Prospects on Manufacturing and Their Implications on the LogisticsTheir Implications on the Logistics
BusinessProf. Cayetano W. Paderanga, Jr.
IDEAIDEA
Outline
• Snapshot of the manufacturing sector
• Developments in the macroeconomy• Developments in the macroeconomy
• Prospects of the manufacturing sector, 2013‐20142014
• Implications on the logistics business
Snapshot of the manufacturing sector
Snapshot of the manufacturing sector
Manufacturing – a key sector in the economy; creates about 1 in every 4 pesos of value added
SectorsPeriod
2001 2010 2011 2012
Share of GVA to GDP per Sector, 2000 = 100
2001‐2010 2011 2012Agriculture, Hunting, Forestry, & Fishery 13.2% 11.5% 11.1%Mining & Quarrying 1.0% 1.2% 1.1%Manufacturing 23.3% 22.4% 22.1%Manufacturing 23.3% 22.4% 22.1%Construction 4.9% 5.2% 5.5%Electricity, Gas, & Water 3.6% 3.3% 3.4%Transport, Storage, & Communication 7.7% 7.5% 7.7%Trade 16.5% 16.5% 16.7%Financial Intermediation 5.9% 6.8% 6.7%Real Estate, Renting, & Business Activities 9.5% 10.7% 11.0%Public Administration 4 7% 4 5% 4 2%Public Administration 4.7% 4.5% 4.2%Other Services 9.8% 10.5% 10.6%
Source: National Statistical Coordination Board, staff calculation
Snapshot of the manufacturing sector
Employs 3.1 million, accounting for 8% of total employment
Manufacturing Employment12%
3 100
3,150
8%
10%
3,000
3,050
3,100
4%
6%
2,900
2,950
0%
2%
2,750
2,800
2,850
Source: National Statistical Coordination Board, staff calculation
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Employment in Manufacturing, in '000 [LHS] Share of Manufacturing to Total Employment [RHS]
Snapshot of the manufacturing sector
Manufacturing has the most extensive linkages in the economyy
Sectoral Linkage Index (2000 Input‐Ouput Table)
SectorsLinkage Index
Forward Backward TotalForward Backward TotalManufacturing 3.13 1.26 4.39Other Services 1.00 1.16 2.15Transport, Storage 0.82 1.20 2.03Agriculture, Fishery & Forestry 1.06 0.86 1.92Trade 0.90 0.97 1.88Mining & Quarrying 0.83 0.99 1.82Construction 0 63 1 14 1 77Construction 0.63 1.14 1.77Electricity, Gas and Water 0.83 0.92 1.75Finance 0.78 0.96 1.74Communication 0.68 0.95 1.63
Source: National Statistical Coordination Board, staff calculation
Real Estate & Ownership of Dwellings 0.73 0.77 1.50Government Services 0.61 0.82 1.43
Snapshot of the manufacturing sector
Manufacturing has the most extensive linkages in the economyy
MfgMfg MfgMfg
Tranport, Storage
Agri, Fishery, Forestry
Mfg
dd TradeTrade
Snapshot of the manufacturing sector
GVA narrowed in 2009 but recovered quickly; top firms’ revenue, however, remained weak
Manufacturing GVA TrendsRevenue Trends of Top 1000 Mfg Corps25%1,600
YearTotal Revenue, in billion pesos
Growth Rate23%
24%
1,000
1,200
1,400
2007 2,571.7
2008 2,896.4 12.6%21%
22%
400
600
800
2009 2,735.4 ‐5.6%
2010 1,720.4 ‐37.1%19%
20%
0
200
Source: National Statistics Office, staff calculation
Source: Top Corporations Reports, staff calculationManufacturing GVA, in billion pesos [LHS]
Share of Mfg GVA to GDP [RHS]
Snapshot of the manufacturing sector
l fLocal manufacturing sector grew 50% since 2000, but one of the slowest in the region…
20%
180
200 350Manufacturing GVA Index, 2000 = 100
10%
15%
120
140
160
200
250
300
0%
5%
60
80
100
100
150
200
‐10%
‐5%
0
20
40
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
0
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Q1 '00
Q4 '00
Q3 '01
Q2 '02
Q1 '03
Q4 '03
Q3 '04
Q2 '05
Q1 '06
Q4 '06
Q3 '07
Q2 '08
Q1 '09
Q4 '09
Q3 '10
Q2 '11
Q1 '12
Q4 '12
Mfg GVA Index [LHS] Growth Rate [RHS]
China Indonesia Malaysia
Philippines Thailand Vietnam
Source: National Statistical Coordination Board, staff calculation Source: World Bank, staff calculation
Snapshot of the manufacturing sector
…MISSI, however, with a few exceptions, shows only a revival to 2001 production level
40%120 600300
MISSI Volume of Production Index, 2000 = 100
10%
20%
30%
80
100
300
400
500
150
200
250
‐10%
0%
40
60
100
200
50
100
‐40%
‐30%
‐20%
0
20
1 2 3 4 6 7 8 9 1 2
00
Jan‐01
Jul‐0
1
Jan‐02
Jul‐0
2
Jan‐03
Jul‐0
3
Jan‐04
Jul‐0
4
Jan‐05
Jul‐0
5
Jan‐06
Jul‐0
6
Jan‐07
Jul‐0
7
Jan‐08
Jul‐0
8
Jan‐09
Jul‐0
9
Jan‐10
Jul‐1
0
Jan‐11
Jul‐1
1
Jan‐12
Jul‐1
2
Food [LHS] Beverages[LHS]
Jan‐01
Apr‐02
Jul‐0
3
Oct‐04
Jan‐06
Apr‐07
Jul‐0
8
Oct‐09
Jan‐11
Apr‐12
VOPI [LHS] Growth Rate [RHS]
Chemical Products [LHS] Non‐metallic Mineral Products [LHS]
Basic Metals [LHS] Transport Equipment [LHS]
Miscellaneous Manufactures [LHS] Furniture & Fixtures [RHS]
Source: National Statistics Office
Snapshot of the manufacturing sector
Many subsectors, e.g., semi‐conductors, have weaker production in 2012 than in 2001p
180
MISSI Volume of Production Index, 2000 = 100
100
120
140
160
20
40
60
80
0
20
Jan‐01
May‐01
Sep‐01
Jan‐02
May‐02
Sep‐02
Jan‐03
May‐03
Sep‐03
Jan‐04
May‐04
Sep‐04
Jan‐05
May‐05
Sep‐05
Jan‐06
May‐06
Sep‐06
Jan‐07
May‐07
Sep‐07
Jan‐08
May‐08
Sep‐08
Jan‐09
May‐09
Sep‐09
Jan‐10
May‐10
Sep‐10
Jan‐11
May‐11
Sep‐11
Jan‐12
May‐12
Sep‐12
Tobacco Textiles Footwear & Wearing Apparelg pp
Wood & Wood Products Paper and Paper Products Publishing & Printing
Leather Products Rubber & Plastic Products Petroleum Products
Machinery, excluding Electrical Electrical MachinerySource: National Statistics Office
Snapshot of the manufacturing sector
A number of factors offer threats to the manufacturing sectorg
• Uncompetitive energy cost
• Emergence of low cost production countries• Emergence of low‐cost production countries
• Weak global economic growth
• Trade liberalization
Snapshot of the manufacturing sector
Mfg sector growth, more correlated to external demand; but domestic factors also matter
30%
Mfg GVA, Exports, and Net GDP* Growths, 2000 = 100
Correlation with Mfg Growth
10%
15%
20%
25%
SectorsPeriod
2000 ‐ 2010‐
Correlation with Mfg Growth
10%
‐5%
0%
5% 2012 2012
Exports 0.59 0.71
Net GDP* 0 36 0 37
‐20%
‐15%
‐10%
Q1 '00
Q3 '00
Q1 '01
Q3 '01
Q1 '02
Q3 '02
Q1 '03
Q3 '03
Q1 '04
Q3 '04
Q1 '05
Q3 '05
Q1 '06
Q3 '06
Q1 '07
Q3 '07
Q1 '08
Q3 '08
Q1 '09
Q3 '09
Q1 '10
Q3 '10
Q1 '11
Q3 '11
Q1 '12
Q3 '12
Net GDP* 0.36 0.37*Net of net exports
Source: National Statistical Coordination Board, staff calculation
Manufacturing Exports GDP net of net exports
*Net of net exportsSource: National Statistical Coordination Board, staff calculation
Snapshot of the manufacturing sector
k l d d l d hWeak external demand, in part, lowered share of mfg to exports
6%
90%
100%GDP Growth of Major Trade Partners Share of Mfg to Exports
2%
4%
60%
70%
80%
‐2%
0%
30%
40%
50%
6%
‐4%
0%
10%
20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011‐6%2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States European Union Japan
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China Indonesia Malaysia
Thailand Philippines Vietnam
Source: World Bank Source: World Bank
Snapshot of the manufacturing sector
d hIncreasing income, demographic transition make domestic economy viable market
14%2,500
Gross National Income Trends Population Age Structure
3.6% 4.3%64+
8%
10%
12%
1,500
2,000
15 4%
22.9%
15 3%
27.4%
25 34
35‐64
p4%
6%
8%
1,000
,
9.4%
15.4%
9.1%
15.3%
20‐24
25‐34
Age group
0%
2%
0
500
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
38.2%
10.5%
33.4%
10.5%
0‐14
15‐19
Q1 '00
Q4 '00
Q3 '01
Q2 '02
Q1 '03
Q4 '03
Q3 '04
Q2 '05
Q1 '06
Q4 '06
Q3 '07
Q2 '08
Q1 '09
Q4 '09
Q3 '10
Q2 '11
Q1 '12
Q4 '12
GNI, in billion pesos [LHS] Growth Rate [RHS]
Source: National Statistical Coordination Board Source: National Statistics Office, staff calculation
‐40% ‐20% 0% 20% 40%
1995 2010
40% 20%
Developments in the macroeconomy
Developments in the macroeconomy
The Philippines has shown resilience throughout the global economic slowdown.
Real Gross Domestic Product, Annual Average Global Economic Growth Forecasts
10%
9.0%7,000
4%6%8%10%
6.7% 6.6%
7.6%
6.6%
6.0%
7.0%
8.0%
5,000
6,000
sos
‐4%‐2%0%2%5.0% 4.8%
5.2%
4.2%3.9%
3.0%
4.0%
5.0%
2 000
3,000
4,000
In billion pe
‐8%‐6%‐4%
'08 '09 '10 '11 '12 '13 '141.1%
0.0%
1.0%
2.0%
0
1,000
2,000
Source: National Statistical Coordination Board Source: International Monetary Fund, World Bank, IDEA staff calculation
US Japan World Emerging0.0%0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Level (LHS) Growth rate (RHS)
Developments in the macroeconomy
The economy grew by 6.6 percent in 2012.
Regional Economic Performance, 2012Real Gross Domestic Product, Quarterly10.0%1800
Selected8.4%
8.9%
7.3%
6.1% 6.3%6.0%
7.2%6.8%
6.0%
7.0%
8.0%
9.0%
1200
1400
1600
s
Selected Economies
Growth Rate
China 7.8
PHILIPPINES 6 64.9%
3.6%3.2%
4.0%
3.0%
4.0%
5.0%
600
800
1000
in billion pe
sos PHILIPPINES 6.6
Indonesia 6.3*
India 6.5
0.0%
1.0%
2.0%
0
200
400 Malaysia 5.3*
Vietnam 4.7
Thailand 2.6
* As of Q3 2012Source: Country statistical websites
Source: National Statistical Coordination Board
Level (LHS) Growth rate (RHS)
Singapore 1.5
h d d d d d f l l b
Developments in the macroeconomy
On the demand side, demand for Filipino labor abroad supports consumption growth…
Top Remittance Recipient Economies, 2012
7080
EconomiesPer Capita
$70
66
50
60
70
ollars
EconomiesRemittance*, in US$
India 55.6
China 48.9
PHILIPPINES 249 5
24 2421
18
30
40
in billion US do PHILIPPINES 249.5
Mexico 206.7
Nigeria 123.5
Egypt 218.7 18
14 149 7
0
10
20Pakistan 77.6
Bangladesh 91.6
Vietnam 101.1
Source: World Bank estimates, IDEA computation
Lebanon 1,627.9
*Using 2012 population estimates of the Population Reference Bureau
Developments in the macroeconomy
…while resurgent government spending and exports support the growth picture…p pp g p
Government Cash Flow Growth Rates
Monthly Export Performance, 2010 – Nov 2012
60%60%6.00
30%
40%
50%
60%RevenueExpenditure
20%30%40%50%
4.00
5.00
h rate
lion US$
0%
10%
20%
30%
‐20%‐10%0%10%
1.00
2.00
3.00
Growth
FOB, in
Bil
‐30%
‐20%
‐10%
0%
‐40%‐30%
‐10
‐Jan
May Sep
11‐Jan
May Sep
12‐Jan
May Sep
Source: Bureau of Treasury, IDEA staff calculations
Source: National Statistics Office
Export (LHS) Growth (RHS)
Developments in the macroeconomy
…though investments remain weak.
Capital Formation and Construction Gross Value Growth Rates
60%
80%
20%
40%
60%
‐40%
‐20%
0%
‐80%
‐60%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2009 2010 2011 2012
Source: National Statistical Coordination Board
2009 2010 2011 2012
Public Construction Private Construction Construction Capital Formation
Developments in the macroeconomy
On the supply side, all sectors contributed to economic growth.
Gross Value Added Growth Rates25%
15%
20%
5%
10%
‐5%
0%
Source: National Statistical Coordination Board
Services AFF Industry
Developments in the macroeconomy
Low inflation allows for adequate monetary policy space.
6%
Consumer Price Inflation and Contribution of Components (2006 = 100) 7%
Overnight Policy Rates
3%
4%
5%
6%
6%
0%
1%
2%
3%
5%
Q1 '11 Q2 Q3 Q4 Q1 '12 Q2 Q3 Q4
Food and Non‐Alcoholic Beverages
Housing, Water, Electricity, Gas, and Other Fuels
Transport
R t t d Mi ll G d d S i3%
4%
Source: National Statistics Office
Restaurants and Miscellaneous Goods and Services
Others
Inflation
Q1 '10 Q2 Q3 Q4 Q1 '11 Q2 Q3 Q4 Q1 '12 Q2 Q3
RP Rate RRP Rate
Source: Bangko Sentral ng Pilipinas
Developments in the macroeconomy
Consequently, interest rates have declined.
Treasury Bill Rates3%
dred
s
2%
Hun
d
1%
0%
11 Jan
Feb
Mar
Apr
May Jun Jul
Aug Sep
Oct
Nov Dec
12 Jan
Feb
Mar
Apr
May Jun Jul
Aug Sep
Oct
Nov
Source: Bangko Sentral ng Pilipinas
20 20
91 ‐ Day All Maturities
BOP surplus drives external stability boosting
Developments in the macroeconomy
BOP surplus drives external stability, boosting the strength of the peso.
Current Account, Capital Account, and Balance of Payment
5 000 8%
9%47
Peso‐Dollar Exchange Rate
3,000
4,000
5,000
S $ 5%
6%
7%
8%
44
45
46
0
1,000
2,000
In M
illion US
1%
2%
3%
4%
41
42
43
‐2,000
‐1,000
10 Jan
Mar
May Jul
Sep
Nov
11 Jan
Mar
May Jul
Sep
Nov
‐1%
0%
40
41
Jan‐10
Apr‐10
Jul‐1
0
Oct‐10
Jan‐11
Apr‐11
Jul‐1
1
Oct‐11
Jan‐12
Apr‐12
Jul‐1
2
Oct‐12
Source: Bangko Sentral ng Pilipinas
201
201
BOP CA KA
Peso/Dollar Exchange Rate [LHS]
Appreciation Rate [RHS]
Source: Bangko Sentral ng Pilipinas
Developments in the macroeconomy
Investment is not yet able to take advantage of CA surplus.
Savings, Investment, and Gap
800
900
600
700
800
Pesos
300
400
500
in Billions
‐
100
200
2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4
Source: National Statistical Coordination Board, IDEA Staff computation
2010 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4
Gap Savings Investment
Developments in the macroeconomy
Government spending has picked up, but the deficit is contained.
Government Revenue, Expenditure, and Deficit250
100
150
200
sos
(50)
‐
50
In billion Pe
s
(150)
(100)
(50)
Source: Bureau of the TreasuryDeficit Revenue Expenditure
Developments in the macroeconomy
Weakness in the labor market persists.
Indicators June 2012 October 2012 October 2011
Key Labor and Employment Indicators
Employment rate 93.0% 93.2% 93.6%
U l t t 7 0% 6 8% 6 4%Unemployment rate 7.0% 6.8% 6.4%
Underemployment rate 22.7% 19.0% 19.1%
Labor force participation rate 64.0% 63.9% 66.3%
Source: National Statistics Office
Developments in the macroeconomy
Recent positive developments fuel optimism.
Philippine Stock Exchange Index
Feb '13 6318.61
6,400
Bullish sentiment continues to drive
6,100
6,200
6,300
continues to drive the stock market to record highs…5,800
5,900
6,000
5,500
5,600
5,700
Source: Philippine Stock Exchange
5,400Dec '12 Jan '13 Feb '13
Developments in the macroeconomy
Recent positive developments fuel optimism.
Rank Change from ASEAN ranking
2012 WEF Global Competitiveness Report ‐ Philippines
previous year
65th of 144 +10 6th of 8 (+1)
Sound macroeconomic and gains in public trust in
Source: WEF Global Competitiveness Report
Sound macroeconomic management…
Favorable interest rate spreadR d d d b
…and gains in public trust in institutions.
Transparency in budgeting processMReduced government debt More open procurement processEfforts to reduce corruption
Developments in the macroeconomy
Recent positive developments fuel optimism.
Agency Rating Outlook Date
Sovereign Credit Rating
Recent switch to positive outlook by Standard & Poor’s
Agency Rating Outlook Date
Fitch BB+ Stable Oct 28, 2011
Standard & Poor’sMoody’s Ba1 Stable Oct 29, 2012
S&P BB+ Positive Jul 4, 2012
Source: Bangko Sentral ng Pilipinas
Developments in the macroeconomy
Long‐term service sector and remittance trends temper the growth outlook.
Service Sector Growth Rates and Trend Overseas Filipino Monthly Dollar Remittances12% 50%2.5
6%
8%
10%
30%
40%
1 5
2.0
%billion
$
Remittances Growth Rate
0%
2%
4%
0%
10%
20%
1.0
1.5
Growth, in
mittances, in
‐2%'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12
Service SectorTradeR Estate Renting Bus Activities
‐20%
‐10%
0%
0.0
0.5
'04
Sep
May '06
Sep
May '08
Sep
May '10
Sep
May '12
Sep
Rem
Source: National Statistical Coordination Board Source: Bangko Sentral ng Pilipinas
R. Estate, Renting, Bus. ActivitiesOther ServicesService Sector Trend
Jan ' S M
Jan ' S M
Jan ' S M
Jan ' S M
Jan ' S
Significant increase in capital formation could
Developments in the macroeconomy
Significant increase in capital formation could boost growth.
6% 35%Investment and GDP Growth
4%
5%
20%
25%
30%
2%
3%
10%
15%
20%
Investment/GDP (right scale)
0%
1%
0%
5%
1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3 2 1 4 3
Investment/GDP (40 Qtr Moving Average) (right scale)GDP growth (40 Qtr Moving Average) (left scale)
1992:1
1992:4
1993:3
1994:2
1995:1
1995:4
1996:3
1997:2
1998:1
1998:4
1999:3
2000:2
2001:1
2001:4
2002:3
2003:2
2004:1
2004:4
2005:3
2006:2
2007:1
2007:4
2008:3
2009:2
2010:1
2010:4
2011:3
Source: National Statistical Coordination Board, IDEA staff calculation
Bottom lineEconomy has what it takes to maintain at least 6% growth, on the back of traditional growth6% growth, on the back of traditional growth drivers…
BPOs, real estate, tourism, finance on the supply side
Remittance‐driven consumption, increased government p gspending and positive exports on the demand side
But more investments are needed to sustain andBut more investments are needed to sustain and accelerate growth.
Developments in the macroeconomy
PH relatively unattractive to FDI, but has potential to attract more.
FDI Attraction Index vs. FDI Potential Index Matrix, 2011
Above expectations In line with expectations Below expectations
High
Q1
China, Hong Kong, Malaysia, Singapore,
Viet Nam
ex
DI A
ttraction Inde
Q2 Cambodia Brunei
Indonesia, Thailand
Q3 Lao,
Japan
FD Q Myanmar
Japan
Low
Q4 Philippines
Q4 Q3 Q2 Q1Low FDI Potential Index High
Source: United Nations Conference on Trade and Development
Developments in the macroeconomy
FDI in PH contributes the least to economic development.
FDI Contribution Index vs. FDI Presence Matrix, 2011Above expectations In line with expectations Below expectations
High
Q1 Cambodia
MalaysiaHong KongSingapore
n FD
I Con
tribution
Inde
Q2
Q3 China
I d i
Q Indonesia
Low
Q4 Japan
Philippines
Q4 Q3 Q2 Q1Low FDI Inward Stock/GDP High
Source: United Nations Conference on Trade and Development
Developments in the macroeconomy
Investment – missing leg for faster, more sustainable growth.
1,000
Net Foreign Direct Investments Comparative FDI inflows of selected ASEAN countries, as of 1H 2012
400
600
800
US$
Country Level Growth Rate
Singapore $27.4 billion ‐1.9%
0
200Million U
Indonesia $8.2 billion ‐20.6%
Thailand $5.6 billion 62.1%
‐400
‐200
Jan Feb Mar Apr May Jun Jul Aug
Malaysia $4.4 billion ‐36.6%
PHILIPPINES $0.9 billion 10.6%
C b di $0 9 billi 166%2011 2012
Source: Bangko Sentral ng Pilipinas Source: UNCTAD
Cambodia $0.9 billion 166%
Though macroeconomic management and
Developments in the macroeconomy
Though macroeconomic management and governance issues are being addressed,
infrastructure remains a concern.infrastructure remains a concern.WEF Global Competitiveness Report 2010‐2011
Source: National Competitiveness Council
Developments in the macroeconomy
Infrastructure needs now being addressed by the government.
80%
Gross Value in Construction Year‐on‐Year Growth Rate by Type
2011 – 2016 PH Government Investment Requirement
h
%
40%
60%
80%Public construction
Private construction
GV in construction
Infra dev't
Php1.94 T
(38 0%)
OthesPhp1.86
T(36.4%)
‐20%
0%
20%(38.0%)Social dev't
Php1.31 T
(25 6%)
‐80%
‐60%
‐40%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2012 2013 GrowthTotal Budget in Php B 1 816 0 2 006 0 10 5%
(25.6%)
Proposed 2013 Infrastructure Budget
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2010 2011 2012
Source: National Statistical Coordination Board
Total Budget, in Php‐B 1,816.0 2,006.0 10.5%Capital Outlay 18.7% 20.6% 21.5%Infrastructure 13.9% 16.0% 19.5%Source: National Economic Development Authority
Developments in the macroeconomy
Catching up on PPP projects…
Project Status
PPP Update
jDaang Hari‐SLEX Road Link Awarded
PPP for School Infrastructure Project Phase I Awarded
Modernization of the Philippine Orthopedic Center Bidder due diligence ongoingModernization of the Philippine Orthopedic Center Bidder due diligence ongoing
NAIA Expressway Project Bidder due diligence ongoing
LRT Line 1 Cavite Extension and O&M Bidder due diligence ongoing
Mactan‐Cebu International Airport Passenger Terminal Building Invitation to bid publishedMactan Cebu International Airport Passenger Terminal Building Invitation to bid published
PPP for School Infrastructure Project Phase II Invitation to bid published
Automatic Fare Collection System Invitation to bid published
Angat Hydro Plant Rehabilitation and O&M Invitation to bid publishedAngat Hydro Plant Rehabilitation and O&M Invitation to bid published
NLEX‐SLEX Connector Road For publication of invitation to bid
Source: PPP Center
Prospects of the manufacturing sector, 2013 20142013‐2014
IDEA Forecasts (preliminary)
Prospects of the manufacturing sector, 2013‐2014
PH economic growth hit 6.6% in 2012, maintaining above 6% growth through 2014.
Assumptions 2011 2012 2013/f 2014/f
Inflation 4.8 3.3 4.2 4.391‐day Treasury Bill Rate 1.4 1.6 1.1 1.6Peso‐Dollar Exchange Rate 43.3 42.4 40.9 40.5Dollar Remittances Growth Rate 7 2 6 0 5 0 5 0Dollar Remittances Growth Rate 7.2 6.0 5.0 5.0Budget Deficit, in Billion Pesos (197.8) (127.3) (148.7) (160.1)US GDP Growth Rate 1.6 2.2 2.4 2.4Japan GDP Growth Rate (0.8) 2.6 1.6 1.6
Aggregate 2011 2012 2013/f 2014/f
G D i P d 3 9 6 6 6 3 6 3Gross Domestic Product 3.9 6.6 6.3 6.3Net Primary Income 1.0 5.8 6.3 5.3Gross National Income 3.2 5.8 6.3 6.1
Prospects of the manufacturing sector, 2013‐2014
Private demand, except investment, holds steady growth.
Demand Sectors 2011 2012 2013/f 2014/f
1. Household Final Consumption Expenditure 6.3 6.1 5.6 4.92. Government Final Consumption Expenditure 1.0 11.8 3.8 8.93. Capital Formation 8.1 (4.4) 10.0 5.14. Exports (4.2) 8.7 10.6 8.55. Less: Imports 0.2 4.2 6.7 7.0
Prospects of the manufacturing sector, 2013‐2014
All major production sectors to contribute positively to economic growth.
Production Sectors 2011 2012 2013/f 2014/f
1 Agriculture Hunting Forestry and Fishing 2 7 2 7 3 6 4 41. Agriculture, Hunting, Forestry, and Fishing 2.7 2.7 3.6 4.42. Industry Sector 2.3 6.5 6.2 5.8a. Mining & Quarrying 7.0 (3.7) 12.6 3.0b. Manufacturing 4.7 5.4 4.6 4.3c Construction (7 3) 14 4 12 8 12 4c. Construction (7.3) 14.4 12.8 12.4d. Electricity,Gas, and Water Supply 0.6 5.1 4.2 4.9
3. Service Sector 5.1 7.4 6.9 6.9a. Transport, Storage & Communication 4.3 9.1 7.3 6.3b Trade 3 3 7 5 5 1 4 5b. Trade 3.3 7.5 5.1 4.5c. Financial Intermediation 5.2 7.8 9.3 8.3d. R. Estate, Renting & Business Activities 9.3 7.9 8.7 7.4e. Public Administration & Defense 0.3 3.3 7.8 16.9f Other Services 6 6 7 2 5 8 5 8f. Other Services 6.6 7.2 5.8 5.8
Prospects of the manufacturing sector, 2013‐2014
Upside factors to manufacturing growth
• Development of a an industry roadmap
• Power saving schemes (open access to• Power‐saving schemes (open access to electricity)
L f l b• Low cost of labor
• Infrastructure development, PPP
• Better than expected global economic growth
Prospects of the manufacturing sector, 2013‐2014
Downside factors to manufacturing growth
• Power rate hikes
• Absence of a long term strategy for growth• Absence of a long‐term strategy for growth
• Weak investment
Implications on the logistics business
Prospects of the manufacturing sector, 2013‐2014
Manufacturing growth to drive higher demand for logistics services
• Every unit increase in final demand for f t i t 0 02 it l imanufacturing generates 0.02 unit sales in
transport and storage sector.
• Outsourcing “in‐house” transport by manufacturing firms can boost further growth in the sector
Postal & courier activities sea & coastal
Implications on the logistics business
Postal & courier activities, sea & coastal transport, storage & warehousing to benefit
the mostthe mostDegree of Backward Linkages of the Logistics Business
Storage andPostal and Road freight Sea and coastal
Agriculture, Fishery, and Forestry 0.0% 0.0% 1.4% 0.3% 0.0%Mining and Quarrying 0 0% 0 1% 0 0% 0 0% 0 0%
Air transportStorage and warehousing
SECTORPostal and
courier activitiesRoad freight transport
Sea and coastal transport
Mining and Quarrying 0.0% 0.1% 0.0% 0.0% 0.0%Manufacturing 84.1% 4.0% 86.9% 3.2% 69.0%Construction 0.2% 52.8% 0.0% 0.2% 0.3%Utilities 0.2% 0.5% 0.1% 0.0% 2.2%Transportation, Communication, and Storage 4.5% 0.9% 2.9% 7.9% 1.6%p gTrade 0.6% 37.5% 0.3% 47.2% 0.4%Repairs 0.0% 0.0% 0.2% 0.0% 0.0%Finance 9.5% 3.3% 3.6% 20.1% 4.9%Ownership of Dwellings and Real Estate 0.0% 0.0% 1.5% 0.3% 17.2%
Source: National Statistical Coordination Board, staff calculation
Government Services 0.0% 0.8% 0.0% 16.6% 0.1%Private Services 1.0% 0.0% 3.1% 4.2% 4.2%
Prospects on Manufacturing and Their Implications on the LogisticsTheir Implications on the Logistics
BusinessThank you!Thank you!
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