Low-value industries ‘at risk’

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Sunday, March 23, 2014


LOW–VALUE industries that are energy-intensive and rely heavily on logistics and transshipment in their regular operations will be the most vulnerable when the Asean Economic Community takes full effect next year, said National Competitiveness Council co-chairperson Guillermo Luz.

He admitted that power cost and logistics shipment costs are some of the areas the Philippines will have problems with compared to its counterparts in Southeast Asia.

What it is strong at is in its people. Luz noted that in the region, the Philippines has the largest English-speaking population, a quality that can attract foreign investors.

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Human resources

However, rather than think of exporting human resources to other countries to gain more remittances, Luz hopes local companies can send Filipinos abroad as part of their expansion but still as part of their organization. He names companies like SGV and Jollibee as having done it successfully.

“Now, they (overseas Filipino workers) are moving around as free agents. It is not a company sending people to move out there,” Luz pointed out.

Luz was in Cebu Wednesday as guest speaker of the Institute of Corporate Directors luncheon at the Marco Polo Plaza Hotel.

He admitted that the lure of seeking employment abroad is tempting for many Filipinos, mostly because of the pay. However, he said there are Filipinos who do consider returning to the country for the right reasons.

“Not everything needs to be matched. Many of them understand the benefits of staying at home. The pay will not be at the same level (as those overseas) but for different reasons, there is a pull.” Luz said the challenge for employers is to find out what motivates Filipinos into staying.

While it may be difficult to address the high power costs in the country, Luz said there may be a way around the high shipping costs--by processing the raw materials where these are sourced.

Manufacturing

Luz said that if low value raw materials are shipped in small volumes, the cost of transporting them will be high. He said that if these materials can be manufactured in the areas where these are grown, these become high value products and can be exported.

He said the manufacturing industry should be pushed because it yields higher incomes and productivity, as opposed to agriculture and services.

He added that super typhoon Yolanda presented an opportunity for the country to be part of a larger supply chain after a shortage in construction materials was observed in the midst of rebuilding efforts. He suggested local businesses can take part in supplying the needed materials for the construction industry as a whole.

Agriculture could also be vulnerable to the AEC, mainly because of agrarian reform.

Luz noted that the small cuts of land cannot produce global standards while those that have succeeded are plantation areas and are part of the global chain. He also noted that most food products are not bought locally.

Published in the Sun.Star Cebu newspaper on March 24, 2014.

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