. No.: (632) 650-1531

E-mail: [email protected]

Website: http://www.cfip.ph/

Board of Investments (BOI)

Ms. Ana Maria Bernardo
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City, Philippines

Tel. No.: (632) 895-6682 loc. 259

Email: [email protected]

Iron and Steel

The Philippine iron and steel industry is a critical component in achieving inclusive economic growth and sustainable development. The industry provides necessary inputs for the construction of infrastructure, power generation and distribution, transportation facilities and vehicles, manufacturing machinery and equipment – all of which are vital for a nation’s long-term growth. The industry’s outputs are utilized by both commercial and industrial enterprises, such as electronics, appliance manufacturing, and shipbuilding, among others.

The Philippine iron and steel industry aims to contribute to the country’s sustainable development by manufacturing world-class products for the industry and society, and sees itself as a majority producer of high-quality and safe steel products for domestic users by 2030. This is achieved when the industry is able to supply 70% of the tonnage of required apparent steel consumption.

To achieve this, the industry recommends the implementation of measures that would reduce the costs of importing raw materials and losses of revenue due to unfair competition; reduce electricity costs; reduce logistics costs; encourage investment in the industry; enlarge the pool of workers for the industry; make the sector more attractive for local and foreign investors through ISO accreditation; answer the need for a set of consistent and timely delivered industry data; complement the implementation efforts of the BOC and DTI provincial standards monitoring teams; and help companies upgrade their capacities continuously.

 

About Iron and Steel

The Philippines sits on vast reserves of minerals, both metallic and non-metallic. Aside from gold and copper, the country is also rich in iron ore reserves of almost 300 million metric tons. To further promote investments in the mining of metals, the Philippine government allowed 100 percent foreign ownership of large-scale mines (subject to certain terms and conditions) in the hope of attracting quality operators and ensuring a steady output of metals.

The rapid development of the Philippines and continuous growth of the Southeast Asian region has resulted in higher demand for iron and steel products domestically and regionally.  The Philippine economy has been performing beyond expectations over the past years, growing from 5.1% in 2011 to 6.8% in 2012, and to 7.2% in 2013. In this unprecedented growth, the construction sector is a major contributor driven by demand for private residential and office buildings and infrastructure spending by the government, which led to an upswing in demand for steel products. From 2010 to 2013, the country’s apparent steel consumption (ASC) increased from 4.1 to 6.6 million metric tons — a consumption growth of 61% in three years.

Philippine-based iron and steel manufacturers have expanded their production capacities in the long products sector, but still fall short of domestic demand, mainly because of the absence of an integrated steel mill (ISM). The flat products sector has no local production of hot rolled coils (HRC), hot rolled plates (HRP), and cold rolled coils (CRC), and all are currently imported. The availability of raw materials (i.e. iron ore) and semi-processed products (i.e. pig-iron) presents the opportunity for local iron and steel manufacturers to domestically source their input requirements and, more importantly, the possibility of establishing an ISM.

Investing in the Philippines will provide iron and steel manufacturers better access to other ASEAN-member countries, which includes the big steel markets of Indonesia, Malaysia, Thailand, and Vietnam. The establishment of the ASEAN Economic Community (AEC) in 2015 will further facilitate the free flow of commodities across the region, including iron and steel.

 

Facts and Figures

Steel product lines locally produced

  • Semi-finished products: billets
  • Finished long products:
    • Reinforcing steel bars (all sizes)
    • Angle bars – 80mm and below
    • Light sections, channels and shapes
    • Steel wires
    • Steel purlins
  • Finished flat products:
    • Hot dipped galvanized sheets
    • Zn-Al coated sheets
    • Welded black iron pipes and tubes
    • Welded galvanized pipes and tubes
    • Pre-painted galvanized / Zn-Al coated coils and sheets
    • Pre-painted galvanized iron

 

Apparent Steel Consumption (ASC), 2007-2012*

Particulars 2007 2008 2009 2010 2011 2012
Billets 1,744,265 1,554,497 1,941,799 2,219,998 2,311,252 2,543,855
Slabs 319,079 250,139 64,286 0 8,759 0
Long Products 2,201,216 2,179,056 2,263,840 2,774,510 3,123,520 3,851,836
Flat Products 2,101,690 2,032,120 1,646,936 1,748,877 2,517,381 3,180,740
Long and Flats Total 4,302,906 4,211,176 3,910,776 4,523,387 5,640,901 7,032,576

*In metric tons. | Sources: BOC, DTI, PISI, SEAISI, and industry sources

 

Trade Performance, 2004-2012*

2004 2005 2006 2007 2008 2009 2010 2011 2012
Exports 92 162 346 220 151 74 105 44 0
Imports 2,867 2,721 3,077 3,433 3,018 2,830 3,148 3,922 4,684

*In ‘000 metric tons. | Source: SEAISI

 

Policies

IPP 2014-2016

The manufacture of basic iron and steel products, steel grinding balls, long steel products (billets and reinforcing steel bars), and flat hot/cold-rolled products is among the preferred list of activities in the IPP.

All iron and steel products must be compliant with the applicable Philippine National Standards (PNS).

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain iron and steel products as among the products for mandatory certification under mechanical/building and construction materials.

The certification of iron and steel products are guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme and the implementing guidelines for the mandatory certification of rerolled steel barsdeformed steel barsequal leg steel angle barssteel wire nailslow carbon steel wires, and BI/GI steel pipes.

Imports of steel products must undergo the Import Commodity Clearance (ICC) certification scheme, through which ICCs are issued to importers whose shipments have been found to conform to the requirements of the relevant Philippine National Standards or acceptable international or foreign standards.

PNS for Iron and Steel Products

There are mandatory Philippine National Standards covering ferroalloys, metals, and steels and equal leg angle bars.

 

Programs

Industry Development Program

The iron and steel industry technical working group (TWG) conducts meetings to discuss and address industry concerns and issues. It includes representatives from the BOI, Philippine Iron and Steel Institute, other government agencies (such as DOST-PCIEERD, BOC, TESDA, and DOE), and other concerned stakeholders.

Among the matters covered by the TWG are the following:

  • Implementation of short-term, medium-term and long-term actions that will address the horizontal and vertical issues of the industry for a more conducive business environment
  • Component studies that will provide guidelines in the establishment of an integrated steel mill (ISM)
  • Bench scale metallurgical testing of domestic iron ore
  • Program to address smuggling, tariff distortion, logistics, infrastructure and power costs
  • Revival of existing steel capacities
  • PPP projects

 

Champions

Philippine Iron and Steel Institute (PISI)

Mr. Roberto Cola
President

Room 509, Cityland Shaw Tower,

Shaw Blvd., Mandaluyong City, Philippines

Tel. No.: (632) 631-0773

Telefax: (632) 636-5263

Email: [email protected]

Board of Investments (BOI)

Mr. Reynaldo Lignes
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 237

Email: [email protected]

Metalcasting

The Philippine Metalcasting Industry envisions itself to be at par with the best in the world, engineered, molded, and shaped by the Philippine Metalcasting Association, Inc. (PMAI) as a widely recognized and highly regarded institution for dependability. It will always be entrepreneurial in spirit and truly Filipino in heart and mind.

The industry aims to supply majority of the domestic requirements for cast products, contributing to the development of downstream industries such as the equipment manufacturing sector; achieve significant export activity supplying high –value –added cast products; develop a highly productive workforce and a culture of innovation capable of integrating the latest technologies in the improvement of products and processes; and contribute to the protection of the environment through high waste recycling and high energy efficiency.

 

About Metalcasting

The Philippine Metalcasting Association, Inc (PMAI) is the only trade association of foundries in the Philippines, comprised of 55 member foundries. Majority of the members are located outside the economic zones. While there are many nonferrous die-casting companies operating in the various export processing zones, majority of these serve the casting requirements of automotive and electronics companies that are also located in these zones. Some of them produce directly for export.

The metalcasting industry is changing with the development, adoption, and use of new and improved materials for casting based on the changing properties and performance requirements. Some of the advances in materials technology which are expected to take on new markets are the following: aluminum and magnesium casting with corrosion (inhibiting properties for aerospace, electrical energy and automotive markets); high quality ductile iron with tighter tolerance and controlled microstructure and properties for automotive markets; high alloy steel casting with increased heat resistance for use in pump, valve, furnace and turbine applications; and copper-based alloys as substitute for lead due to environmental concerns.

The industry is also anticipating to engage in activities resulting from the increasing acceptance of new emerging materials and applications in various industries, such as: production of higher value castings from aluminum, steel and ductile iron; manufacture of aluminum and magnesium alloys, due to the general trend in weight reduction in automobiles; applications of titanium castings in aerospace and automotive industries; and the use of aluminum-lithium alloys as casting materials for aerospace to replace components previously made from wrought materials.

 

Facts and Figures

 

Programs

Metals Industry Research and Development Center (MIRDC)

The Metals Industry Research and  Development Center (MIRDC), an agency of the Department of Science and Technology, is the sole government entity directly supporting the metals and engineering industry with services designed to enhance its competitive advantage.

The MIRDC seeks to provide both government and the private sector in the metals, engineering, and allied industries with professional management and technical expertise on the training of engineers & technicians; information exchange; quality control & testing; research & development; technology transfer; and business economics advisory services.

The Materials and Process Research Division a division of MIRDC specializes in metalcasting of ferrous and non-ferrous alloys. Using specialized metalcasting technologies such as investment casting and its conventional casting capabilities, MIRDC undertakes prototype production of engineered and decorative products. Likewise, casting product localization, alloy formulation can also be accommodated through contract research activity. It also offers rental of facilities to SME’s through time-sharing scheme.

Industry Development Program

The metalcasting industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its recent activities are:

  • Baseline Data. The Philippine Metalcasting Association Inc. (PMAI) conducted a survey to determine firm-level annual tonnage casting production to establish baseline data for the industry. The DOST-MIRDC presented to the BOI the enhancements to the draft roadmap, including both the data annexes and further recommendations that would include manpower development, such as technical training and engineering curriculum enhancement to include foundry knowledge in one subject. The narrative of the roadmap is to be finalized by February 2015.
  • Feasibility Study on the Establishment of a Steel Grinding Balls Facility. A feasibility study previously conducted on casting steel grinding balls showed the activity is not viable. The said study is proposed to be updated to revive and boost production rates of local SME foundries. At present, there is an existing market for foundries such as steel grinding balls for the mining and cement industries.
  • Human Resource Development. The TWG had a briefing on the functional analysis and process training regulations/curricula of foundry vocational courses available in TESDA.

 

Champions

Philippine Metalcasting Association Incorporated

Mr. Loreto Matibag
Chairman

Quezon City Polytechnic Compound, 673 Quirino Highway,

San Bartolome, Novaliches, Quezon City

Tel. No: (632) 475-0829, 401-4134

E-mail: [email protected]

Website: http://www.philmetalcasting.com/

Board of Investments (BOI)

Mr. Amelito Umali
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 259

Email: [email protected]

Motorcycle

Initially based upon the investments of Japanese manufacturing corporations, the Philippine motorcycle assembly and production industry has developed rapidly with the participation of more local companies carrying technical licensing agreements with foreign brands. This development of the motorcycle industry has come from the great demand for motorcycles in the local market and the government’s policy of promoting and attracting foreign investment.

From the four pioneer members, participation has increased to twenty eight companies, including Chinese, Taiwanese, Thai, Malaysian and Indian brands. Nevertheless, Japanese brands, which have vastly invested in the country, continue to hold the dominant market position with 80% of market share.

 

About Motorcycle

The motorcycle sector has potential to expand manufacturing and sales operations in the Philippines due to the affinity of the Filipinos with motorcycle usage. From leisure and personal use to business needs, the motorcycle is a viable means of transport in urban and rural areas.

Compared to other Southeast Asian markets, the Philippine market is not yet saturated, providing many investment opportunities. The growing Filipino middle class sees motorcycles as efficient and cost-effective for both personal and business needs. With easy access to credit, sales potential in the country is promising.

Consumers are able to buy motorcycles at reasonable prices, with many investors specializing in semi-knocked down units. Local companies have also established technical licensing agreements with foreign brands to facilitate localization of inputs and technology transfer. At present, Japanese brands such as Honda, Kawasaki, Suzuki, Yamaha and Taiwanese brand Kymco conduct their operations in the country. Chinese brands are also gaining prominence among motorcycle users.

Development programs such as the Comprehensive Motor Vehicle Development Program have been established to promote investments, technology transfer, and industrial upgrading. Twenty eight local and foreign companies have availed of the incentives in this program through the assistance of BOI. At the same time, the Philippine Economic Zone Authority (PEZA) also provides fiscal and non-fiscal incentives, including income tax holidays from 4 to 8 years, tax and duty exemptions.

 

Facts and Figures

  • Major players: Honda, Kawasaki, Suzuki, Yamaha, Kymco
  • Products: Scooters, underbone, mopeds
  • 5000+ direct employees, 30,000+ indirect employees
  • PHP 2.2 Billion in revenue for 2012
  • PHP 3.4 Billion in Paid-Up Capital by major companies in 2011
  • 95% of sales are Complete Knock Down (CKD) parts and components
  • From 756,228 registered motorcycles in 2009 to 1,140,019 registered motorcycles in 2013.

 

Programs

Restructured Motor Vehicle Development Program (EO 156)

The restructuring of the Motor Vehicle Development Program provides for the following:

  • Ban the importation of all types of used motor vehicles and parts and components, except those that may be allowed under certain conditions
  • Restructure the Most Favored Nation (MFN) tariff rates for motor vehicles and their raw materials and parts and components at such rates that will encourage the development of the industry
  • Restructure the current excise tax system for motor vehicles with the end view of creating a simple, fair and stable tax structure
  • Continue the application of AICO scheme as may be adopted by ASEAN consisted with the implementation of the ASEAN-CEPT
  • Grant incentives to assemblers and parts and components makers for the export of CBUs and parts and components

Comprehensive Motor Vehicle Development Program (EO 877-A)

The Comprehensive MVDP provides for the following:

  • Creates a Motor Vehicle Industry Development Council to oversee, coordinate and align all government policies and programs, rules and regulations, related to the motor vehicle industry.
  • Increases the level of progress achieved by EO 156 through the enhancement of the existing motor vehicle industry policy framework
  • Strengthens the used vehicle importation prohibition under EO 156
  • Provides for the restructuring of (1) tariff rates to be comparable to neighboring countries with similar motor vehicle development programs; and (2) excise taxation system for motor vehicles to be fair, transparent, and stable
  • Provides for granting of export incentives and support measures to encourage greater participation, diversification of exports, and capacity utilization of parts manufacturing and auto-support industries

 

Champions

Motorcycle Development Program Participants Association, Inc. (MDPPA)

Mr. Rodel I. Pablo
President

Unit 302, Jollibee Center,

San Miguel Avenue, Ortigas Center, Pasig City

Tel. No.: (632) 401-9136

Telefax: (632) 470-6187

Email Address: [email protected]

Website: http://www.mdppa-inc.org/

Board of Investments (BOI)

Dir. Corazon Halili-Dichosa
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 896-9239

Email: [email protected]

Natural Health Products

The Philippine natural health products (NHP) industry envisions itself to be sustainable, inclusive, and globally competitive, known for the dedication and passion of its stakeholders in consistently providing safe, innovative, superior quality, effective and affordable natural health products that nurture both people and animal’s health in every market served.

In line with this vision, the industry is determined to build a unique range of natural health products through the effective and efficient use of the country’s natural resources. This effort is directed toward continuous improvement, and with respect for diversity and active involvement of all stakeholders through strong forward and backward industry linkages. With the adoption of technologies and processes at par with other countries, the industry will be known for producing superior quality, safe, effective and affordable natural health products, and will be committed to creating jobs, empowering and giving equal economic opportunity and uplifting the condition of small Filipino farmers and farmholders especially in the countryside.

Towards this, the industry intends to adopt, harmonize and align the proposed Philippine NHP standards and certification systems with international standards; initiate a National Research and Development Agenda for Philippine NHP; design a strategic NHP Raw Material and Production Master Plan; conduct continuous product development; identify and target possible markets through consolidated strategic marketing programs for each of the indentified export markets; and build the capacity of relevant industry stakeholders.

 

About Natural Health Products

The Philippine natural health products industry is an emerging contributor to consumer welfare and inclusive growth in the country. Providing affordable and organic sources of personal care products, it caters to a niche market which can expand through developments in its supply chain management, production technologies and research and development. In the medium to long-term, the industry envisions itself to be a leading research and development center of natural health products in the ASEAN region, contributing to the country’s economic development and job generation.

One of the biggest global trends in the past 20 years has been the growing interest in health and well-being. It has become increasingly important to consumers to improve both their own health and the environment they live in. Natural and organic household and home care products that include cleaners, surface, laundry and dish cleaners, pet food, flowers and linens and fibers are becoming more in demand by consumers who are interested in their health and well-being, inducing more job opportunities in the sector.

The industry’s two core competencies are: 1) the presence of diverse natural resources and 2) the availability of land and the natural condition and location of the Philippines.

In 2008 to 2011, health supplements grew by 40.35%, while personal care products increased by 34.25%. However, in 2009, these same products posted only a slight growth of 2.8% and 7.1%, respectively. The decrease for personal care products was caused by the decrease in imports by Australia and Malaysia, two of the top importers of Philippine personal care products.

Meanwhile, medicinal plants/food posted the biggest leap, growing from 13% in 2009 to 111% in 2011. The continuous annual increase in the exports of medicinal plants/food can be attributed to the increase in demand of raw materials brought about by the increasing demand for organic and natural health products in the world market.

At present, multinational and local companies cater to the expanding demand of the domestic and international markets, with 85% belonging to the micro, small and medium-scale enterprise (MSME) category and 15% classified as large-scale. Products can be categorized into two: natural ingredients (i.e. essential oils, extracts, semi-processed and plant parts) in the upstream, and finished products (i.e. herbal medicines, traditional medicines, cosmetics, health supplements, green fertilizers and pesticides, household and homecare products, and veterinary/animal products) in the downstream.

 

Facts and Figures

  • Based on the survey conducted by the Chamber of Herbal Industries of the Philippines, manufacturing firms engaged in the production of natural health products comprising of medium and small scale firms are operating at around 50-60% of their installed capacity; while large scale companies utilize around 60% of their installed capacity per year. For those engaged in the manufacture of natural cosmetics, home care and natural ingredients comprising of medium and small sized firms, capacity utilization is around 50% of total installed capacity per year.
  • Philippine natural and organic products have an estimated total export value (FOB) of about US$153 million in 2011. The major contributor of the growth in the sector is the medicinal plants/foods and the personal care category.
  • Currently, there are ten (10) Philippine medicinal plant species approved for therapeutic uses by the Food and Drug Administration (FDA) under the Department of Health (DOH):
    1. Lagundi (Vitexnegundo) – Cough and asthma
    2. Sambong (Blumeabalsamifera L.) – Anti-urolithiasis (kidney stones)
    3. Ampalaya (Momordicacharantia L.) – Lowering of blood sugar and anti-diabetes
    4. Garlic (Allium sativum) – Anti-cholesterol
    5. Guava (Psidiumguajava) – Oral/skin antiseptic
    6. Tsaang-gubat (Carmona cetusa) – Mouthwash
    7. Yerba-Buena (Menthaarvensis) – Analgesic or anti-pyretic
    8. Niyug-niyogan (Quisaualisindica) – Anti-helminthic
    9. Acapulco (Cassia alata) – Antifungal
    10. Ulasimang-bato (Peperomiapellucida)- Anti-hyperurisemia
  • Product Coverage
    1. Natural Ingredients Category
      • Plant parts
      • Extracts
      • Essential Oils
      • Semi-processed raw materials
    2. Finished Products Category
      • Human Products
        • Herbal medicines
        • Traditional medicines
        • Cosmetics
        • Health supplements
      • Household and Homecare products
        • Laundry detergents
        • Insect repellent
      • Veterinary products
        • Drugs
        • Cosmetics
        • Health supplements
      • Green Fertilizers and Pesticides
        • Pro-biotics
  • Industry Associations
    1. Chamber of Herbal Industries of the Philippines, Inc.
    2. Health and Dietary Supplement Association of the Philippines

 

Policies

TAMA Law

With the Traditional and Alternative Medicine Act (TAMA Law), the Philippine Institute of Traditional and Alternative Health Care (PITAHC) is created. Attached with the Department of Health, PITAHC is mandated to plan and carry out research and development activities and to transfer economically viable technologies for the development of Philippine traditional and alternative health care.

PITAHC is also tasked to formulate policies that will stimulate and sustain the industry through public awareness campaign/education, develop continuing training programs for the medical practitioners (e.g. physicians, nurses, pharmacists, etc.) and to coordinate with other institutions and agencies involved in the research on herbal medicines.

Philippine Pharmacopeia (EO 302)

Executive Order 302, s. 2004, declared and adopted the Philippine Pharmacopeia as the Official Book of Standards and Reference for Pharmaceutical Products and Crude Plant Drugs in the Philippines.

The Philippine Pharmacopeia (PP) 1st edition April 2004 and any supplement is the official book of the standards and references for the determination of the identity, purity, and quality of pharmaceutical products and crude plant drugs in the Philippines.

 

Programs

Business Development Support

DTI has supported the development of the industry through various opportunities in trade shows and business missions. For example, the Center for International Trade Expositions Mission (CITEM) organizes BIOSEARCH, an annual trade fair for herbal products.

The Bureau of Export Trade and Promotions helps MSMEs in introducing their products to foreign markets (i.e. Middle East, Europe and North America) through the Offshore Business Mission Program.

Finally, the Export Development Council provides funding assistance for MSME exporters to participate in international trade shows.

Industry Development Program

On behalf of the Philippine Natural Health Products Industry, the Chamber of Herbal Industries of the Philippines, Inc. (CHIPI) is working with the Department of Science and Technology (DOST) in crafting a research and development plan for the industry. DTI and CHIPI is also set to meet on the establishment of the Philippine Natural Health Products and Business Development Center and selection of 10 champion Natural Health Products.

 

Champions

Chamber of Herbal Industries of the Philippines, Inc.

Mr. Albert M.G. Garcia
President

Mezzanine Flr., Strata 300 Bldg. P. Guevarra Street

San Juan City 1500 Philippines

Tel. Nos.: (632) 907-8536; (632) 584-6241; (632) 725-6470

Fax: (632) 725-6470

E-mail: [email protected]

Board of Investments (BOI)

Mr. Dexter Pajarillo
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 259

Email: [email protected]

 

Petrochemicals

The Philippine petrochemicals industry aims, In the short- to medium-term, to secure and provide the vital resin requirements of the entire country in a competitive, efficient and timely manner so as to catalyze sustainable and dynamic manufacturing activities fueling growth across all user-industries. In the medium- to long-term, it seeks to harness the tremendous potential of the entire petrochemical streams (over 2,000 industrial/chemical products), which should provide a formidable backbone for Philippine industrialization.

The industry’s objective is to achieve self-sufficiency in strategic resin supply and increase the petrochemical sector’s contribution to total Philippine GDP from Php 44 B in 2010 to Php 113 B in 2018 and Php 215 B by 2025 through the progressive integration of upstream, midstream and downstream components of the sector. Such progressive integration will involve the entry into various other petrochemical branches that will provide exponential value addition in different industries, spurring domestic and export growth and potentially contributing up to 5-10% of GDP by 2025.

Towards this, the industry recommends the enforcement of anti-smuggling measures to eradicate substandard and illegal petrochemical products in the local market, implementation of reforms to ease doing business, and update the industry masterplan to rationalize location and and logistical network of upstream-midstream-downstream facilities in a closely-linked value chain.

 

About Petrochemicals

Petrochemicals is a strategic sector of the economy that could anchor the country’s industrial development. Because of its strong linkages upstream, midstream and downstream, the sector provides robust multiplier effects on other main sectors of the economy such as construction, electronics and computer, medical services, transportation and automotive, packaging, education, telecommunications, electrical and water distribution, agriculture and fishery, and furniture, among others.

The petrochemicals industry centers around the production of plastic resins, which is used as inputs to the downstream plastics industry to form different products. The total petrochemical investment in the country is estimated to exceed US$ 2 Billion pesos with 895,000 metric tons per year total capacity in polymer production. Total domestic capacity for resins presently exceed local demand but remain unutilized due to intense competition from imports, the absence of domestic monomer production, and intermittent supply constraints for feedstock or monomer.

There are currently seven operating firms in the industry, employing more than 1,200 employees directly and around 1,800 workers indirectly. With the addition of upstream projects under construction and expansion plans, direct and indirect employment is estimated to reach more than 5,000 by 2014.

The establishment of the Philippine’s first naphtha cracker facility by JG Summit Olefins Corp. (JGSOC) is expected to provide the first step for upstream integration of the petrochemicals industry.  It provides a powerful means to actualize the potential of developing various downstream operations that would broaden the petrochemicals industry product range and deepen its primary product offerings in the country. With the growing demand for resins from both the domestic and international markets, the promising outlook for the domestic economy, and the government initiatives to boost the manufacturing sector, investments in the petrochemicals industry can be expected to expand further.

The main industry association in the petrochemicals sector is the Association of Petrochemical Manufacturers of the Philippines, Inc. (APMP). It is a member of the Federation of Philippine Industries (FPI) and the Philippine Chamber of Commerce and Industry (PCCI).

 

Facts and Figures

Petrochemicals Industry Performance (in MT)

  2007 2008 2009 2010e 2011e
Local Production* 288,649 269,481 320,222 299,137 272,346
Resin Imports** 442,605 376,843 387,039 436,747 404,098
Total Available 731,254 645,824 707,261 735,884 676,444
Less: Resin Exports 10,032 49,157 99,391 117,819 58,529
Net Compounded Local Sales 721,222 596,667 607,870 618,065 617,915
Average Price/MT in US $ 1,329 1,470 1,060 1,433 1,426
Average Forex Price Php:US$ 46.15 44.47 47.64 45.08 43.31
Est. Local Sales Value, in billion Php 44.23 39.00 30.70 39.93 38.16
* Local production is used using monomer inputs. Monomer import data is based on figures reported by RP.
** Resin import data based on figures reported by exporting countries
e estimates

 

Policies

IPP 2014-2016

The manufacture of chemicals is among the preferred activities in the IPP. This includes the production of petrochemicals and its derivatives, including, but are not limited to, the manufacture of derivatives from ethylene such as ethylene dichloride (EDC) and vinyl chloride monomer (VCM); olefins and polyolefins [Polyethylene (PE), Polypropylene (PP), Polystyrene (PS), and Polyvinyl Chloride (PVC)], derivatives from propylene, derivatives from mixed C4, and aromatic derivatives.

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain petrochemicals products as among the products for mandatory certification under mechanical/building and construction materials.

The certification of petrochemicals products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

 

Programs

Industry Development Program

The Technical Working Group (TWG) for the Chemicals Industry Cluster – which includes petrochemicals – serves as the coordinating mechanism through which industry concerns are addressed. The TWG is organized into four action tasks, namely:

  • FOR TRADE & INVESTMENT MATTERS – covering issues regarding industry clustering, tariff concerns, smuggling, and trade and investment promotions;
  • FOR TALENT DEVELOPMENT & INNOVATION – covering issues on skills development and introduction of innovation and process;
  • FOR EASE OF DOING BUSINESS – covering issues on assistance that the government could provide the industry as regards streamlining the permit and documentary requirements which overlaps among various agencies; and
  • FOR ENVIRONMENTAL PRACTICES – covering issues on plastic banning, life cycle assessment (LCA) and the use of the same as basis of scientific and technological studies in crafting laws that would affect the industries.

Among the TWGs activities are the following:

  • Ease of Doing Business. With the release by the DENR of EMB MC 2014-003 (or the Supplemental Guidelines for DENR AO 2007-23, prescribing additional requirements for the issuance of the priority chemical list (PCL)), the TWG was able to obtain a PCL exemption for the industry. In addition, a series of workshops for Ease of Doing Business from January to February 2015 was conducted to come up with a roadmap to streamline the processes of issuance of permits and licenses by various regulatory agencies for the chemicals industry.
  • Human Resource Development. TESDA and SPIK conducted a workshop in consultation with the various chemicals industry associations in October 2014 to come up with Training Regulations for a) plant process operators and b) QA/QC laboratory technicians. These training regulations are currently being reviewed by TESDA. After finalizing the training regulations, TESDA and SPIK shall proceed to work on the Assessment Tools for the skills identified.
  • Life Cycle Analysis (LCA) for Plastic Packaging. In view of the increasing number of LGU’s banning the use of plastics, the conduct of LCA on plastics has become a priority. This is also pursuant to R.A. 9003’s mandate for DTI to come up with a non-environmentally acceptable products (NEAP) list. In December 2014, the initial results of the LCA Study were presented by the Chairman of the Plastics Industry TWG. The LCA Consultant from DLSU presented to the group his simulation results.
  • JGSOC Naphtha Cracker. The JG Summit Olefins Corporation (JGSOC) confirmed that the first Naphtha Cracker Plant in the Philippines started its commercial operations on November 1, 2014. Currently, the downstream polymer plants of JG Summit Petrochemical Corporation (JGSPC) are already using polymer-grade ethylene and propylene manufactured from the JGSOC Naphtha Cracker Plant to produce polyethylene (PE) and polypropylene (PP) resins, for sale to both domestic and export markets. JGSOC also started to export pyrolysis gasoline (pygas).
  • Greening the Industry Roadmaps. In the 2nd Scoping Mission for Greening the Industry Roadmaps project conducted by GIZ, the Plastics Industry was identified as one of the priority sectors. Following this, BOI and PPIA collaborated in conducting a workshop on ISO 14000-Environmental Management and ISO 50001-Energy Management System Standard for PPIA-member companies in February 2015.
  • Reverse Trade Agreement. Pacific Paint (Boysen) Philippines, Inc. has entered into an MOU with SHDA on September 26, 2014. BOYSEN would be supplying SHDA with white latex paint for their housing projects. There have been similar negotiations between SHDA and two (2) other paint companies (Davies Paints Philippines, Inc. and Campbridge Paint, Inc.).
  • Product Standards for Paints. In 2014, the BPS-TC on Paints re-convened and agreed that the priority products would include Semi-gloss Latex, Gloss Enamel, and Alkyd Metal Primer Products. The product standard for Semi-gloss latex topcoat for white and light tints was finalized.
  • Comprehensive Tariff Review. A Comprehensive Tariff Review (Line-by-line tariff review) for the chemicals industry was conducted, in preparation for ongoing and future FTA negotiations. The Chapters reviewed include Chapters 28, 29, 31, 32, 33, 34, 35, 36, 37, and 38. Chapter 39 remains under review, with the PPIA and APMP finalizing their position papers.
  • ASEAN-Japan Chemical Safety Database (AJCSD) Seminar. The AJCSD’s objective is to come up with a database of all regulated chemicals in ASEAN and Japan, as well as share chemical regulatory information among ASEAN countries. A mini-seminar on the AJCSD Project was facilitated by experts from the Japan Ministry of Economy, Trade, and Industry (METI) and the National Institute of Technology and Evaluation (NITE). The TWG, regulatory government agencies, and the private sector have also agreed to establish a national database containing the regulations for Philippine chemical products. BOI is currently coordinating with PEZA to assess the feasibility of using their Chemical Importation Tool (CIT) database facility for this purpose.

 

Champions

Association of Petrochemical Manufacturers of the Philippines (APMP)

Mr. Homer Maranan
Executive Director

Unit 1405 Cityland 10 Tower 1,

156 H.V. dela Costa St., 1227 Makati

Tel. No.: (632) 753-4189

Email: [email protected]

Board of Investments (BOI)

Dir. Evariste M. Cagatan
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 890-9329

Email: [email protected]

Plastics

The Philippine plastics industry envisions itself to be a proactively adaptive downstream industry that is able to fully supply the growing and changing demands of the domestic and export market, create employment opportunities with a positive well-informed on the environmental image and perception.

Its goals are:
o Satisfy the domestic demand and be a leading contributor to the Philippine export basket.
o Promote a high level of workforce productivity.
o Be innovative in process
o Develop a sustainable industry mindful of our limited/finite resources.
o Promote/ develop/ strengthen the plastics recycling industry.
o Create a wide range of innovative products with the best consumer value.

 

About Plastics

The Philippine downstream plastics industry refers to the plastic fabricators and manufacturers which convert plastic resins to industrial and consumer finished products. Main production processes include film and sheet extrusion; injection moulding; compression moulding; extrusion blow moulding: injection blow moulding; injection stretch blow moulding; pipe and profile extrusion; net and twine extrusion; woven sack extrusion and weaving; sheet thermoforming, printing, lamination, slitting and bag forming; and recycling.

Plastic is a widespread and pervasive material that is used by a multitude of industries in the production of numerous products. In the Philippines, industries such as the electronics, construction, food, cosmetics, packaging, and automotive are aligned with the viability of the plastics industry. Having a local source of plastic materials benefits all sectors with its adaptive, just in-time delivery capabilities, and more importantly softens the impact brought about by dollar and import requirements.

Majority of the plastics companies are situated Metro Manila, particularly in the CAMANAVA (Caloocan, Malabon, Navotas, Valenzuela) area, while others are from Manila, Pasig and CALABARZON (Cavite, Laguna, Batangas, Rizal, and Quezon). There are some in Iloilo and Cebu in the Visayas, and Davao in Mindanao.

The main industry association in the plastics industry Philippine Plastics Industry Association, Inc. (PPIA).

With the coming of the ASEAN Economic Community in 2015, and given that applications for plastics are increasing from building and infrastructure, transport, automotive sectors among others, foreign investments are shifting towards the region. This creates opportunities for the industry to gain competitive advantage in the global market.

 

Facts and Figures

 

Philippine Plastics Raw Material Consumption

 

Philippine Resin Consumption

 

Policies

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain plastic products as among the products for mandatory certification under mechanical/building and construction materials and chemicals and other consumer products.

The certification of plastic products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme and the implementing guidelines for the certification of monobloc chair, stool, and plastic table.

PNS for Plastic and Plastic Products

There is a Philippine National Standard for plasticsplastic and plastic productsspecifications for compostable plasticsmonobloc chair, stool, and plastic table, and PVC resin.

 

Programs

Industry Development Program

The Technical Working Group (TWG) for the Chemicals Industry Cluster – which includes plastics – serves as the coordinating mechanism through which industry concerns are addressed. The TWG is organized into four action tasks, namely:

  • FOR TRADE & INVESTMENT MATTERS – covering issues regarding industry clustering, tariff concerns, smuggling, and trade and investment promotions;
  • FOR TALENT DEVELOPMENT & INNOVATION – covering issues on skills development and introduction of innovation and process;
  • FOR EASE OF DOING BUSINESS – covering issues on assistance that the government could provide the industry as regards streamlining the permit and documentary requirements which overlaps among various agencies; and
  • FOR ENVIRONMENTAL PRACTICES – covering issues on plastic banning, life cycle assessment (LCA) and the use of the same as basis of scientific and technological studies in crafting laws that would affect the industries.

Among the TWGs activities are the following:

  • Ease of Doing Business. With the release by the DENR of EMB MC 2014-003 (or the Supplemental Guidelines for DENR AO 2007-23, prescribing additional requirements for the issuance of the priority chemical list (PCL)), the TWG was able to obtain a PCL exemption for the industry. In addition, a series of workshops for Ease of Doing Business from January to February 2015 was conducted to come up with a roadmap to streamline the processes of issuance of permits and licenses by various regulatory agencies for the chemicals industry.
  • Human Resource Development. TESDA and SPIK conducted a workshop in consultation with the various chemicals industry associations in October 2014 to come up with Training Regulations for a) plant process operators and b) QA/QC laboratory technicians. These training regulations are currently being reviewed by TESDA. After finalizing the training regulations, TESDA and SPIK shall proceed to work on the Assessment Tools for the skills identified.
  • Life Cycle Analysis (LCA) for Plastic Packaging. In view of the increasing number of LGU’s banning the use of plastics, the conduct of LCA on plastics has become a priority. This is also pursuant to R.A. 9003’s mandate for DTI to come up with a non-environmentally acceptable products (NEAP) list. In December 2014, the initial results of the LCA Study were presented by the Chairman of the Plastics Industry TWG. The LCA Consultant from DLSU presented to the group his simulation results.
  • JGSOC Naphtha Cracker. The JG Summit Olefins Corporation (JGSOC) confirmed that the first Naphtha Cracker Plant in the Philippines started its commercial operations on November 1, 2014. Currently, the downstream polymer plants of JG Summit Petrochemical Corporation (JGSPC) are already using polymer-grade ethylene and propylene manufactured from the JGSOC Naphtha Cracker Plant to produce polyethylene (PE) and polypropylene (PP) resins, for sale to both domestic and export markets. JGSOC also started to export pyrolysis gasoline (pygas).
  • Greening the Industry Roadmaps. In the 2nd Scoping Mission for Greening the Industry Roadmaps project conducted by GIZ, the Plastics Industry was identified as one of the priority sectors. Following this, BOI and PPIA collaborated in conducting a workshop on ISO 14000-Environmental Management and ISO 50001-Energy Management System Standard for PPIA-member companies in February 2015.
  • Reverse Trade Agreement. Pacific Paint (Boysen) Philippines, Inc. has entered into an MOU with SHDA on September 26, 2014. BOYSEN would be supplying SHDA with white latex paint for their housing projects. There have been similar negotiations between SHDA and two (2) other paint companies (Davies Paints Philippines, Inc. and Campbridge Paint, Inc.).
  • Product Standards for Paints. In 2014, the BPS-TC on Paints re-convened and agreed that the priority products would include Semi-gloss Latex, Gloss Enamel, and Alkyd Metal Primer Products. The product standard for Semi-gloss latex topcoat for white and light tints was finalized.
  • Comprehensive Tariff Review. A Comprehensive Tariff Review (Line-by-line tariff review) for the chemicals industry was conducted, in preparation for ongoing and future FTA negotiations. The Chapters reviewed include Chapters 28, 29, 31, 32, 33, 34, 35, 36, 37, and 38. Chapter 39 remains under review, with the PPIA and APMP finalizing their position papers.
  • ASEAN-Japan Chemical Safety Database (AJCSD) Seminar. The AJCSD’s objective is to come up with a database of all regulated chemicals in ASEAN and Japan, as well as share chemical regulatory information among ASEAN countries. A mini-seminar on the AJCSD Project was facilitated by experts from the Japan Ministry of Economy, Trade, and Industry (METI) and the National Institute of Technology and Evaluation (NITE). The TWG, regulatory government agencies, and the private sector have also agreed to establish a national database containing the regulations for Philippine chemical products. BOI is currently coordinating with PEZA to assess the feasibility of using their Chemical Importation Tool (CIT) database facility for this purpose.

 

Champions

Philippine Plastics Industry Association (PPIA)

Mr. Teo Kee Bin
President

122 A. del Mundo St. cor 10th & 11th Ave., Grace Park, Caloocan City

Tel. No. : (632) 361-1160; 330-4423; 330-4424

Email: [email protected]

Board of Investments (BOI)

Dir. Evariste M. Cagatan
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 890-9329

Email: [email protected]

Paper

The Philippine paper industry seeks to attain the capability to serve all major pulp and paper requirements of the country and develop high-value and quality pulp and paper products in the long-term, in a manner that is internationally competitive and environmentally-sustainable.

Its goals are:
– To improve the country’s wastepaper recovery and recycling rate;
– To upgrade the levels of manufacturing technologies and environmental performance of local paper mills;
– To establish local sources of pulp, based on sustainably-managed tree plantations and non-wood fibers from agricultural wastes and annual crops; and
– To enable the local mills in achieving economic competitiveness and thus, contribute to poverty alleviation and national development.

 

About Paper

The pulp and paper industry contributes about P30 billion per year in domestic sales value to the economy, or saves the country $700 million per year in foreign exchange from imported paper and board. As of 2012, the local paper industry directly employs about 6,000 personnel, mostly skilled workers and technical professionals, and contribute value to the economy by sustaining the livelihood opportunities of about 1.2 million workers in the wastepaper collection, sorting, and hauling sub-sectors.

Current socio-economic conditions in the country are profitable for businesses in the pulp and paper industry. While paper and paperboard consumption in the Philippines is still low at 19 kg per capita, total annual demand is growing at 2.5% per year, with packaging and tissue grades experiencing high growth rates. Moreover, total paper and board demand in the Philippines is projected to surpass 2 million tons within five years, or an additional of 0.3 million tons per year at current consumption levels.

The country’s recent strong economic performance has pushed a steady rise in demand for packaging materials such as corrugating container boards and carton boards, which can be traced to the increasing export sales of electronics, fresh fruits, garments, handicrafts and furniture. Strong growth is also seen in the domestic market, coming from the demand for packaging processed foods, appliances and other consumer goods, as well as consumption of tissue, publishing and printing paper. This strong demand is driven by improved standards of living, higher disposable income, rise in education, tourism, and increased manufacturing activities in the Philippines.

Furthermore, the shift towards environmentally-friendly policies and lifestyles drives demand further, thereby providing promising opportunities to invest in the industry. For instance, sales of paper bags and wrappings in retail stores are expanding in large volumes for the next 3 to 5 years, as a result of new laws regulating the use of plastic and polystyrene in packaging consumer and industrial products.

At present, the Philippines has twenty-four (24) non-integrated paper mills with a total production capacity of 1.3 million tons of paper and paperboard per year, as well as four (4) abaca pulp mills exporting 25,000 tons of specialty non-wood pulp per year. Major grades of manufactured papers in the country are mostly derived from recycled wastepaper, and these products come in the form of newsprint, printing and writing paper, tissue, container board, and other packaging paper and boards.

In the last five years, almost all grades produced in the Philippines have a recycled fiber content of 95-100%, compared to the minimum recycled content of 25-35% implemented in developed countries. By being a market of about 1 million tons of wastepaper per year, the paper industry provides strong support to the country’s solid waste management efforts. Consequently, it provides thousands of indirect jobs for garbage collectors, junk recyclers, sorters, haulers, and other workers in the country’s marginalized sectors.

Aside from recycling paper for its fiber requirements, the Philippines has unutilized volumes of agricultural waste and abaca (Manila hemp) that farmers in Bicol, the Visayas, and Mindanao can supply to the paper industry. Other fibers from agricultural waste (such as rice straw, banana and sugarcane bagasse), as well as plants like kenaf and bamboo, can be supplemental sources of pulp in the industry. Such production technique facilitates not only environmental sustainability and resourcefulness, but also inclusiveness in generating jobs for marginalized sectors.

Finally, the Philippines has suitable areas for fast-growing and sustainably-managed commercial forests. For instance, in the eastern half of Mindanao, pulp production can be established based on privately-owned tree farms, industrial tree plantations, and community-based forestry. The forest products sector has also identified various species excellent for reforestation, such as Acacia mangium, Eucalyptus spp hybrids, Gmelina arborea, and Albizzia falcata. Virgin kraft and chemi-mechanical pulps (used in high-grade and international standards-compliant paper and paperboard products) can be locally manufactured from these wood species.

Since there is sufficient domestic market paper production in the Philippines, the country’s pulp requirements are enough to support the establishment of an economic-sized pulp mill. The industry presently operates without the presence of a local pulp mill, which is necessary for the production of specialty and high-value paper products. Domestic and foreign investments on this significant component will make the paper and pulp supply chain more productive and cost-competitive.

 

Facts and Figures

Volume of Paper and Paperboard (‘000 MT)

2006 2007 2008 2009 2010 2011
Exports 176 168 135 132 165 130
Imports 620 419 339 326 400 823

 

Value of Paper and Paperboard (in M US$)

2006 2007 2008 2009 2010 2011
Exports 105.9 102.2 110.1 98.8 132.1 144.2
Imports 386 291 252 223 284 737

 

Paper and Paperboard Production and Consumption (in ‘000 MT)

2006 2007 2008 2009 2010 2011
Production 524 1097 843 1019 1038 950
Consumption 968 1348 1468 1253 1834 1643

 

Policies

IPP 2014-2016

The production of virgin paper pulp integrated with forest plantation, research & development, and technical vocational education and training institutions is among the preferred activities listed in the IPP.

In the upstream: industrial tree plantation (also known as Industrial Forest Plantation (IFP) based on DENR AO 1999-53) is among the special laws listed in the IPP. This covers extensive plantation of forest land of tree crops (including timber and non-timber species such as rubber, bamboo, rattan, etc., except fruit trees) for commercial and industrial purposes.

In cases of tree plantations that are joint venture agreements with other private entities, community organizations or government entities, only the share of the registered enterprise may be entitled to ITH.

Application for registration must be accompanied by an endorsement from the DENR.

In the downstream: the publication or printing of books is among the special laws listed in the IPP. This covers content development intended for books and publication of books in print or digital format.

The following may qualify as new:

  • New book titles (original works, and original text with annotations), and
  • First format by which the new book title will be produced or published. The succeeding format (example; print to digital, or vice versa) by which the same title is published will be regarded as “Expansion.”

Re-prints, revisions, and succeeding editions of existing titles will not qualify for registration.

For unpublished content, application for registration may be on a per book title or a maximum of five (5) book titles per application.

For publishing, the following will apply:

  • A minimum of 10 titles with 1,000 copies each for its first print run, in case of printed books; and
  • A minimum of 10 titles each, in case of e-books.

Application for registration must be accompanied by an endorsement from the National Book Development Board (NBDB).

BPS Product Certification Scheme

The certification of pulp and paper products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

PNS for Pulp and Paper Products

There are Philippine National Standards covering paperboard, and pulpspaper products, as well as tissue paper and tissue products.

 

Programs

Industry Development Program

The pulp and paper industry, through the Philippine Paper Manufacturers Association, Inc. (PPMAI), collaborates with DTI and other government agencies in order to promote the sector’s competitiveness.

Among the matters discussed in the industry Technical Working Group (TWG) include:

  • Safeguard Measures. Discussions with DTI bureaus (BETP, BITR, BPS and BIS) and the Tariff Commission regarding the formulation of safeguard measures against importation of some paper grades (e.g., newsprint and paper boards) were done to come up with adjustment plans to effectively face import competition. The Tariff Commission currently investigates the import of newsprint.
  • DTI’s Green Procurement Program. As one of the identified pilot products under the Program, the paper industry would receive capacity building assistance in order to better participate in the government’s bidding process. Currently, DTI is conducting training for technical capability to formulate technical specifications for paper products that the government purchases.
  • Investments in New Paper Mills. A possible project is the reactivation of the integrated paper mill of PICOP in Bislig that was closed in 2010. Unfortunately, the current owner has not yet responded to requests for a meeting and the interested Japanese investors are requesting for alternative sites.
  • Greening Manufacturing. Paper is one of the selected sectors included in this project of DTI with GIZ, with the aim of incorporating green elements in their production process and meet global standards.

 

Champions

Philippine Paper Manufacturers Association, Inc. (PPMAI)

Mr. Ray Geganto
Executive Director

2F FMF Bus. Center, 126 Pioneer St., Mandaluyong City

Tel. Nos.: (632) 7039124; (632) 4054069; (63) 9168200702

Fax.   : (632) 8159460

E-mail: [email protected]

Board of Investments

Mr. Mario Pocholo Orense
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 895-3977

Email: [email protected]

Rubber

The Philippine rubber industry aims to propel domestically-produced rubber products to become a key contributor to Philippine economic development by transforming the industry to produce world-class, competitive and high quality rubber products.

It seeks to achieve this by (1) upgrade manufacturing skills, (2) adopting technical and market standards, and (3) linking with both the local and export markets.

 

About Rubber

The country’s economic growth created greater capacity for consumption for different segments of the population. This has stimulated the demand for various products including those made from rubber, thus, generating the need and opportunity to develop the country’s rubber product industry.

The Philippines has been among the top ranking countries in rubber production until the 80’s, when demand for car tires and other rubber-made products slowed down following the decline in the Japanese and European economies. In recent times, however, the Philippine market for rubber products has demonstrated new vitality shown by the increasing demand for rubber-made goods.

The Philippine rubber industry is characterized by its expertise to manufacture a wide array of rubber products, existing capacity to meet customer demands, technical capability to satisfy customer needs, strong ability to adjust to customer requirements, and highly-experienced direct labor.

The main industry organization is the Philippine Rubber Industries Association, Inc. (PRIA), formed in 1979 from the merger of the Philippine Rubber Manufacturers Association (PHIRMA) and the Rubber Industries Association of the Philippines (RIAP). PRIA today has 46 member firms, 26 of which are direct industry players, while the rest are business development service providers (e.g. material suppliers and logistics companies).

The expected increase in global and domestic demand for natural rubber is an opportune time to strengthen the rubber products industry in the country.

 

Facts and Figures

Trade data of rubber products (FOB value, in M US$)

2011 2012 2013 2014
Rubber manufacture imports 261 277 301 311
Natural rubber exports n/a 62  75  79

 

Policies

IPP 2014-2016

The commercial production of high value crops – including rubber – is among the preferred activities listed in the IPP.

Industrial tree plantation (also known as Industrial Forest Plantation (IFP) based on DENR AO 1999-53) is among the special laws listed in the IPP. This covers extensive plantation of forest land of tree crops (including timber and non-timber species such as rubber, bamboo, rattan, etc., except fruit trees) for commercial and industrial purposes.

In cases of tree plantations that are joint venture agreements with other private entities, community organizations or government entities, only the share of the registered enterprise may be entitled to ITH.

Application for registration must be accompanied by an endorsement from the DENR.

BPS Product Certification Scheme

The certification of rubber products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

PNS for Rubber and Rubber-based Products

There are Philippine National Standards covering rubber sheetsrubberproductsrubber and rubber-based productsrubber products and footwearcentrifuged natural rubber latex, and rubber products and adhesives.

 

Programs

Industry Development Program

The rubber industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among these are:

  • Official designation campaign
  • Trade harmonization and rationalization
  • People productivity campaign
  • Shop floor productivity gains
  • Materials and suppliers assurance
  • Price stabilization campaign
  • Manufacturing process enhancement
  • Equipment retrofitting
  • Technical services partnership
  • New product development
  • Dominate the local market campaign
  • Export marketing campaign

Among the recent TWG activities are:

  • Integration of Upstream and Downstream Rubber Roadmaps. The Department of Agriculture has completed its Natural Rubber Roadmap (DA Master Plan). A consultant was hired to integrate the upstream (DA roadmap) and the downstream rubber industry roadmap (DTI roadmap).
  • Research & Development. DOST approved funding for several projects including a research project to increase the local rubber content in motorcycle tire application and a testing facility in Region XII. A proposal for a pre-FS on a manufacturing facility for latex-dipped rubber products is currently being developed.
  • Testing Facility. To date, DTI-ROG has approved 5 testing facilities under its SSF project. Another SSF for rubber in Palawan is currently under evaluation. Representatives of ROG together with rubber producers and processors from Region IX and XII visited the Yokohama Tires Philippines, Inc. (YTPI) rubber manufacturing plant in Clark, Pampanga to be clarified on the rubber quality requirements and suppliers accreditation process of YTPI.
  • Human Resource Development. PRIA and Mapua signed a MOA for the pilot of the first rubber course in 2015. In addition, DOST approved funding for capacity building activities for rubber farmers.

 

Champions

Philippine Rubber Industries Association (PRIA), Inc.

Ms. Rhodora Medalla
President

Principal Address: 32 Mulawian Rd., Brgy. Lawang Bato, Valenzuela City

Mailing Address: 40 J.P. Ramoy St. Barrio Talipapa, Novaliches, Caloocan City

Tel. No.: (632) 983-6820 loc. 20

Fax no.: 454-0111

Email: [email protected]

Website: www.philippinerubber.com.ph

Board of Investments (BOI)

Mr. Dexter Pajarillo
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 897-6682 loc. 259

Email: [email protected]

Tool and Die

The Philippine tool and die industry aims to be a locally-dominant, globally-competitive, and self-sustaining industry.

By locally-dominant, the industry hopes for its favorable reception in the Philippine market, i.e., a state where locally produced tool and die products are strongly patronized by the domestic market over imported ones. By being globally competitive, industry seeks to develop its ability to offer products and services which are comparable in terms of quality and price with its competitors. By self-sustaining, the industy targets to operate on its technical, market and financial merits and not on artificial support.

The industry’s goals are:
– To increase the number of skilled and competent personnel as well as enhance the current level of technical skills of local tool and die manufacturers;
– To enhance the capabilities of the local industry by supporting modernization and meeting the technological requirements of the tool and die stakeholders; and
– To reduce, if not eliminate, demand for internationally outsourced products and services by developing local suppliers of production inputs (e.g. raw materials, equipment, ancillary and maintenance services).

 

About Tool and Die

The tool and die industry is an industry that uses general and specialized metal cutting technology to fabricate dies, molds and toolings employed to convert raw material into a required shape. The common products of this sector include dies (simple, compound and progressive), molds (for forging, plastics injection or blow molding, die casting, glass blow molding) and tools, e.g. jigs and fixtures used for cutting and shaping different materials. Molds are shaping implements for glass, metal, rubber and plastics components through processes such as die casting, blow molding or sheet stamping. Both molds and dies are used to give a material a final or intermediate shape thus these products are found at the forefront of the shaping and fabrication industries. Tool and dies normally are ready to use products either as standalone (molds) or as an attachment to a machine (die).

The products of the tool and die industry are typically made by mold and die makers using general, conventional and specialized metal cutting technology, like computer numerically controlled (CNC) cutting machines, employing special tool steel materials which are either pre-hardened or which undergoes heat treatment after the desired tool has been cut to shape. The skill levels of mold and die makers are of the craftsmen level which requires talent and experience, although the use of CNCs improves the productivity of some.

The Philippine government recognizes that the tool and die industry is an important complement to other manufacturing activities. Through the Metal Industry Research and Development Center (MIRDC) of the Department of Science and Technology (DOST), it fully supports and promotes the tool and die industry and engages its stakeholders particularly the Philippine Die and Mold Association (PDMA). The PDMA collaborates with the associations of related industries, including the Motor Vehicles Part Manufacturers Association of the Philippines (MVPMAP), Metalworking Industries Association of the Philippines (MIAP), and Philippine Metalcasting Association, Inc. (PMAI).

At present, there are about 170 firms in the tool and die industry, mostly SMEs, currently providing input materials to key manufacturing activities of the country, including automotive and electronics manufacturing. These are engaged in such activities as die casting and forging; electronics and semiconductor tooling; metal stamping; and plastic, rubber, and packaging.

Despite the presence of local manufacturers, there is still a significant amount of imported tool and die products making its way into the country – indicating that local supply remains insufficient to cover domestic demand. With the country poised to be the next manufacturing hub in Asia, the Philippines is a good investment destination for manufacturing and offers much opportunities for tool and die enterprises.

 

Policies

IPP 2014-2016

The manufacture of tool and die products is among the preferred activities listed in the IPP. This covers the production of dies and molds, research & development, and technical vocational education and training institutions.

  • Simple, compound and progressive dies for metal stamping or metal forging
  • Molds for die casting, for plastic injection or blow molding, glass blow molding, forging, encapsulation molds
  • Jigs and fixtures for metal cutting and metal forging.

 

Programs

Die and Mould Solution Center

Launched in June 2014 under the DOST’s Makinarya at Teknolohiya para sa Bayan (Makibayan) Program, the Die and Mould Solution Center (DMSC) aims to enhance the competitiveness of the local tool and die sector through the acquisition of the needed technology and facilities to support the competitiveness in the localization of currently imported dies and moulds.

Hosted at the DOST’s Metals Industry Research and Development Center (MIRDC), the expected output of the DMSC include acquisition of design and simulation software for plastic injection moulds and stamping dies through offering translation of Computer-Aided Design into Computer-Aided Manufacturing. The DMSC also strives to complement and upgrade the present CNC Machines at the MIRDC to include CNC High Speed Machining Centers, 5-axis CNC Multi-tasking Machines, CNC EDM Sinker/Drill/Wirecut, LASER Welding Machine and Surface Grinders.

The DMSC also offers a common service facility for the local tool and die makers under a facility-sharing scheme at reasonable rates. The MIRDC is also gearing up to provide consultancy and training on specialized techniques and procedures relevant to tool, die and mould-making.

Industry Development Program

The tool and die industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. It also serves as a venue to coordinate the industry’s projects and programs, particularly the Tool and Die Making and Design Training Program, whose objective is the upgrading of the capability of the industry by expanding the pool of trained and highly-skilled die and mold designers. It seeks to address the deficiency in the supply of skilled manpower for the industry.

The program was piloted in July 2014. It was designed for six (6) months for a batch of 20 trainees, mostly graduates of Tool and Die Engineering Technology course from the Technological University of the Philippines (TUP), or Mechanical Engineering graduates. Most of the trainees came from PDMA member companies. The TWG, PDMA and MIRDC crafted the curriculum for the pilot Training Program, including the selection criteria and requirements for the trainees.

In 2015, four sessions of the 6-month training funded under the MRP have been arranged to graduate 80 die and mold makers and designers.

 

Champions

Philippine Die and Mold Association (PDMA)

Mr. Philip C. Ang
President

Metals Industry Research and Development Center Compound,

Gen. Santos Ave., Bicutan,

Taguig, Metro Manila 1631

Tel. No.: (632) 837-0431 to 38 loc. 463 / 837-0764

Telefax: (632) 838-7878 / 837-0430

Board of Investments (BOI)

Mr. Amelito Umali
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave.,

Makati City, Philippines

Tel. No.: (632) 890-9329; 897-6682 loc. 259

Email: [email protected]

 

Manufacturing

Manufacturing comprises more than half of the Philippines’s industrial sector and accounts for almost a quarter of the country’s Gross Domestic Product (GDP). From an annual growth rate of 5.4% in 2012, the manufacturing sector grew by 10.5% in 2013 and 8.1% in 2014.

Manufacturing industries have higher employment, income and output multipliers relative to the agriculture and services sectors. Manufacturing also promotes stronger inter-industry and inter-sectoral linkages, firm productivity, technological development and innovation. As such, the growth of the manufacturing industry improves the upgrading and diversification in the agricultural sector, as well as drives demand for higher value-added services. Taking all these into consideration, the Philippines is accelerating the manufacturing sector’s competitiveness towards the achievement of sustainable and inclusive development in the country.

 

Vision of the Industry

Globally Competitive Manufacturing

The vision is to create a globally competitive manufacturing industry with strong forward and backward linkages to serve as hubs in the regional and international production networks of automotive, electronics, garments and food and supported by well-managed supply chains.

Targets: manufacturing contribution of 30% of total value added and 15% of total employment

 

Goals and Strategies

Roadmap for Structural Transformation

Short-run (2014-2017) Goals:

  • maintain competitiveness of comparative advantage industries
  • strengthen emerging industries
  • strengthen capacity of existing industries

Medium-run (2018-2021) Goals:

  • shift to high value added activities
  • investments in upstream or core sectors
  • link and integrate manufacturing with agriculture and services industries
  • create a manufacturing innovation ecosystem

Long-run (2022-2025) Goals:

  • continue technology upgrading to maintain a globally competitive and innovative manufacturing industry

 

 

Strategic Actions and Complementary Measures

To achieve the above goals, the following strategic actions are pursued:

  • Address gaps/linkages in industry supply chains
  • Expand the domestic market base to allow industries to attain scale economies and export
  • Design human resource development and training programs to improve skills and establish tie-ups with universities and training institutions
  • Support SME development through establishment of common service and incubation facilities
  • Support innovation and R&D activities
  • Promote green growth: green industry, use of clean technologies in industrial production, greater resource and energy efficiency, improved water and waste management
  • Pursue aggressive promotion and marketing programs to attract more foreign direct investments especially those that would bring in new technologies.
  • Continue to address the high cost of power and domestic shipping, smuggling and implementation of measures to streamline and automate government procedures and regulations.
  • Adopt a more competitive exchange rate.

Economic Contribution and Growth Performance

Manufacturing Growth Performance

The average growth of the manufacturing sector, in terms of gross value added, has been steadily increasing since the 1990s. From 1991 until 2000, the sector grew on the average by 2.5%. Average growth picked up to 4.1% from 2001 to 2010. This further increased to 7.1% in recent years (2011 to 2014), which is higher than the average growth rates of GDP and the entire industry sector amounting to 6.0% and 6.4%, respectively.

At the sub-sectoral level of the manufacturing industry, all segments- consumer goods, intermediate goods and capital goods – have manifested positive average value added growth rates in the 1990s, the 2000s and the early 2010s. In the 1990s and 2000s, the capital goods segment had seen the most rapid average value added growth rate, driven primarily by the double-digit growth rates of the electrical machinery products during the 90s and of the basic metal industries in the 2000s. Meanwhile, from 2011 to 2014, the intermediate goods segment has shown the strongest average value added growth rate driven by the double digit growth rates of the print and publishing sector and the chemical industry.

Value Added Growth Performance of Manufacturing and its Sub-sectors (in percent; at constant 2000 prices)

Year 1991-00 2001-10 2011 2012 2013 2014 2011-14
Gross Domestic Product 3.0 4.7 3.9 6.6 7.2 6.1 6.0
INDUSTRY Sector 3.0 4.2 2.3 6.5 9.3 7.5 6.4
Manufacturing 2.5 4.1 4.7 5.4 10.3 8.1 7.1
Consumer Goods 1.8 4.6 7.3 10.3 5.7 9.5 6.5
Food manufactures 1.8 5.9 3.1 6.9 4.4 6.8 4.8
Beverage industries 2.3 3.8 17.2 4.4 -0.3 25.1 8.8
Tobacco manufactures 1.2 -9.7 -18.8 -0.2 -2.7 -5.1 -5.9
Footwear, wearing apparel 1.5 -2.0 3.9 39.0 11.9 -3.4 8.5
Furniture and fixtures 2.0 6.2 94.8 38.7 41.8 24.8 34.7
Intermediate Goods 1.6 2.4 4.3 3.8 31.4 6.9 8.4
Textile manufactures -4.6 0.8 -2.3 -0.5 -12.1 15.0 -0.6
Wood and cork products -4.0 -2.7 -8.7 18.1 -9.2 0.6 -1.0
Paper and paper products -0.7 0.6 14.6 -4.5 -8.2 6.3 1.4
Publishing and printing 1.4 0.6 -5.6 1.8 -5.9 88.7 13.5
Leather and leather prod. 5.3 -4.8 nd nd nd nd nd
Rubber products -2.2 1.1 7.6 8.1 3 5.7 3.9
Chemical & chemical prod. 2.5 4.4 18.1 4.0 97.8 3.3 21.7
Prod.of petroleum & coal 3.7 2.6 -9.1 -3.9 -14.7 14.3 -1.2
Non-metallic mineral prod. 2.1 5.0 2.9 15.1 10.1 -2.8 5.4
Capital Goods 6.2 5.5 0.2 0.1 6.9 7.5 4.4
Basic metal industries -1.8 13.1 -0.6 -18.1 51.1 -0.2 7.3
Metal industries 0.1 5.3 6.7 0.1 -0.9 46.2 9.6
Machinery except electrical 5.9 -0.5 2.7 8.6 6.2 22.3 7.5
Electrical machinery 13.2 5.7 0.4 -0.7 7.2 5.5 5.2
Transport equipment 2.4 7.5 -6.4 12.3 -19.9 7.1 0.5
Miscellaneous manufactures 4.9 7.9 12.5 -6.8 -10.7 -0.7 1.2

*nd= no data | Source of basic data: National Accounts of the Philippines, Philippine Statistics Authority.

 

Manufacturing Value Added Contribution to GDP

The manufacturing value added contribution has been quite steady since the 1990s. From an average share of 24.3% from 1991 to 2000, the sector’s average value added share from 2001 to 2010 slightly decreased to 23.7%. From 2011 to 2014, the average manufacturing value added contribution further decreased to 23%.This decline is also shared by the overall industry sector, given that the manufacturing sector accounts for almost 70% of the entire industrial sector’s gross value added. Meanwhile, the agriculture sector has experienced a diminished value added contribution over the years, whereas the services sector has seen a tremendous increase in its value added share over time.

At the sub-sectoral level, the consumer products segment has been the largest contributor to the total manufacturing value added since the 1990s. The food manufacturing industry has been consistently the single biggest component of this segment, with a contribution of more than 35% from the 1990s until the early 2010s. With regard to the consumer goods and capital goods segments, the former had a bigger share in the total value added as compared to the latter, during the 1990s and 2000s. However, during the 2011 to 2014 period, the latter has started to overtake the former in terms of value added share percentage. Within the intermediate goods segment, the chemical industry has manifested significant increases in its share, while the petroleum products sector has shown significant decreases over time. For capital goods, the electrical machinery sector has shown consistent increases in its value added share and it has been the biggest component of the capital goods segment since the 1990s until 2014.

Value Added Contribution (in percent)

Year 1991-00 2001-10 2011 2012 2013 2014 2011-14
Agriculture, Fishery, Forestry 20.8 18.9 11.5 11.1 10.4 10.0 11.0
Services 42.4 48.0 56.4 56.9 56.8 56.7 57.0
Industry 34.1 33.1 32.1 32.1 32.8 33.3 33.0
Manufacturing 24.3 23.7 22.4 22.1 24.6 23.2 23.0
Consumer Goods 50.0 51.0 48.0 50.0 47.8 48.4 48.6
Food manufactures 36.0 40.0 37.0 38.0 36.1 35.6 36.7
Beverage industries 4.0 4.0 4.0 4.0 3.8 4.4 4.1
Tobacco manufactures 3.0 1.0 0.4 0.4 0.3 0.3 0.4
Footwear, wearing apparel 6.0 4.0 3.0 3.0 2.6 2.3 2.7
Furniture and fixtures 1.0 1.0 3.0 4.0 5.0 5.8 4.5
Intermediate Goods 35.0 27.0 20.0 20.0 22.9 22.7 21.4
Textile manufactures 3.0 2.0 2.0 2.0 1.7 1.8 1.9
Wood and cork products 2.0 1.0 1.0 1.0 0.9 0.8 0.9
Paper and paper products 1.0 1.0 1.0 1.0 0.8 0.8 0.9
Publishing and printing 2.0 1.0 1.0 1.0 0.5 0.9 0.9
Rubber products 1.0 1.0 2.0 2.0 1.5 1.5 1.8
Chemical & chemical prod. 6.0 6.0 7.0 7.0 12.0 11.4 9.4
Products of petroleum & coal 17.0 14.0 4.0 4.0 2.8 3.0 3.5
Non-metallic mineral prod. 3.0 2.0 2.0 3.0 2.7 2.4 2.5
Capital Goods 13.0 19.0 29.0 27.0 26.7 26.5 27.3
Basic metal industries 2.0 3.0 2.0 2.0 2.0 1.9 2.0
Metal industries 2.0 2.0 1.0 1.0 0.9 1.2 1.0
Machinery except electrical 1.0 1.0 3.0 3.0 1.4 1.6 2.3
Electrical machinery 6.0 12.0 21.0 20.0 20.6 20.1 20.4
Transport equipment 1.0 1.0 2.0 2.0 1.7 1.7 1.9
Miscellaneous manufactures 2.0 3.0 4.0 3.0 2.6 2.4 3.0

Source of basic data: National Accounts of the Philippines, Philippine Statistics Authority.

 

Employment Performance

Total manufacturing employment has grown on the average by 0.8% from 2001 to 2013. Of the manufacturing sub-sectors, the food and beverages sector, electrical machinery manufacturing sector, and transport equipment manufacturing industry have the highest average employment growth rates of more than 2%. Meanwhile, the sub-sectors whose total employment has contracted, on the average, from 2001 to 2013 are the tobacco, textile, publishing and printing, basic metal, fabricated metal, and non-electrical machinery manufacturing industries. Employment in miscellaneous manufactures has also decreased over the years.

Employment Figures (in ‘000)

Year 2001-08 2009 2010 2011 2012 2013 2011-13 Average Growth, 2001-13
Manufacturing 3641 3599 3763 3818 3784 3822 3757 0.8%
Consumer Goods 2245 2193 2268 2296 2317 2359 2287 0.7%
Food and Beverage 691 740 779 784 840 880 805 2.4%
Tobacco manufactures 12 10 12 12 13 12 12 -0.8%
Footwear, wearing apparel 553 470 488 479 504 533 495 0.1%
Furniture and fixtures 130 116 119 122 139 118 123 0.0%
Intermediate Goods 654 708 729 737 673 664 702 1.1%
Textile manufactures 205 149 141 162 148 152 150 -3.2%
Wood and cork products 289 334 357 365 317 293 333 2.0%
Paper and paper products 48 45 45 49 50 49 48 1.8%
Publishing and printing 80 73 78 82 55 56 69 -2.2%
Rubber products 63 73 71 67 72 79 72 1.9%
Chemical & chemical prod. 79 85 83 80 82 93 85 1.1%
Products of petroleum & coal 6 4 5 5 6 5 5 0.3%
Non-metallic mineral prod. 90 94 90 89 91 89 91 1.7%
Capital Goods 628 609 669 687 672 674 662 1.3%
Basic metal industries 52 47 42 44 45 56 47 -0.3%
Metal industries 146 139 149 144 151 131 143 -0.6%
Machinery except electrical 73 69 68 64 19 16 47 -8.5%
Electrical machinery 297 286 339 352 380 396 351 4.6%
Transport equipment 60 68 71 83 77 75 75 2.5%
Miscellaneous manufactures 114 89 97 98 122 125 106 -0.7%

Notes: *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.

 

Employment Contribution

The manufacturing employment contribution to total employment has been declining since the 1990s. From an average share of 10% from 1991 to 2000, the sector’s average share from 2001 to 2010 slightly decreased to 9.1%. From 2011 to 2014, the average manufacturing employment contribution further decreased to 8%. This trend in the manufacturing sector is shared by the overall industry sector, given that manufacturing accounts for more than half of the entire industrial sector’s total employment. Meanwhile, the agriculture sector has experienced a diminished employment contribution over the years, whereas the service sector has seen a tremendous increase in its employment share over time.

At the sub-sectoral level, since the 2000s, the consumer goods segment has been the largest contributor to total manufacturing employment. Its share of more than 45% has been fairly steady from 2001 to 2013. The food manufacturing industry has been consistently the single biggest component of this segment, with an average contribution of more than 20% (from 2001 to 2010) and and 25% (from 2011 to 2013). The second biggest contributor to manufacturing employment is the intermediate goods segment, with an average share of 28.8% (from 2001 to 2010) and 27.1% (from 2011 to 2013). It is followed by the capital goods segment, with an average share of 24.8% (from 2001 to 2010) and 22.8% (from 2011 to 2013), and by the miscellaneous manufactures sector with a 3.7% average share for both time periods.

Employment Contribution (in percent)

Year 1991-00 2001-10 2011 2012 2013 2014 2011-14
Agriculture, Fishery, Forestry 43.2 36.1 33.0 32.1 31.1 30.8 32.0
Services 40.9 48.8 52.1 52.5 53.4 53.7 53.0
Industry 16.0 15.1 14.9 15.4 15.6 15.6 15.0
Manufacturing 10.0 9.1 8.3 8.3 8.3 8.1 8.0
2001-2010 2011 2012 2013 2011-2013
Consumer Goods 46.4 45.4 48.1 48.8 47.4
Food and Beverage 23.6 25.5 27.0 27.9 26.8
Tobacco manufactures 0.4 0.4 0.4 0.4 0.4
Footwear, wearing apparel 18.1 15.6 16.2 16.9 16.2
Furniture and fixtures 4.3 4.0 4.5 3.7 4.1
Intermediate Goods 28.8 29.2 26.4 25.8 27.1
Textile manufactures 6.5 5.3 4.8 4.8 4.9
Wood and cork products 10.1 11.9 10.2 9.3 10.4
Paper and paper products 1.6 1.6 1.6 1.6 1.6
Publishing and printing 2.6 2.7 1.8 1.8 2.1
Rubber products 2.2 2.2 2.3 2.5 2.3
Chemical & chemical prod. 2.7 2.6 2.6 2.9 2.7
Products of petroleum & coal 0.2 0.2 0.2 0.2 0.2
Non-metallic mineral prod. 3.0 2.9 2.9 2.8 2.9
Capital Goods 24.8 25.5 21.6 21.3 22.8
Basic metal industries 1.7 1.4 1.5 1.8 1.6
Metal industries 4.9 4.7 4.9 4.2 4.6
Machinery except electrical 2.4 2.1 0.6 0.5 1.1
Electrical machinery 10.1 11.4 12.2 12.5 12.1
Transport equipment 2.1 2.7 2.5 2.4 2.5
Miscellaneous manufactures 3.7 3.2 3.9 4.0 3.7

Note: *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.

 

Labor Productivity

Labor productivity has increased significantly for all major industries of the country from the 1990s until the early 2010s. From the 1990s until the 2000s, labor productivity for the agriculture, services, and industry sectors has grown by an average of 24.1%, 8.2%, and 16.8%, respectively. Meanwhile, from the 2000s until the early 2010s, labor productivity for the sectors has respectively grown by an average of 10.4%, 15.6%, and 18.2%. From 1991 until 2013, the industry sector has the highest labor productivity. It is followed by the services sector and then by the agriculture sector, which has the lowest labor productivity among the three.

The labor productivity for the manufacturing sector has grown by an average of 25.5% from the 2000s until the early 2010s. At the sub-sector level, the labor productivity for the various manufacturing segments- consumer goods, intermediate goods, and capital goods – have also grown consistently over the years. Across all years, the capital goods segment has the highest labor productivity, followed by the intermediate goods segment and then by the consumer goods segment. The miscellaneous manufacturing segment meanwhile has the lowest labor productivity. Furthermore, the petroleum and coal sector has the highest labor productivity among all sub-sectors across the years on the average, while the wood and cork products sector has the lowest.

Labor Productivity Measured in Terms of Gross Value Added (in Philippine pesos; constant 2000 prices)

Year 1991-00 2001-10 2011 2012 2013 2011-13
Agriculture, Fishery, Forestry 42,086 52,221 55,420 57,799 59,706 57,642
Services 144,390 156,222 172,033 181,227 188,715 180,658
Industry 258,456 301,797 342,486 353,725 373,831 356,681
Manufacturing nd 145,700 181,400 176,900 190,100 182,900
2001-2010 2011 2012 2013 2011-2013
Consumer Goods 31,700 40,500 42,300 43,400 42,100
Food and Beverage 60,200 70,500 70,200 69,900 70,200
Tobacco manufactures 109,200 40,400 37,200 37,900 38,500
Footwear, wearing apparel 7,800 70,00 9,200 7,600 7,900
Furniture and fixtures 12,400 32,200 39,300 64,100 45,200
Intermediate Goods 34,300 35,700 40,600 53,600 43,300
Textile manufactures 19,100 19,000 20,700 17,400 19,000
Wood and cork products 5,400 3,500 4,800 4,400 4,200
Paper and paper products 23,100 28,900 27,000 25,500 27,100
Publishing and printing 11,800 9,900 15,100 14,300 13,100
Rubber products 24,900 32,600 32,800 29,400 31,600
Chemical & chemical prod. 81,700 114,300 115,900 202,600 144,200
Products of petroleum & coal 1,055,400 1,016,100 813,500 855,400 895,000
Non-metallic mineral prod. 26,400 37,100 41,700 47,000 41,900
Capital Goods 50,000 55,600 56,900 60,800 57,800
Basic metal industries 45,800 58,800 47,100 56,600 54,200
Metal industries 8,300 10,000 9,500 10,600 10,000
Machinery except electrical 28,100 31,100 105,400 134,500 90,300
Electrical machinery 80,500 83,100 77,300 79,900 80,100
Transport equipment 33,800 35,600 43,100 35,500 38,100
Miscellaneous manufactures 27,900 49,600 37,100 32,300 39,700

Notes: *nd= no data / *Sub-sectoral classification used reconciles the 1994 and 2009 PSIC to ensure data compatibility and continuity from 2001 to 2013. No data available for pre-2000 years and for 2014. | Sources: Yearbook of Labor Statistics (1980-2000) and Current Labor Statistics (2001-2002), Bureau of Labor and Employment Statistics, Department of Labor and Employment. Labor Force Survey, Philippine Statistics Authority.