A former National Economic and Development Authority (Neda) director general believes that the Philippines’s ailing manufacturing industry may stand to benefit from China’s “lack of appeal” to foreign investors as a result of a dwindling Chinese work force.
Cielito Habito, now head of the Ateneo Center for Economic Research and Development (ACERD), said on Thursday that even Filipino firms operating in China are thinking of repatriating because of the lack of workers in China.
“There is this observation that China is losing its appeal as the factory of the world,” Habito told the Management Association of the Philippines (MAP) Economic Briefing and General Membership Meeting in Makati City.
“I’ve heard a lot of anecdotes, including those from banker friends who have Filipino clients doing business in China, [and these clients are] actually repatriating their factories… to the Philippines. It’s very hard to get workers for their factories,” he said.
Habito added that the lack of workers might have stemmed from China’s one-child policy. The one-child policy caused many families to shelter younger generations, thus making factory work unattractive for them.
The former socioeconomic-planning secretary said there are even stories now that some Chinese factories have to send buses to fetch workers from far-flung villages just to make them work.
“The products of the one-child policy who, of course, became emperors and empresses in their families, were showered with everything. Now that they are of working age, they are in no mood to work in factories and that will lead to a longer change in the labor force of China,” Habito added.
Habito said the return of factories to the Philippines could boost the growth of the manufacturing industry. This will not only increase growth in the industry sector, he added, but also create millions of jobs in the long run.
He said that in 2012, the country’s economic growth would likely be between 4 percent and 5 percent. But Habito added that the government’s 5-percent to 6-percent growth target might still be achievable given that government spending is expected to increase this year.
Other growth drivers include the country’s resilience to external shocks due to the continued inflow of overseas Filipino worker (OFW) remittances, which, according to Asian Development Bank (ADB) Philippines Country Director Neeraj Jain had been the backbone of economic growth in recent years.
Other growth drivers, Habito and Jain said, included the growth of the business-process outsourcing (BPO) industry, particularly in creative industries such as animation and other service-related sectors.
Habito said he expects inflation to be benign at around 3 percent to 4 percent and the country’s unemployment to be within 6 percent to 7 percent. He added that these are positive indicators that can boost domestic demand and increase economic growth.
Jain, in the MAP briefing, said Habito’s growth forecast is almost the same as that of the ADB’s 4.8 percent this year and 5 percent in 2013. He, however, added that these estimates are being reviewed and any change or update will be made public in April.
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