More than two (2) decades ago, I was part of a team to construct a PhP550M polypropylene plant, it was designed to produce about 160,000 MT of polypropylene pellets annually. The projected cost per kilogram of product was then around PhP30. After several years, it ceased operation. It could not compete with China imports which is only Php11 per kilogram then. Good thing I already moved on before that happened.
An American tire company has a very good prospect with the local tire demand/market. It bought another local tire manufacturing plant and rehabilitated it, costing the company around US30M. After two(2) years of operation, it closed shop. It could not compete with cheap Indian tire imports. After several years, the American tire company transferred its operation to another ASEAN country.
In the steel industry, cheap China imports dominate the local market. Local manufacturers could not compete with the selling price of China imports head on. Thus other local manufacturers produce sub-standard products to enable them to survive the competition, to the detriment of consumers.
Why Philippine made products can not compete with imported counterparts?
- Free trade is the number one reason. There is no protection for local manufacturers from imported products.
- Reliance on imported raw materials. There are no local industries to support the raw materials requirements of value added product manufacturers. This will considerably increase the input cost of manufacturing.
- Product quality Imported products, despite being cheaper can be of better quality.
- Labor cost. The cost of labor in the Philippines compared to other developing countries are lower.
- Weak Government Incentives. Other countries provide tax holidays, reduced red tape, low incidence of corruption. I could still remember when we were constructing industrial plants back then that we need to closely coordinate with the Barangay Chairman to ensure that locals will not block our delivery trucks. Afters several decades, this still hold true.
- Absence of Product Standards. The product standards are not religiously implemented or not available at all. This makes it difficult to police sub-standard products.
I could still enumerate a lot more but I believe that the above reasons are the primary reasons why Philippine made poducts are not able to compete with their imported counterparts.