Why an annual IPP?
Last Wednesday’s forum conducted by the National Statistics Office to disseminate the result of the 2012 Annual Survey of Philippines Business and Industries (ASPBI) shows that among the 18 sectors covered in the survey it was mining and quarrying that employs the highest average number of workers in the country. Next was administrative and support services activities, followed by financial and insurance activities. In the Central Visayas region of which Cebu is part of, the same first two sectors were on top in terms of the average number of workers employed; the third is manufacturing.
This information on mining and quarrying is important given the trouble that investors in the mining sector are facing in the country. The trouble comes from the opposition of many local groups who are very much concerned with the impact of mining activities on the environment. If they were given their way, mining would not be allowed anywhere in the country—“not in our backyard.” Yet we use a lot of things in life that are made wholly or in part of metallic or non-metallic minerals. Do we want a return to the Stone Age?
There are mining processes that produce a lot of pollution but there are also those that produce less that is tolerable to the environment and humans. After all most of what we do, including exhaling the the air, for example, produces some kind and level of pollution. Because we cannot afford to live without the use of minerals in their raw or processed form, there ought to be a system or agreement that should allow us to mine and process our valuable minerals with an acceptable level of pollution given our level of technology and ability to pay the cost of reducing or minimizing pollution.
The Philippines is one of the most fortunate countries in the world to have huge deposits of valuable metallic and non-metallic minerals. The major ones include coal, cobalt, copper, chromite, gold, gypsum, iron, natural gas, nickel, petroleum, salt, silver and sulfur. The lesser deposits include bauxite, lead, mercury, molybdenum, and zinc. Properly done and when allowed to prosper, mining and quarrying can help generate jobs and income that we badly need to improve the well-being of our people.
Last Wednesday’s forum also revealed that among the 18 sectors covered in the survey, manufacturing was a top revenue earner in the Philippines, particularly Central Visayas. Needless to say, manufacturing in the country also generates the highest value added to the economy. The more value each firm or industry adds, the bigger the size of our Gross Domestic Product.
Again this information on manufacturing only highlighted the fact that if we were to achieve our aim to move higher in our level of development, we have to go back to the basics of manufacturing goods for domestic use and/or for export. Led by import substituting manufacturing industries, the Philippine economy was moving fast and enjoyed an advantage over many of our neighbors in Asia in the 1950s. We lost this when we moved deeper into the service sector without completing first our process of industrialization. From import substitution in the 1950s we could have deepened our industrialization in the following decades by going into export industrialization using our cheap labor like what Korea, Taiwan and other newly industrializing countries in Asia initially did, and later, using our knowledge and skills to go into higher level of manufacturing.
Lacking the manufacturing base, we find today many of our workers going into service activities, many of which are of the informal type and giving lower wages than those given by manufacturing industries.
Now, we find not a few people telling the government to rehash its economic policy and promote manufacturing again, including ADB Senior Economist Norio Usui who came to Cebu for the 2nd National Business Conference of Independent Business Clubs and Chambers. Officials from the Board of Investment that came yesterday to Cebu for the road show of the 2012 Investment Priorities Plan (IPP) were also talking of giving incentives to new manufacturing activities that will be set up in the country.
The 2012 Investment Plan that was presented yesterday consisted of the list of Preferred, Mandatory and Export Industries. Under the Preferred Industries of the IPP are Agribusiness, Creative/Knowledge-based, Disaster PMR, Energy, Green Projects, Hospitals, Infrastructures, Iron and Steel, Mass Housing, Motor Vehicle, Research and Development/Training, Shipbuilding, and Strategic Projects. Listed under Mandatory Industries are Books, Mining, Petroleum Products, PWD Support, Renewable Energy, Tourism, Solid Waste Management and Water Supply. Under Exports, the list includes Manufactured Products, Services, Exports and Activities Supporting Exports.
The only trouble with the 2012 IPP is this: Based on the 1987 Omnibus Investment Code, the BOI must submit the annual IPP for approval to President not later than the end of March of the year. The 2012 IPP was approved by the President on the 13th of June this year but it was only yesterday that the plan was presented to the Cebuanos. I therefore questioned the usefulness of the plan that came very late to the knowledge of the would-be investors in Cebu. Why can’t the IPP be prepared one year in advance?
My second question was why an annual IPP also? Does it mean that our investment priorities could just be changed every year? Where is the long term outlook? Instead of an annual IPP, why can’t the BOI just prepare only a Medium Term Philippine Investment Priorities Plan that would translate the intents of the Medium Term Philippine Development Plan prepared by the National Economic Development Authority into a concrete guide for action by the private sector?
