IF you look at the global mineral map, you’ll see that the Philippines is one of the world’s top mineralized countries: third in gold reserves, fourth in copper and fifth in nickel.
Situated along a well-defined belt of volcanoes called the Circum-Pacific Belt, or the Pacific Ring of Fire, the country is where the processes of postvolcanic eruption and plate convergence take place, resulting in the formation of rich and abundant metallic mineral deposits.
Yet, the country remains poor and at the bottom of the five original members of the Association of Southeast Asian Nations. (The other four are Singapore, Malaysia, Thailand and Indonesia.)
To remedy this unfortunate situation, Rep. Francisco T. Matugas of the First District of Surigao del Norte province called for the passage of House Bill (HB) 5058, or “An Act Promoting the Development of Minerals Processing and, in the Process, Banning the Export of Iron, Nickel, Chromite, Manganese and Other Strategic Metallic Ores, and for Other Purposes.”
“Sadly, these ores, after mining or extraction, are exported directly to foreign countries as raw materials. This is so because the country has not developed the downstream-mining industry and, thus, cannot maximize the benefits or value added from mining,” Matugas lamented.
He said it is time for the mining industry to focus on the final stages of the mineral value chain, and encourage the establishment and development of processing plants that use new technologies in the manufacturing of mineral ores.
“It is my firm belief that, by developing the downstream-mining industry, we are not only advancing [it, but also] paving the way for the industrialization of the entire country,” Matugas said, adding that “we cannot afford to remain as [a] mere exporters of raw materials.”
The lawmaker insisted that the country should not content itself with being a mere exporter of raw materials. Instead, he said, it should establish and develop its own processing plants that use new technologies in manufacturing mineral ores.
Matugas said the state must promote industrialization and full employment through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets.
“We should help promote the downstream industries of processing metals, such as copper, nickel, gold and chromite, so as to develop community-based manufacturing and supplier industries and services, improve government benefits for the mining industry, and control the export of unprocessed minerals,” he explained.
HB 5058 is actually a refiled measure that was approved at the committee level during the 15th Congress, but failed to gain plenary passage due to time constraints. The bill was referred on October 20 to the House Committee on Natural Resources, which the author himself heads, for appropriate action.
The committee approved the measure during its deliberations on November 26.
Related to Matugas’s bill is the new Asian Development Bank (ADB) report that said the Philippines and other developing Asian economies should boost their manufacturing sectors in order to prosper.
The ADB said manufacturing is key for Asian countries to have “a high productivity-service sector, technological innovation and modernizing agriculture.”
Changyong Rhee, ADB chief economist, said: “Historically, no economy has reached [a] high-income status without reaching at least [an] 18-percent share of manufacturing in output and employment for a sustained period.”
The ADB report noted that if manufacturing shares in both gross domestic product (GDP) and total employment are at least 18 percent, there is a 41-percent probability of becoming a high-income economy.
The ADB report cited a group of economies—those of Hong Kong, China, Japan, South Korea, Singapore and Taiwan—that have rapidly industrialized to become high-income countries.
Changing even more slowly are developing countries, such as Bangladesh, India, Pakistan and the Philippines, having created few manufacturing jobs, and are shifting from agriculture into services.
“Right now, as services boom in the region, it’s tempting to shun industrialization, but it will be a serious mistake if a country wants to be prosperous,” Rhee said.
The report noted that industry does not lead the way in Asia. Services make up the largest share of developing Asia’s output, while agriculture remains the largest employer.
“For advanced Southeast Asian economies, the main recommendation is to focus on upgrading, as they are already quite diversified. Countries such as Malaysia and Thailand have developed institutional capacity to diversify their economies, but need to deepen and upgrade their industries to avoid being caught in the middle-income trap,” it said.
In the case of the Philippines, the ADB said that, “to escape [the middle-income] trap, the Philippines needs to develop a much deeper industrial base to complement its service sector.”
In the recent announcement of the first-quarter GDP results, the performance of the manufacturing sector was singled out. Based on official data, manufacturing output rose 9.7 percent and accounted for nearly 23.5 percent of GDP in real terms for the first quarter.
There are also indications that foreign companies are moving or expanding manufacturing operations in the country. For instance, Japanese manufacturer Brother recently opened a new manufacturing facility at the First Philippine Industrial Park in Batangas province.
E-mail: cecilio.arillo@gmail.com.