Philippines - Industry

In January 2001 the Philippine government estimated that employment in industry had decreased by 86,000 since January 2000, or by 1.8%, and that its share of total employment had declined 1.2%. In this same period it reported a 7.4% increase in agricultural employment and a .6% increase in agriculture's share of the economy. These statistics reflect the setbacks the Philippines have encountered in its long-run strategy of converting to a more diversified economy with growth led by high value-added manufactured exports. These problems were aggravated by the global economic recession in 2001 and the aftershocks of the 11 September 2001 terrorist attacks on the United States. Over half of the value of Philippine exports in 2000 were accounted for by information technology (IT) products, which were particularly affected by the global recession in 2001 and the aftershocks of the terrorist attacks. Measured on year to year basis, merchandise trade declined -19.5% in the fourth quarter of 2001 due in large part to a -28.8% decline in electronic components exports, which registered a further -5.8% decline for the first quarter of 2002, according to Philippine National Statistics.

By value, according to CIA estimates for 2001, the leading industries were textiles, pharmaceuticals, chemicals, wood products, food processing, petroleum products, electrical machinery, textiles, electronics assembly, petroleum refining, and fishing, with significant production in transport equipment, nonmetallic mineral products, fabricated metal products, beverages, rubber products, paper and paper products, leather products, publishing and printing, furniture and fixtures, and tobacco. Following the 11 September 2001 terrorist attacks on the United States, there were five months of contraction in industrial production before a return to growth in 2002. Year-on- year growth was strongest in lower-tech, more domestically oriented sectors such as leather products (57.7%), rubber products (31.1%), textiles (27%) and food processing (11.9%), while high-tech, export-oriented sectors such as electrical machinery and transport equipment grew more moderately, at7.2%and 18.7% respectively. Overall industrial production index rose 4.7% in November 2002 on a year-on-year basis, according to Philippine official statistics.

The industrialization strategy proposed by the government in 1981 stressed development of exports and the accelerated implementation of 11 major industrial projects-a copper smelter, a phosphate fertilizer plant, an aluminum smelter, a diesel-engine manufacturing plant, an expansion of the cement industry, a "cocochemical" complex (based on coconuts), an integrated pulp and paper mill, a petrochemical complex, heavy engineering industries, an integrated steel mill, and the production of "alcogas." The copper smelter, the phosphate fertilizer plant, and the "cocochemical" complex went into operation in 1985. Exports of power train components from Honda's plant in the Philippines are due to begin in 2003. Local cement and steel manufacturers are seeking protection from foreign imports as part of the government's announced policy to reimpose tariffs to the maximum allowed by the WTO on imports that are locally produced. Historically manufacturing production has been geographically concentrated in the Metro Manila area and the adjoining regions of Southern Tagalog and Central Luzon. With the progress in electrification, this geographic concentration has begun to decrease. Most industrial output is concentrated in a relatively few large firms. Although small and medium-sized businesses account for about 80% of manufacturing employment, they account for only about 25% of the value-added in manufacturing