Industrialization, job creation to boost economy, reduce trade deficit: DTI

Sherrie Ann Torres, ABS-CBN News

Posted at Aug 22 2022 03:36 PM

A fishing raft with a resting shed floats on the shores of Baseco in Tondo Manila on July 09, 2021. Jonathan Cellona, ABS-CBN News
A fishing raft with a resting shed floats on the shores of Baseco in Tondo Manila on July 09, 2021. Jonathan Cellona, ABS-CBN News


MANILA - Industrialization could help mitigate the country's ballooning trade deficit or the balance between exports and imports, through improving sectors such as manufacturing and creating jobs, Department of Trade and Industry Secretary Alfredo Pascual said Monday.

Currently, the country’s economy is relying heavily on the remittance of overseas Filipino workers and revenues from the Business Processing Outsourcing sector, the DTI said.

“That’s why I’d like to shift the focus of the department towards real effort in industrializing the country. That’s the only way we can sustain an economy that is sustainable and inclusive economy," Pascual said during a briefing with the Senate Committee on Trade, Commerce and Entrepreneurship.

"In the sense that it’s only from industry, particularly manufacturing, that our people can get stable jobs, better quality jobs and higher paying jobs...Unless we give that, we are forever be beholden to these inflows from OFWs, we’ll be burdening them, we’ll be sending more people abroad to earn the dollars so we can do the importation here. That’s not sustainable,” Pascual added.

The DTI is now in the process of encouraging enterprises to produce consumer goods like processed foods that use raw materials sourced from the Philippines, but consumers today buy as imported products to fill in the demand, the Secretary said.

Industrialization, which has been proven effective in Indonesia, could also help reduce the country's trade deficit which has ballooned over the years, DTI Undersecretary Ceferino Rodolfo said.

The country registered a $40 billion trade deficit between 2018 to 2019 or before the pandemic, Rodolfo said, adding that this year's trade deficit could reach $46 billion.

The Balance of Trade or trade deficit in 2019, 2020 and 2021. Chart: Philippine Statistics Authority
The Balance of Trade or trade deficit in 2019, 2020 and 2021. Chart: Philippine Statistics Authority

Asked by Senator Sonny Angara if the Philippines has the biggest trade deficit in Southeast Asia, Rodolfo answered: "yes, Sir.”

“Yun hong ating (our) trade deficit has really ballooned… $40 billion na ho yung deterioration,” he said.

He said the main causes of deterioration is the import of rice and petroleum, among others, which are considered essential.

“We are growing but to fulfill the demand from this growth, we have to import massively....So ang laki nun sa deficit natin (That's why our deficit is huge). Kaya ang sinasabi natin we have to industrialize to be able to arrest this (We're saying we need to industrialize to arrest this),” he added

Angara said government leaders must also identify what sectors can really provide “high-paying jobs,” which Pascual said, would actually come from the manufacturing sector. 

“We produce agricultural products that undergo processing,” Pascual said.

Cacao, coffee, bamboo, and abaca fiber are just among the agricultural products that local industries can actually produce to fill in the demands, he said.

Pascual said, he is now actively approaching various domestic and international business groups to encourage investments.

Officials have earlier said that trade deficit is likely to widen in the coming months due to the continued infrastructure spending and construction import.

Socioeconomic Planning Secretary Arsenio Balisacan earlier said the investments put in place would result in improved competitiveness.

"We would expect that deficits, trade deficits to increase but again the expectation is the investments we’re putting in place…. Will improve the competitiveness of our industries, particularly exports and gain dividends from that," he said.

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