[ LETTER OF INSTRUCTION NO. 154, December 26, 1973 ]
ANNOUNCING THE APPROVAL AND EFFECTIVITY OF THE ADDENDA TO THE SIXTH INVESTMENT PRIORITIES PLAN AND FOURTH EXPORT PRIORITIES PLAN UNDER THE INVESTMENT INCENTIVES ACT AND EXPORT INCENTIVES ACT.
WHEREAS, pursuant to the provisions of Republic Act No. 5186, otherwise known as the Investment Incentives Act, and Republic Act No. 6135, otherwise known as the Export Incentives Act, the Board of Investments has prepared the Addenda to the Sixth Investment Priorities Plan and the Fourth Export Priorities Plan and the same have been submitted to me for approval through, and with the recommendation of the National Economic and Development Authority;
WHEREAS, after a careful study of the said Addenda to the Plans and their supporting data, I found the Addenda to be feasible and in conformity with law and accordingly approved it.
NOW, THEREFORE, pursuant to Section 18 of Republic Act No. 5186 and Section 4 of Republic Act No. 6135, I, FERDINAND E. MARCOS, President of the Philippines, do hereby declare and proclaim in effect the Addenda to the Sixth Investment Priorities Plan and the Fourth Export Priorities Plan hereto attached.
Don, in the City of Manila, this 26th day of December, in the year of Our Lord, nineteen hundred and seventy-three.
ADDENDA TO THE SIXTH INVESTMENT PRIORITIES PLAN - 1973
Republika ng Pilipinas
Tanggapan ng Pangulo
LUPON NG PAMUMUHUNAN
(BOARD OF INVESTEMENTS)
Ortigas Building
Ortigas Ave., Pasig, Rizal
Hon. Gerardo P. Sicat
Director General
National Economic and Development Authority
Padre Faura, Manila
Dear Dr. Sicat
We are submitting herewith our proposed amendments to the Sixth Investment Priorities Plan. The amendments consist of the following:
I. New Inclusions
In view of the urgency and economic implication of the present energy crisis, we are recommending the inclusion of two new projects, namely, coal mining for power generation and the manufacture of oil exploration and development equipment and facilities. These two projects are expected to encourage the development of local resources and facilities for power generation.
As part of the BOI Textiles Sector Development Program we are also recommending the inclusion of three new projects which represent major inputs into the textile weaving and knitting industries.
The new projects being proposed for inclusion are the following:
II. Amendment of Measured Capacity
The proposed amendment of the measured capacity of three (3) projects are:
In the case of woven textiles, we are recommending the increase of the local measured capacity from 115,400,000 sq. yds. to 116,400,000 sq. yds. The slight increase of 1,000,000 sq. yds. is due to the change in population projections which are now based on the results of the 1970 general census.
III. Other amendments
In addition to the proposed new inclusions and amendments in measured capacity, we are proposing two other minor amendments:
[*] Oil exploration equipment and facilities: jack-up drill rigs, floating rigs non-self propelled, semi-submersibles, drill rigs, self-propelled drill rigs.
[*] Oil development equipment and facilities: drilling platforms on fixed jacket structures, production platforms on fixed jacket structures, service platforms on fixed jacket structures, personnel bridges, flare bridges, submarine pipe lines, single-buoy mooring facilities, fixed berth mooring facilities.
PIG IRON
The proposed project will involve the following processes:
Pig iron is used as raw material for foundries and steel production, it is interesting to note that the Philippines exports iron ore only to buy it back in the form of pig iron products which means not only unproductive expenditure of our foreign exchange, but also the loss of other social and economic benefits. During the last few years, our local foundries and steel mills have been producing far less than their rated capacities mainly due to the high price and shortage of their pig iron requirements. The local manufacture of pig iron will, therefore, not only replace the present importations of pig iron but more importantly, provide adequate raw materials for the continuous operation of our steel mills and foundries. It is likewise expected to bring about the expansion of existing mills and foundries as well as the establishment of other factories that depend upon iron and steel as raw materials. If pig iron will be available locally, it is expected that annual consumption will be increased by at least 10% over the next several years.
Almost all of the essential raw materials in pig iron manufacture will come from indigenous sources. This includes run-or-mine ore, limestone, charcoal, molasses and lime.
OIL EXPLORATION AND DEVELOPMENT EQUIPMENT
AND FACILITIES
The search for offshore oil in the Philippines is accelerating at a rapid pace in view of the present energy crisis and favorable results in oil surveys indication the probable presence of oil in commercial quantities. Along with this, the demand for the necessary equipment and facilities needed for offshore oil exploration and development will increase.
The proposed manufacture of equipment and facilities for oil exploration will over the manufacture of drill rigs (i.e., jack-up drill rigs, drill rigs, drill rigs and self-propelled drill rigs), non-self propelled floating rigs and semi-submersibles. Equipment and facilities for oil development, on the other hand, will include the manufacture of platforms on fixed jacket structure (i.e., drilling platforms, production platforms and service platforms), bridges (flare and personnel bridges), submarine oil storage and pipes lines, and mooring facilities (single-buoy and fixed berth).
The process generally includes metal fabrication, assembly and general installation. The parts are fitted, assembled and installed as a complete unit.
Raw materials and supplies, namely, steel plates, steel sheets, alloy pipes, pipe fittings and electrical supplies are to be imported. Instrumentation supplies and control devices will have to be imported also.
The local development of an offshore construction capability is expected to induce manufacturing activities in related sectors like structural steel fabrication, pipe manufacturing and fabrication, foundries, air-conditioning equipment manufacturing, electric wire and cable manufacturing, welding rod manufacturing, oxygen and acetylene production.
With the available technical know-how and facilities, locally manufactured oil exploration and development equipment and facilities will be able to compete quality-wise in the foreign market.
CLOSED-IMPRESSION DIE STEEL FORGINGS
Forgings are component parts produced by heating a piece of alloy steel and subsequently applying force so that the metal will assume the shape of the die. Such operations are either done with air or drop hammers or upsetters.
The manufacture of rough forgings for components of machineries has not yet been listed in the IPP. However, forge plants for the manufacture of various hand tools and grinding balls and smaller forge shops are now in existence.
Finished forgings form component parts of agricultural and industrial machineries. It is used by automotive assemblers in the manufacture of transmissions, rear axle assembly, propeller shaft, engine and front suspension. It is likewise used in the manufacture of earthmoving equipment and trailers, agricultural machineries, mining equipment, refrigeration equipment, small engines, materials handling components, electric transmission components, pipe fittings and flanges for oil and petroleum, and railway rolling stock.
Until high quality alloy steel billets are locally available, raw materials will have to be imported from Japan or Australia. The die requirements will also be imported.
PHTHALIC ANHYDRIDE
Phthalic anhydride occurs as large white needles prepared by atmospheric oxidation of orthoxylene in the presence of vanadium pentoxide as catalyst.
Almost 80% of the phthalic acid market goes into the manufacture of plasticizers (mainly for vinyl resins) and alkyd resins. Other consumers are the polyester, dye, agricultural chemical and pharmaceutical industries.
Phthalic anhydride was listed in the 2nd IPP with a measured capacity of 8,000 MT. It was subsequently delisted with the registration of Resins, Inc., which has an annual rated capacity of 8,000 MT. However, due to the increasing export demand for the product, Resins, Inc., is able to supply only 45% of the local market. Phthalic anhydride is therefore being recommended for relisting in the 6th IPP with a local measured capacity of 4,000 MT and a variable export measured capacity.
Our market studies have established the export potential of this product. Japan has no plans of expanding its phthalic anhydride production and would prefer to import to meet its needs. Taiwan needs about 12,000 MT per year of the product and it has no phthalic anhydride plant. Thailand will need about 3,000 MT per year of phthalic anhydribe starting 1974 and it has no plant either. Inquires from Taiwan, Korea and Japan have already been received. A Japanese firm has already expressed interest in a processing arrangement with a local phthalic anhydride manufacturer.
INTEGRATED VINYL CHLORIDE MONOMER PLANT
Vinyl chloride monomer is the principal raw material for the production of polyvinyl chloride (PVC) resin which is used by the fabrication industry in the manufacture of pipes and fittings, floor tiles and insulators for electrical wires and cables.
The proposed manufacture of vinyl chloride monomers from an integrated plant will have as one of its by-products, caustic soda (NaOH). Caustic soda is used by the textile, pulp and paper, soap and detergents, food and beverages and other industries.
At present, there is only one firm engaged in the manufacture of this product with a rated capacity of 10,000 MT per year. Local demand, however, is expected to increase yearly by about 30%. By 1976, projected demand is estimated to be 64,600 MT.
The local manufacture of vinyl chloride monomer will therefore not only provide the necessary raw material for PVC resin producers but will also save foreign exchange since the increasing demand for the product will otherwise have to be met through importation.
Thus, the inclusion of vinyl chloride monomer from an integrated plant is being recommended for the following reasons: the projected local measured capacity, the acute shortage of vinyl chloride monomer and the net foreign exchange savings that will be derived from the project.
TEXTILE TOPS/SLIVERS
Textiles tops may be defined as the resulting fibers produced when filament yarn tow is passed through a converter which cuts the yarn into desired lengths. They are normally produced using the worsted system. Staple fiber which pass through the carding system may be termed silver and may be equivalent to tops which originate from filament yarn. Tops/silvers therefore represent an intermediate product prior to production of spun yarn. Its starting raw material may either be staple fiber or filament yarn.
This product is recommended for inclusion in the IPP with a variable export measured capacity. As part of the Textile Sector Development Program of the BOI, this will help increase our export earnings and generate labor employment.
The projected demand for the product is considered variable since it will primarily depend upon the type of fiber used, i.e., acrylic, wool, polyester, etc.
SPUN YARN
Spun yarn represents one of the major inputs into the weaving and knitting industries. Its inclusion in the IPP as a separate category from woven textiles is proposed in order to emphasize its importance. As part of the sector development program, the production of spun yam forms the backbone of the weaving and knitting industries.
Spun yarn may consist of natural or synthetic fibers or a combination of natural and synthetic fibers in varying proportions. These fibers may be cotton, silk, ramie, linen, flax wool, polyester, nylon, rayon, acrylic or polynosic fibers. Generally, the fibers are subjected to mixing, cleaning, and bale-opening operations, scutching, carding, drawing and spinning to finally form the yarn. Depending on the length of the staple fiber used, either the cotton or worsted system may be used for processing into spun yarn.
RAYON FIBER
Rayon is a generic name for all manufactured fibers from regenerated cellulose. It is a semisynthetic fiber classified under cellulosic fiber which is used in the manufacture of tire cord, nonwoven fabrics, surgical dressings, wearing apparel, mechanical rubber goods, coated fabrics, belts, blankets, blend with cotton for home furnishings, etc.
Rayon was covered in the 1st, 2nd, 3rd, and 4th IPPs on a preferred pioneer status but it was delisted due to the high capital investment required for the project. However, in view of the textile sector program of the BOI which would require rayon as one of its raw materials, and the increasing demand for fitter and yarn by our local textile mills, it is being proposed for relisting in the 6th IPP.
The increase in the demand for our garment exports using local fabrics has considerably increased the fiber and yarn requirements of local textile mills. Their requirements of rayon fiber have always been supplied through importations from Japan and die United States. Fiber and yarn consumption for 1972 amounted to 79,655 MT, of which 71,930 MT (90%) were imported and only 7.725 MT were locally produced. Based also on past importations (1963-1972), the average share of rayon to total fiber and yarn imports was about 23% or approximately 57% of total synthetic importations. Since the demand of our garment and textile industries have increased, the expected demand for rayon by 1976 is 24,310 MT.
ADDENDUM TO TABLE 26
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
DEMAND-SUPPLY GAP AND ANNUAL CAPACITY OF THE
RECOMMENDED ECONOMIC-SIZE PLANT
(in thousands)
ADDENDUM TO TABLE 27
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
INVESTMENT REQUIREMENT AND VALUE OF OUTPUT
OF THE RECOMMENDED ECONOMIC-SIZE PLANT
(in thousand pesos)
ADDENDUM TO TABLE 28
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
LABOR REQUIREMENT OF THE ECONOMIC-SIZE PLANT
BY LEVEL OF SKILL
238
6,750
273
239
1,978
49,500
1,130
165
3,600
109
119
1,595
1,350
100
80
53
7,200
216
50
365
32
46
416
40
6,300
144
146
ADDENDUM TO TABLE 29
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
ECONOMIC FACTORS
.41
.52
—
82,418
6,886
31.25
2.47
1.56
1.83
83
ADDENDUM TO TABLE 30
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
LINKAGE EFFECTS
ADDENDA TO THE FOURTH EXPORT PRIORITIES PLAN - 1973.
Republic ng Pilipinas
Tanggapan ng Pangulo
LUPON NG PAMUMUHUNAN
(BOARD OF INVESTMENTS)
Ortigas Building
Ortigas Ave., Pasig, Rizal
Dr. Gerardo P. Sicat
Chairman
National Economic and Development Authority
Padre Faura, Manila
Dear Dr. Sicat:
We are submitting herewith our proposed amendments to the Fourth Export Priorities Plan. These consist of the inclusion of new products in List A and new products in List B and the amendment of the product description of two (2) List B products together with their corresponding Brussels Trade Nomenclature (BTN) and Standard International Trade Classification (SITC) numbers.
I. New Inclusions
The new products being proposed for inclusion are the following:
We are also proposing the revision of the product description of two (2) List B products in order to broaden tbe export industrial coverage of very related products that similarly enjoy cost advantages and for which significant intrest for joint ventures have been shown. The revision would change their producl ciassifications and descriptions from:
ADDENDUM TO TABLE 31
OF THE
FOURTH EXPORT PRIORITIES PLAN
INVESTMENT REQUIREMENT AND VALUE OF OUTPUT OF THE
RECOMMENDED ECONOMIC-SIZE PLANT
(in thousands)
.410 MT
MT
MT
liters
refined
alcohol
MBF
.192 MBF
yds.
pcs.
pcs.
pcs.
units
pcs.
pcs.
ADDENDUM TO TABLE 32
OF THE
FOURTH EXPORT PRIORITIES PLAN
LABOR REQUIREMENTS OF THE RECOMMENDED ECONOMIC-SIZE PLANT
BY LEVEL OF SKILL
ADDENDUM TO TABLE 33
OF THE
FOURTH EXPORT PRIORITIES PLAN
ECONOMIC FACTORS
h.i. — highly indigenous
SPICES
This product fits into the domestic program for the hiked processing of fruits and vegetables to cope with increasing demand in both local and foreign markets.
Spices are aromatic parts of plants, mostly tropical, which are dried and used in food preparation either whole or in pulverized form. Spices may be made from the root, bark, fruit, flower, bud or seed of a plant.
An onion/garlic plant was used as the representative economic-size plant for processed spices because onion and garlic have the biggest share in the world spice market. Although the study is limited to onion and garlic, proponents may go into processing of other spices more particularly those from plants which are locally grown, such as ginger, pepper and cinnamon. It is advisable to concentrate and to process a limited range of varieties for economic reasons.
The world market for dehydrated onion and garlic has been steadily growing. The import demand for spices of the United States and the United Kingdom is big enough to warrant domestic processing for export. At present the bulk of Philippine exports of spices, particularly ginger, is shipped to Hongkong in an unprocessed state. The principal end-users are the dry-soup industries, fish and canning industries and other food industries.
Quality is a major consideration. Experience and technical know-how, however, is difficult to acquire and involves a lengthy and costly process. This can be hastened, though, through foreign technical tie-ups.
FODDER (Cattle Feed)
The proposal for the inclusion of fodder in the Export Priorities Plan is premised on two considerations. (1) there is a minimal usage for cattle feed domestically due to the abundance of green grass for cattle feeds throughout the year, and (2) there is a large foreign demand for fodder. The Japanese export market alone has increased by about 493% from 1962 to 1972. Investors from Japan likewise have sounded out interest in joint venture activities in this area.
Fodder production involves the growing, drying, baling and/or pelletizing of plant materials belonging the grass family, Grainincae, which includes sorghum, corn, sudan grass, and others which are generally used as forage for cattle.
The proposed product refers to compressed bay fodder. This is made from pellets of ground dried grass forage which is granulated, and kobu which is pulverized and cubed.
The major raw material being considered for fodder production is sorghum. It is important to note that a number of raw materials like sugar cane tops, napier grass, rice and corn stalks can also be processed into compressed fodder. However, the feeding value in terms of digestible nutrients of these raw materials tend to be low compared with young sorghum.
BENEFICIATED NICKEL SILICATE ORE
Beneficiation is defined as the (1) dressing and processing of nickel ores for the purpose of removing the unwanted constituents, regulating the size of the desired product and improving its quality, purity or assay grade; (2) concentration or other preparation of nickel ore for smelting by drying, flotation or magnetic separation.
Nickel deposits are classified as sulfides, oxides and silicates. Sulfide nickel ore is a mixture of sulfide minerals with varying amounts of worthless rock minerals called gangue. The main sulfide minerals are pentlandite, pyrrhotite and iron sulfide. Nickel latcrites (oxides) are residual soil containing concentrations of iron oxides, hydroxides and aluminum hydroxides. Nickel silicates are hydrous, nickel-magnesium silicate minerals exemplified by garnicrite whose nickel content is variable and may even reach up to 47% nickel. They are mined in New Caledonia, Indonesia and Brazil. Prospecting and exploration work currently being undertaken in Palawan revealed the presence of gamicritc.
The known and blocked nickel silicate ore reserves of the country are either limited or too scattered to warrant the establishment of nickel-processing or refuting plants. It is therefore proposed to mine and beneficiate the country's nickel silicate deposits so that they can be utilized.
Beneficiated nickel ore is used as a raw material of pyrometallurgical or hydrometallurgical nickel extractive plants in order to produce electrolytic nickel and other pure forms of nickel and nickel salts, ferronickel and nickel oxide. Nickel is used in the manufacture of stainless steel (wrought), alloy steel (wrought), iron and steel castings, electroplating, nickel alloys and copper alloys.
ALCOHOL (Molasses Fermentation)
Ethyl alcohol production in the Philippines is closely identified with the sugar industry because it is being produced mainly from molasses. In the country's large sugar centrals, alcohol production from fermented molasses is an integral part of its operation in order to optimize the utilization of molasses by-products.
The domestic requirement for ethyl alcohol is adequately met by existing local producers because of our abundant supply of molasses. Alcohol production is one of the major consumers of molasses in the Philippines. However, the bulk of our molasses production is disposed of through the export market. Alcohol manufacture and molasses disposition are two economic activities which are interdependent and interrelated with each other.
Refined ethyl alcohol is mostly used for human internal consumption as liquor and medicinal drug. Unrefined alcohol or denatured alcohol, on the other hand, is used as fuel in rural areas and as solvent and chemical intermediate for varnish, inks, and paints.
The Philippines has not exported ethyl alcohol in the past. We do, however, export liquor made out of locally-produced refined ethyl alcohol. Lately, a new development is shaping up in the Southeast Asian export market for alcohol and molasses, particularly in Japan.
BUILDERS' WOODWORK
The industry refers to the processing of logs and flitches into builders' woodwork and prefabricated components of wood through the establishment of a wood-processing plant or through the forward integration of existing sawmills. Its proposed inclusion in the Export Priorities Plan fits into the scheme of developing industrial wood manufacturers for export which is a necessary undertaking to avoid economic dislocations as a result of the log phase-out.
The products covered under this category are:
1) Worked lumber which, in addition to being dressed, has been matched, shiplapped or patterned. This clarafication includes edge and end glued lumber, floorings, mouldings, jambs, door and window frames.
2) Wood tiles, stair treads, stepladders, handles and other articles of wood. These products are utilized for construction of and interior trim.
The Philippines' main export markets for lumber and lumber products are the United States and Canada, although there has been substantial exports to Japan lately. Japan's share of the market rose from 10% in 1967 to 20% in 1971 or an increase of 9.13 MBF over a 5-year period. The United States' share, on the other hand, vent down from 58% in 1967 to 31%'in 1971. There are also active markets in Australia, Guam and Western Europe.
FURNITURE
The proposed activity covers the manufacture of furniture, either in whole pieces, sets, or parts thereof.
Furniture include upholstered pieces such as seats, chairs, sofas, stools and beds; storage pieces such as chests, cabinets and bookcases; and occasional pieces such as chairs, tables and stands.
The primary raw material is either wood, rattan, plastic, metal or a combination of these materials. The raw materials may be derived from usable wastes thus reducing significantly overall wastage.
CERAMIC BATHROOM ACCESSORIES
The proposed project refers to the manufacture of ceramic bathroom accessories of light pieces or what are known as small wares such as soap and grab, paper holder, towel post, soap holder, toothbrush and tumbler holder. Ceramic bathroom accessories are usually glazed and produced in different colors.
At present, there is only one local firm engaged in the manufacture of these products. Although there is no local measured capacity, the export market appears promising. This is encouraged by existing demand in countries like the United States and Japan because of increasing labor costs in these countries and shortage in export capability of low-labor cost developing country suppliers. The recent move of the Japanese firms in basing their operations in Southeast Asian countries would spell bright prospects for joint-venture investments in this activity. Our success in the export market, therefore, would largely depend on its competitiveness in price and quality with Japan and other exporting countries.
VITRIFIED TELES
Vitrified tile is a type of ceramic product which is noted for its high resistance to water absorption and abrasion. It can be both glazed and unglazed and can be produced in different colors and sizes (mosaic, 4¼" x 4¼", 6" x 6", 6" x 12", etc.). Vitrified tiles are produced by firing different ceramic materials to vitrification (nonporosity) temperature ranging from 1,000 C. to 1,300 C.
Locally-produced vitrified tiles (unglazed) are primarily used as flooring materials for comfort rooms, kitchens, washrooms and showers but it can also be used in other places like lobbies and reception rooms of buildings and offices, in building facades, in terminals of public buildings and in open places like parks and sidewalks.
Vitrified tiles were listed in the 1st and 2nd Investment Priorities Plan but the measured capacity has since been filled up. This product is being proposed for inclusion in the Export Priorities Plan because of existing potentials of exporting to the U.S., the number one importer, as a result of the decrease m the production of ceramic products in Japan.
CLOCKS AND WATCHES
The manufacture for export of clocks and watches is proposed in responseto the active to foreign investors, principally Japan, in engaging jpint-venture setups m develops Southeast Asian countries as a result of increasing labor costs in Japan and other clock-producing countries.
The proposed production scheme will involve the local manufacture of the following components: body, backplate, glass, dials, winding lever and hands. The movement or the "engine" will be imported from Switzerland.
Other raw materials such as stainless steel sheets and brass bars will also be imported while plastic cases will be locally procured.
TOYS
The products proposed for export under this category are wooden toys with the small and intricate parts to be made of plastic. The toys will be designed with special consideration on safety in order to meet the regulations imposed by government bodies in the U.S., Canada, and Europe. The United States remains as the largest export market. Similarly, the markets are growing in Western Europe, Canada, Australia, Sweden and Denmark. Initially, the toys envisioned are such items as trains, airplanes, tugboats, etc. with moving parts.
The major steps involved in the production are carpentry, plastic moulding, painting, aasembly, packing and shipment. Carpentry covers the various physical transformation processes that wood materials go through like planing, cutting, slitting, forming, finishing, etc. The plastic components are manufactured either by compression or injection mouldings. Painting and assembly follows, after which the toys are packed and shipped by containers.
CIGARETTE LIGHTERS
The cigarette lighters being proposed for local manufacture will utilize butane as fuel and will have a replaceable butane container in contrast with the throw-away lighters wherein the whole unit is discarded as soon as the butane is exhausted.
The manufacture of butane lighters involves the in-house production of the head or the mechanism which acts as the release valve of the container and at the same time furnishes the spark to ignite the gas. The plastic body will be subcontracted to local tube manufacturers. The head is produced by diecasting and machining. The material for the body will be imported while the plastic tube will be locally procured.
Like clocks and watches, cigarette lighters have attracted the interest of foreign investors. The Philippines has definitely a labor cost advantage over Hongkong in attracting foreign investments especially from Japan in the export production of cigarette lighters.
LOCKS
Locks may be classified into padlocks, night latches, push locks and deadlocks. These items are used primarily as safeguards in homes, factories, buildings and to close containers, compartments and boxes for safekeeping.
The manufacture of locks essentially involves diecasting, machining and press work of the components. Zinc alloy, brass sheets, steel plates, steel wires and brass rods are the principal raw materials. Eighty percent (80%) of the total materials will be locally procured. Zinc and brass alloys will be recovered from locally-generated scrap.
WOVEN FABRICS
Woven fabrics are the products of the spinning, weaving and finishing of natural and man-made fibers used essentially for clothing. They are also used for draperies, mosquito nets, waddings, paddings, surgical and clinical gauzes, etc.
Woven fabrics may be unbleached, scoured, bleached, dyed, printed, mercerized, napped, etc. The designs may also be produced by additional warp or weft threads introduced during weaving.
Cotton has been the major raw material for fabries. Man-made fibers like rayon, nylon, polyester, acrylics, etc. have, however, been developed as substitutes or for blending with cotton to improve the quality of fabrics (to add strength, resistance to creases, stains, mildew, light, etc.)
The inclusion of woven fabrics in the EPP is expected to serve as an encouragement for the private sector to go into fabrics manufacture which can subsequently be sold to garment manufacturers and exporters. It will likewise help alleviate the present raw materials shortage of local garment manufacturers.
WHEREAS, after a careful study of the said Addenda to the Plans and their supporting data, I found the Addenda to be feasible and in conformity with law and accordingly approved it.
NOW, THEREFORE, pursuant to Section 18 of Republic Act No. 5186 and Section 4 of Republic Act No. 6135, I, FERDINAND E. MARCOS, President of the Philippines, do hereby declare and proclaim in effect the Addenda to the Sixth Investment Priorities Plan and the Fourth Export Priorities Plan hereto attached.
Don, in the City of Manila, this 26th day of December, in the year of Our Lord, nineteen hundred and seventy-three.
(Sgd.) FERDINAND E. MARCOS
President
Republic of the Philippines
President
Republic of the Philippines
ADDENDA TO THE SIXTH INVESTMENT PRIORITIES PLAN - 1973
Republika ng Pilipinas
Tanggapan ng Pangulo
LUPON NG PAMUMUHUNAN
(BOARD OF INVESTEMENTS)
Ortigas Building
Ortigas Ave., Pasig, Rizal
6 November 1973
Hon. Gerardo P. Sicat
Director General
National Economic and Development Authority
Padre Faura, Manila
Dear Dr. Sicat
We are submitting herewith our proposed amendments to the Sixth Investment Priorities Plan. The amendments consist of the following:
| 1) | the inclusion of nine (9) new projects; | |
| 2) | the amendment in measured capacity of three (3) project; | |
| 3) | the amendment in the condition for grain processing (rice); and | |
| 4) | a change in the listing of agricultural lime. |
I. New Inclusions
In view of the urgency and economic implication of the present energy crisis, we are recommending the inclusion of two new projects, namely, coal mining for power generation and the manufacture of oil exploration and development equipment and facilities. These two projects are expected to encourage the development of local resources and facilities for power generation.
As part of the BOI Textiles Sector Development Program we are also recommending the inclusion of three new projects which represent major inputs into the textile weaving and knitting industries.
The new projects being proposed for inclusion are the following:
With the exception of coal for power generation, a short description of the new inclusions together with their corresponding economic data and economic factors which were considered in their evaluation are attached. The data on the requirement of an economic-size plant for coal for power generation are being revised in connection with the results of the recent study of the BOI on industrial fuel and power requirements and consumption.Coal for power generation NP Local: 2,400,000 MT Pig iron P Local: 70,000 MT Oil exploration and development equipment and facilities[*] P a. Oil exploration equipment and facilities Local: 40,000 MT
Export: Variableb. Oil development equipment and facilities Local: 32,000 MT
Export: VariableClosed-impression die steel forgings P Local: 7,500 MT
Export: VariablePhthalic anhydride P/NP Local: 4,000 MT
Export: VariableIntegrated vinyl chloride monomer plant NP Local: 54,600 MT Textile tops/slivers
NP Local: 10,200 MT
Export: VariableCondition: Spun yarn for textiles NP Local: 323,000 spindles or 66.9 million lbs.
Export: Variable1. 2. Rayon fiber P Local: 25,000 MT
Export: VariableConditions: 1. 2.
II. Amendment of Measured Capacity
The proposed amendment of the measured capacity of three (3) projects are:
We are recommending the increase in the local measured capacity of nylon fibers from 2,040 MT to 10,000 MT and the addition of a local measured capacity of 16,000 MT for polyester fiber Our study the local market for synthetic fibers has established the domestic potential of these products. Polyester is the newest among the fibers and has gained popularity only in 1970. The wide application of its staple as well as its filament forms are expected to garner a bigger share of the synthetic fiber market.Project Measured Capacity Nylon fiber Local: 10,000 MT
Export: VariablePolyester fiber Local: 16,000 MT
Export: VariableTextiles Local: 116,400,00 sq. yds.
Export: Variable
In the case of woven textiles, we are recommending the increase of the local measured capacity from 115,400,000 sq. yds. to 116,400,000 sq. yds. The slight increase of 1,000,000 sq. yds. is due to the change in population projections which are now based on the results of the 1970 general census.
III. Other amendments
In addition to the proposed new inclusions and amendments in measured capacity, we are proposing two other minor amendments:
- Amendment of the condition in grain processing (rice) regarding facilities to be established in centrals in production areas:
From:_3/ Facilities to be established in these areas may be also utilized for corn drying/ storage. The specific locations and extent of utilization for corn are treated on a case to case basis, but should not be over 60 percent of capacity.To: _3/ Facilities to be established in these areas, as well as in selected consumption areas determined by the Board to be necessary to stabilize prices, may be utilized for corn processing/storage. The extent of utilization for corn should not be over 60 percent of capacity.
- Change in the listing of Agricultural Lime to Lime (CaO).
Very truly yours, |
|
(SGD.) VICENTE T. PATERNO |
|
| Chairman |
[*] Oil exploration equipment and facilities: jack-up drill rigs, floating rigs non-self propelled, semi-submersibles, drill rigs, self-propelled drill rigs.
[*] Oil development equipment and facilities: drilling platforms on fixed jacket structures, production platforms on fixed jacket structures, service platforms on fixed jacket structures, personnel bridges, flare bridges, submarine pipe lines, single-buoy mooring facilities, fixed berth mooring facilities.
Attachment A
DESCRIPTION OF PRODUCTS
DESCRIPTION OF PRODUCTS
The proposed project will involve the following processes:
- mining of the ore
- concentration of the ore
- agglomeration
- smelting of the ore into pig iron
Pig iron is used as raw material for foundries and steel production, it is interesting to note that the Philippines exports iron ore only to buy it back in the form of pig iron products which means not only unproductive expenditure of our foreign exchange, but also the loss of other social and economic benefits. During the last few years, our local foundries and steel mills have been producing far less than their rated capacities mainly due to the high price and shortage of their pig iron requirements. The local manufacture of pig iron will, therefore, not only replace the present importations of pig iron but more importantly, provide adequate raw materials for the continuous operation of our steel mills and foundries. It is likewise expected to bring about the expansion of existing mills and foundries as well as the establishment of other factories that depend upon iron and steel as raw materials. If pig iron will be available locally, it is expected that annual consumption will be increased by at least 10% over the next several years.
Almost all of the essential raw materials in pig iron manufacture will come from indigenous sources. This includes run-or-mine ore, limestone, charcoal, molasses and lime.
AND FACILITIES
The search for offshore oil in the Philippines is accelerating at a rapid pace in view of the present energy crisis and favorable results in oil surveys indication the probable presence of oil in commercial quantities. Along with this, the demand for the necessary equipment and facilities needed for offshore oil exploration and development will increase.
The proposed manufacture of equipment and facilities for oil exploration will over the manufacture of drill rigs (i.e., jack-up drill rigs, drill rigs, drill rigs and self-propelled drill rigs), non-self propelled floating rigs and semi-submersibles. Equipment and facilities for oil development, on the other hand, will include the manufacture of platforms on fixed jacket structure (i.e., drilling platforms, production platforms and service platforms), bridges (flare and personnel bridges), submarine oil storage and pipes lines, and mooring facilities (single-buoy and fixed berth).
The process generally includes metal fabrication, assembly and general installation. The parts are fitted, assembled and installed as a complete unit.
Raw materials and supplies, namely, steel plates, steel sheets, alloy pipes, pipe fittings and electrical supplies are to be imported. Instrumentation supplies and control devices will have to be imported also.
The local development of an offshore construction capability is expected to induce manufacturing activities in related sectors like structural steel fabrication, pipe manufacturing and fabrication, foundries, air-conditioning equipment manufacturing, electric wire and cable manufacturing, welding rod manufacturing, oxygen and acetylene production.
With the available technical know-how and facilities, locally manufactured oil exploration and development equipment and facilities will be able to compete quality-wise in the foreign market.
Forgings are component parts produced by heating a piece of alloy steel and subsequently applying force so that the metal will assume the shape of the die. Such operations are either done with air or drop hammers or upsetters.
The manufacture of rough forgings for components of machineries has not yet been listed in the IPP. However, forge plants for the manufacture of various hand tools and grinding balls and smaller forge shops are now in existence.
Finished forgings form component parts of agricultural and industrial machineries. It is used by automotive assemblers in the manufacture of transmissions, rear axle assembly, propeller shaft, engine and front suspension. It is likewise used in the manufacture of earthmoving equipment and trailers, agricultural machineries, mining equipment, refrigeration equipment, small engines, materials handling components, electric transmission components, pipe fittings and flanges for oil and petroleum, and railway rolling stock.
Until high quality alloy steel billets are locally available, raw materials will have to be imported from Japan or Australia. The die requirements will also be imported.
Phthalic anhydride occurs as large white needles prepared by atmospheric oxidation of orthoxylene in the presence of vanadium pentoxide as catalyst.
Almost 80% of the phthalic acid market goes into the manufacture of plasticizers (mainly for vinyl resins) and alkyd resins. Other consumers are the polyester, dye, agricultural chemical and pharmaceutical industries.
Phthalic anhydride was listed in the 2nd IPP with a measured capacity of 8,000 MT. It was subsequently delisted with the registration of Resins, Inc., which has an annual rated capacity of 8,000 MT. However, due to the increasing export demand for the product, Resins, Inc., is able to supply only 45% of the local market. Phthalic anhydride is therefore being recommended for relisting in the 6th IPP with a local measured capacity of 4,000 MT and a variable export measured capacity.
Our market studies have established the export potential of this product. Japan has no plans of expanding its phthalic anhydride production and would prefer to import to meet its needs. Taiwan needs about 12,000 MT per year of the product and it has no phthalic anhydride plant. Thailand will need about 3,000 MT per year of phthalic anhydribe starting 1974 and it has no plant either. Inquires from Taiwan, Korea and Japan have already been received. A Japanese firm has already expressed interest in a processing arrangement with a local phthalic anhydride manufacturer.
Vinyl chloride monomer is the principal raw material for the production of polyvinyl chloride (PVC) resin which is used by the fabrication industry in the manufacture of pipes and fittings, floor tiles and insulators for electrical wires and cables.
The proposed manufacture of vinyl chloride monomers from an integrated plant will have as one of its by-products, caustic soda (NaOH). Caustic soda is used by the textile, pulp and paper, soap and detergents, food and beverages and other industries.
At present, there is only one firm engaged in the manufacture of this product with a rated capacity of 10,000 MT per year. Local demand, however, is expected to increase yearly by about 30%. By 1976, projected demand is estimated to be 64,600 MT.
The local manufacture of vinyl chloride monomer will therefore not only provide the necessary raw material for PVC resin producers but will also save foreign exchange since the increasing demand for the product will otherwise have to be met through importation.
Thus, the inclusion of vinyl chloride monomer from an integrated plant is being recommended for the following reasons: the projected local measured capacity, the acute shortage of vinyl chloride monomer and the net foreign exchange savings that will be derived from the project.
Textiles tops may be defined as the resulting fibers produced when filament yarn tow is passed through a converter which cuts the yarn into desired lengths. They are normally produced using the worsted system. Staple fiber which pass through the carding system may be termed silver and may be equivalent to tops which originate from filament yarn. Tops/silvers therefore represent an intermediate product prior to production of spun yarn. Its starting raw material may either be staple fiber or filament yarn.
This product is recommended for inclusion in the IPP with a variable export measured capacity. As part of the Textile Sector Development Program of the BOI, this will help increase our export earnings and generate labor employment.
The projected demand for the product is considered variable since it will primarily depend upon the type of fiber used, i.e., acrylic, wool, polyester, etc.
Spun yarn represents one of the major inputs into the weaving and knitting industries. Its inclusion in the IPP as a separate category from woven textiles is proposed in order to emphasize its importance. As part of the sector development program, the production of spun yam forms the backbone of the weaving and knitting industries.
Spun yarn may consist of natural or synthetic fibers or a combination of natural and synthetic fibers in varying proportions. These fibers may be cotton, silk, ramie, linen, flax wool, polyester, nylon, rayon, acrylic or polynosic fibers. Generally, the fibers are subjected to mixing, cleaning, and bale-opening operations, scutching, carding, drawing and spinning to finally form the yarn. Depending on the length of the staple fiber used, either the cotton or worsted system may be used for processing into spun yarn.
Rayon is a generic name for all manufactured fibers from regenerated cellulose. It is a semisynthetic fiber classified under cellulosic fiber which is used in the manufacture of tire cord, nonwoven fabrics, surgical dressings, wearing apparel, mechanical rubber goods, coated fabrics, belts, blankets, blend with cotton for home furnishings, etc.
Rayon was covered in the 1st, 2nd, 3rd, and 4th IPPs on a preferred pioneer status but it was delisted due to the high capital investment required for the project. However, in view of the textile sector program of the BOI which would require rayon as one of its raw materials, and the increasing demand for fitter and yarn by our local textile mills, it is being proposed for relisting in the 6th IPP.
The increase in the demand for our garment exports using local fabrics has considerably increased the fiber and yarn requirements of local textile mills. Their requirements of rayon fiber have always been supplied through importations from Japan and die United States. Fiber and yarn consumption for 1972 amounted to 79,655 MT, of which 71,930 MT (90%) were imported and only 7.725 MT were locally produced. Based also on past importations (1963-1972), the average share of rayon to total fiber and yarn imports was about 23% or approximately 57% of total synthetic importations. Since the demand of our garment and textile industries have increased, the expected demand for rayon by 1976 is 24,310 MT.
Attachment B
STATISTICAL TABLES
STATISTICAL TABLES
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
DEMAND-SUPPLY GAP AND ANNUAL CAPACITY OF THE
RECOMMENDED ECONOMIC-SIZE PLANT
(in thousands)
Name of Product |
Demand Projection Year |
Projected Demand |
Existing Capacity |
Measured Capacity |
Annual Capacity of the Recommended Economic-Size Plant |
||
Total |
Local |
Export |
|||||
| A | Revision in Measured Capacity | ||||||
| Nylon fibers | |||||||
| Polyester fiber | |||||||
| Textiles | |||||||
| B. | New Inclusions | ||||||
| Pig iron | |||||||
| Oil exploration and development equipment and facilities | |||||||
| a) | oil exploration equipment and facilities |
||||||
| b) | oil development equipment and facilitie |
||||||
| Closed-impression die steel forgings |
|||||||
| Phthalic anhydride | |||||||
| Integrated vinyl chloride monomer plant |
|||||||
| Textile tops/slivers | |||||||
| Spun yarn for textiles | |||||||
| Rayon fibers | |||||||
1976 |
1976 |
1976 |
1976 |
1975 |
1975 |
1977 |
1976 |
1975 |
1976 |
1976 |
Variable |
Variable |
Variable |
70 MT |
Variable |
Variable |
Variable |
Variable |
64.6 MT |
Variable |
Variable |
Variable |
7.080 MT |
14.400 MT |
552.060 sq. yds. |
| — |
— |
— |
3 MT |
8 MT |
10 MT |
— |
860 spindles |
— |
Variable |
Variable |
Variable |
70 MT |
Variable |
Variable |
Variable |
Variable |
54.6 MT |
Variable |
Variable |
Variable |
10 MT |
16 MT |
116,400 sq. yds. |
| 70 MT |
40 MT |
32 MT |
7.5 MT |
4 MT |
54.6 MT |
10.2 MT |
323 spindles |
25 MT |
Variable |
Variable |
Variable |
— |
Variable |
Variable |
Variable |
Variable |
— |
Variable |
Variable |
Variable |
2 MT |
2 MT |
6,762 sq. yds. |
34.9 MT |
5 MT |
8 MT |
5.5 MT |
4 MT |
21 MT |
2.4 MT |
10 spindles |
7.92 MT |
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
INVESTMENT REQUIREMENT AND VALUE OF OUTPUT
OF THE RECOMMENDED ECONOMIC-SIZE PLANT
(in thousand pesos)
Name of Product |
Investment Requirement |
Value of Output |
||
Total |
Capital Equipment |
Others |
||
| Pig iron | ||||
| Oil exploration and development equipment and facilities | ||||
| Closed-impression die steel forgings | ||||
| Phthalic anhydride | ||||
| Integrated vinyl chloride monomer plant | ||||
| Textile tops/slivers | ||||
| Spun yarn for textiles | ||||
| Rayon fibers | ||||
27,927
51,000
31,000
5,973
64,597
8,801
24,329
65,956
18,665
31,450
22,500
5,444
50,600
6,746
16,935
46,657
9,262
19,550
8,500
529
13,997
2,055
7,394
19,299
22,045
45,000
22,177
9,520
57,344
25,800
41,382
48,773
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
LABOR REQUIREMENT OF THE ECONOMIC-SIZE PLANT
BY LEVEL OF SKILL
Name of Product |
Total |
Supervisory & Skilled |
Semiskilled |
Unskilled |
||||
Number |
Salary (in P000) |
Number |
Salary (in P000) |
Number |
Salary (in P000) |
Number |
Salary (in P000) |
|
| Pig iron | ||||||||
| Oil exploration and development equipment and facilities | ||||||||
| Closed-impression die steel forgings | ||||||||
| Phthalic anhydride | ||||||||
| Integrated vinyl chloride monomer plant | ||||||||
| Textile tops/slivers | ||||||||
| Spun yarn for textiles | ||||||||
| Rayon fibers | ||||||||
238
6,750
273
26
239
62
137
460
1,978
720
164
1,130
553
485
2,522
165
3,600
109
14
119
44
112
267
1,595
36,000
360
103
619
619
481
420
1,029
9
1,350
100
9
80
7
17
126
7,200
365
64
1,800
64
64
3
40
11
8
67
330
6,300
144
11
146
40
19
177
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
ECONOMIC FACTORS
Name of Product |
Value Added Coefficien at |
Usage of Indigenous Raw Materials |
Total Fixed Assests per Workers (pesos) |
Imported Fixed Assests per Workers (pesos) |
Fixed Assests per Peso Wage |
Fixed Assests Value Added at Domestic Prices |
Foreign Exchange Benefit Cost Ratio |
Foreign Exchange Benefit Imported Raw Materials |
Discounted Rate of Return on Foreign Exchange Investement (%) |
|
Domestic Prices |
World Prices |
|||||||||
| Pig iron | ||||||||||
| Oil exploration and development equipment and facilities | ||||||||||
| Closed-impression die steel forgings | ||||||||||
| Phthalic anhydride | ||||||||||
| Integrated vinyl chloride monomer plant | ||||||||||
| Textile tops/slivers | ||||||||||
| Spun yarn for textiles | ||||||||||
| Rayon fibers | ||||||||||
.61
.38
.41
.33
64
.12
.61
.47
.63
.39
.52
.51
.36
.36
.65
.40
73
.30
—
.05
61
.005
.37
.26
78,426
4,659
82,418
209,393
211,715
108,801
123,613
101,428
5,020
577
6,886
20,385
14,452
8,670
10,730
8,502
9.44
.64
31.25
33.29
44.78
12.19
34,92
18.50
1.38
.18
2.47
1.74
1.38
2.22
.67
2.04
6.33
1.81
1.56
1.87
4.25
1.42
3.28
2.17
28.22
2.00
1.83
2.17
7.88
1.45
4.06
3.01
196
203
83
120
95
201
198
85
OF THE
SIXTH INVESTMENT PRIORITIES PLAN
LINKAGE EFFECTS
Name of Product |
Index of Dispersion |
Index of Sensitivity |
| Pig iron | ||
| Oil exploration and development equipment and facilities | ||
| Closed-impression die steel forgings | ||
| Phthalic anhydride | ||
| Integrated vinyl chloride monomer plant | ||
| Textile tops/slivers | ||
| Spun yarn for textiles | ||
| Rayon fibers |
1.31 to 1.40
1.31 to 1.40
1.31 to 1.40
1.11 to 1.20
1.11 to 1.20
1.11 to 1.20
1.01 to 1.10
1.01 to 1.10
1.21 to 1.40
1.21 to 1.40
1.21 to 1.40
3.21 and over
3.21 and over
3.21 and over
2.41 to 3.20
2.41 to 3.20
Republic ng Pilipinas
Tanggapan ng Pangulo
LUPON NG PAMUMUHUNAN
(BOARD OF INVESTMENTS)
Ortigas Building
Ortigas Ave., Pasig, Rizal
22 October, 1973
Dr. Gerardo P. Sicat
Chairman
National Economic and Development Authority
Padre Faura, Manila
Dear Dr. Sicat:
We are submitting herewith our proposed amendments to the Fourth Export Priorities Plan. These consist of the inclusion of new products in List A and new products in List B and the amendment of the product description of two (2) List B products together with their corresponding Brussels Trade Nomenclature (BTN) and Standard International Trade Classification (SITC) numbers.
I. New Inclusions
The new products being proposed for inclusion are the following:
A short description of the projects proposed for inclusion in the EPP together with the different data and economic factors which were considered in their evaluation arc shown in the attachments.List A: Exportable Product of Existing Firms BTN SITC 39.05 581.92 40.01 231.1 60.05; 841.4 (4) 62.02; 656.9 (1) 94.04 821.0 (3) 66.01 899.41 83.09 698.53 82.05 695.24 84.46 to
84.48719.51
(52) (54)List B: Exportable Products of Preferred Areas of Investment BTN SITC 09.04 to
09.10075.1;
075.2 (2)
(3) (4) (5) (9)23.197 081.99 26.01 283.2(1) 22.08 512.24 44.23 632.4 50 to 56 652 to 653 94.00 821.0 69.10 662.45 91.00 864.1;
864297.01;
97.02;
97.038942 (1) (2) (3) 98.10 899.34 83.01 698.11
We are also proposing the revision of the product description of two (2) List B products in order to broaden tbe export industrial coverage of very related products that similarly enjoy cost advantages and for which significant intrest for joint ventures have been shown. The revision would change their producl ciassifications and descriptions from:
BTN SITC 16.05
85.01 to
85.28032.0 (2)
722 to 726;
729To: 16.04 032.0 (1) Processed seafoods (NP) 16.05 (2) 85.01 to
85.28;
92.11;
92.13722 to 726;
729;
891.1(1) (2)
Very truly yours, |
|
(SGD.) VICENTE T. PATERNO |
|
| Chairman |
Attachment A
STATISTICAL TABLES
STATISTICAL TABLES
OF THE
FOURTH EXPORT PRIORITIES PLAN
INVESTMENT REQUIREMENT AND VALUE OF OUTPUT OF THE
RECOMMENDED ECONOMIC-SIZE PLANT
(in thousands)
Name of Product |
Annual Capacity of the Recommended Economic-Size Plant |
Investment Requirement (Pesos) |
Value of Output (Pesos) |
||
Total |
Capital Equipment |
Others |
|||
| New Inclusions | |||||
| Spices | |||||
| Fodder (cattle feed) | |||||
| Beneficiated nickel silicate ore |
|||||
| Alcohol (molasses fermentation) | |||||
| Builder's woodwork | |||||
| Furniture | |||||
| Woven fabrics | |||||
| Ceramic bathroom accessories | |||||
| Vitrified tiles | |||||
| Clocks and watches | |||||
| Toys | |||||
| Cigarette lighters | |||||
| Locks | |||||
15
200
9,417
6
8,830
1,485
48,000
120
1,800
3,400
6,050
1,870 |
|
8,727 |
|
31,552 |
|
6,610 |
|
5,551 |
|
1,163 |
|
54,586 |
|
| 4,094 |
|
16,000 |
|
1,815 |
|
2,150 |
|
| 3,719 |
|
7,044 |
|
1,230 |
|
7,474 |
|
23,278 |
|
5,860 |
|
| 5,145 |
|
813 |
|
42,113 |
|
2,544 |
|
14,500 |
|
| 965 |
|
700 |
|
2,880 |
|
4,800 |
|
640 |
|
1,253 |
|
8,274 |
|
750 |
|
406 |
|
350 |
|
12,473 |
|
1,550 |
|
1,500 |
|
850 |
|
1,450 |
|
839 |
|
2,244 |
|
3,067 |
|
9,000 |
|
16,341 |
|
9,939 |
|
6,825 |
|
1,380 |
|
48,035 |
|
5,025 |
|
12,000 |
|
5,452 |
|
2,350 |
|
8,133 |
|
18,876 |
|
OF THE
FOURTH EXPORT PRIORITIES PLAN
LABOR REQUIREMENTS OF THE RECOMMENDED ECONOMIC-SIZE PLANT
BY LEVEL OF SKILL
Name of Product |
Total |
Supervisory & Skilled |
Semiskilled |
Unskilled |
||||
Number |
Salary (in P000) |
Number |
Salary (in P000) |
Number |
Salary (in P000) |
Number |
Salary (in P000) |
|
| New Inclusions | ||||||||
| Spices | ||||||||
| Fodder (cattle feed) | ||||||||
| Beneficiated nickel silicate ore |
||||||||
| Builders' woodwork | ||||||||
| Alcohol (molasses fermentation) |
||||||||
| Furniture | ||||||||
| Woven fabrics | ||||||||
| Ceramic bathroom accessories |
||||||||
| Vitrified tiles | ||||||||
| Clocks and watches | ||||||||
| Toys | ||||||||
| Cigarette lighters | ||||||||
| Locks | ||||||||
41
65
257
154
44
48
484
119
68
74
75
38
275
216
240
1,741
611
232
204
1,707
519
410
505
266
181
975
15
53
172
54
25
19
399
70
15
34
10
31
135
134
206
1,425
336
183
120
1,461
334
212
381
63
158
549
2
9
41
27
6
12
65
45
40
23
40
6
80
6
27
159
96
18
43
193
171
152
83
143
20
254
24
3
44
73
13
17
20
4
13
17
25
1
60
76
7
157
179
31
41
53
14
46
41
60
3
172
OF THE
FOURTH EXPORT PRIORITIES PLAN
ECONOMIC FACTORS
Name of Product |
Ratio of Direct Labor to Total Labor |
Usage of Indigenous Raw Materials |
Value Added Coefficient at World Prices |
Foreign Exchange Benefit-Cost Ratio |
| New Inclusions | ||||
| Spices | ||||
| Fodder (cattle feed) | ||||
| Beneficiated nickel silicate ore | ||||
| Builders' woodwork | ||||
| Alcohol (molasses fermentation) | ||||
| Furniture | ||||
| Woven fabrics | ||||
| Ceramic bathroom accessories | ||||
| Vitrified tiles | ||||
| Clocks and watches | ||||
| Toys | ||||
| Cigarette lighters | ||||
| Locks | ||||
.41
.77
.39
.40
.94
.92
.84
.63
.85
.36
.92
.42
.83
h.i.
h.i.
.65
h.i
h.i.
h.i.
.37
.59
.69
.16
h.i.
.11
.80
.16
.61
.73
.23
.48
.48
.72
.69
.50
.56
.48
.51
.63
24.35
13.62
4.04
28.60
1.21
1.03
3.86
3.29
7.22
1.75
2.96
1.59
6.62
h.i. — highly indigenous
Attachment B
DESCRIPTION OF PRODUCTS
DESCRIPTION OF PRODUCTS
This product fits into the domestic program for the hiked processing of fruits and vegetables to cope with increasing demand in both local and foreign markets.
Spices are aromatic parts of plants, mostly tropical, which are dried and used in food preparation either whole or in pulverized form. Spices may be made from the root, bark, fruit, flower, bud or seed of a plant.
An onion/garlic plant was used as the representative economic-size plant for processed spices because onion and garlic have the biggest share in the world spice market. Although the study is limited to onion and garlic, proponents may go into processing of other spices more particularly those from plants which are locally grown, such as ginger, pepper and cinnamon. It is advisable to concentrate and to process a limited range of varieties for economic reasons.
The world market for dehydrated onion and garlic has been steadily growing. The import demand for spices of the United States and the United Kingdom is big enough to warrant domestic processing for export. At present the bulk of Philippine exports of spices, particularly ginger, is shipped to Hongkong in an unprocessed state. The principal end-users are the dry-soup industries, fish and canning industries and other food industries.
Quality is a major consideration. Experience and technical know-how, however, is difficult to acquire and involves a lengthy and costly process. This can be hastened, though, through foreign technical tie-ups.
The proposal for the inclusion of fodder in the Export Priorities Plan is premised on two considerations. (1) there is a minimal usage for cattle feed domestically due to the abundance of green grass for cattle feeds throughout the year, and (2) there is a large foreign demand for fodder. The Japanese export market alone has increased by about 493% from 1962 to 1972. Investors from Japan likewise have sounded out interest in joint venture activities in this area.
Fodder production involves the growing, drying, baling and/or pelletizing of plant materials belonging the grass family, Grainincae, which includes sorghum, corn, sudan grass, and others which are generally used as forage for cattle.
The proposed product refers to compressed bay fodder. This is made from pellets of ground dried grass forage which is granulated, and kobu which is pulverized and cubed.
The major raw material being considered for fodder production is sorghum. It is important to note that a number of raw materials like sugar cane tops, napier grass, rice and corn stalks can also be processed into compressed fodder. However, the feeding value in terms of digestible nutrients of these raw materials tend to be low compared with young sorghum.
Beneficiation is defined as the (1) dressing and processing of nickel ores for the purpose of removing the unwanted constituents, regulating the size of the desired product and improving its quality, purity or assay grade; (2) concentration or other preparation of nickel ore for smelting by drying, flotation or magnetic separation.
Nickel deposits are classified as sulfides, oxides and silicates. Sulfide nickel ore is a mixture of sulfide minerals with varying amounts of worthless rock minerals called gangue. The main sulfide minerals are pentlandite, pyrrhotite and iron sulfide. Nickel latcrites (oxides) are residual soil containing concentrations of iron oxides, hydroxides and aluminum hydroxides. Nickel silicates are hydrous, nickel-magnesium silicate minerals exemplified by garnicrite whose nickel content is variable and may even reach up to 47% nickel. They are mined in New Caledonia, Indonesia and Brazil. Prospecting and exploration work currently being undertaken in Palawan revealed the presence of gamicritc.
The known and blocked nickel silicate ore reserves of the country are either limited or too scattered to warrant the establishment of nickel-processing or refuting plants. It is therefore proposed to mine and beneficiate the country's nickel silicate deposits so that they can be utilized.
Beneficiated nickel ore is used as a raw material of pyrometallurgical or hydrometallurgical nickel extractive plants in order to produce electrolytic nickel and other pure forms of nickel and nickel salts, ferronickel and nickel oxide. Nickel is used in the manufacture of stainless steel (wrought), alloy steel (wrought), iron and steel castings, electroplating, nickel alloys and copper alloys.
Ethyl alcohol production in the Philippines is closely identified with the sugar industry because it is being produced mainly from molasses. In the country's large sugar centrals, alcohol production from fermented molasses is an integral part of its operation in order to optimize the utilization of molasses by-products.
The domestic requirement for ethyl alcohol is adequately met by existing local producers because of our abundant supply of molasses. Alcohol production is one of the major consumers of molasses in the Philippines. However, the bulk of our molasses production is disposed of through the export market. Alcohol manufacture and molasses disposition are two economic activities which are interdependent and interrelated with each other.
Refined ethyl alcohol is mostly used for human internal consumption as liquor and medicinal drug. Unrefined alcohol or denatured alcohol, on the other hand, is used as fuel in rural areas and as solvent and chemical intermediate for varnish, inks, and paints.
The Philippines has not exported ethyl alcohol in the past. We do, however, export liquor made out of locally-produced refined ethyl alcohol. Lately, a new development is shaping up in the Southeast Asian export market for alcohol and molasses, particularly in Japan.
The industry refers to the processing of logs and flitches into builders' woodwork and prefabricated components of wood through the establishment of a wood-processing plant or through the forward integration of existing sawmills. Its proposed inclusion in the Export Priorities Plan fits into the scheme of developing industrial wood manufacturers for export which is a necessary undertaking to avoid economic dislocations as a result of the log phase-out.
The products covered under this category are:
1) Worked lumber which, in addition to being dressed, has been matched, shiplapped or patterned. This clarafication includes edge and end glued lumber, floorings, mouldings, jambs, door and window frames.
2) Wood tiles, stair treads, stepladders, handles and other articles of wood. These products are utilized for construction of and interior trim.
The Philippines' main export markets for lumber and lumber products are the United States and Canada, although there has been substantial exports to Japan lately. Japan's share of the market rose from 10% in 1967 to 20% in 1971 or an increase of 9.13 MBF over a 5-year period. The United States' share, on the other hand, vent down from 58% in 1967 to 31%'in 1971. There are also active markets in Australia, Guam and Western Europe.
The proposed activity covers the manufacture of furniture, either in whole pieces, sets, or parts thereof.
Furniture include upholstered pieces such as seats, chairs, sofas, stools and beds; storage pieces such as chests, cabinets and bookcases; and occasional pieces such as chairs, tables and stands.
The primary raw material is either wood, rattan, plastic, metal or a combination of these materials. The raw materials may be derived from usable wastes thus reducing significantly overall wastage.
The proposed project refers to the manufacture of ceramic bathroom accessories of light pieces or what are known as small wares such as soap and grab, paper holder, towel post, soap holder, toothbrush and tumbler holder. Ceramic bathroom accessories are usually glazed and produced in different colors.
At present, there is only one local firm engaged in the manufacture of these products. Although there is no local measured capacity, the export market appears promising. This is encouraged by existing demand in countries like the United States and Japan because of increasing labor costs in these countries and shortage in export capability of low-labor cost developing country suppliers. The recent move of the Japanese firms in basing their operations in Southeast Asian countries would spell bright prospects for joint-venture investments in this activity. Our success in the export market, therefore, would largely depend on its competitiveness in price and quality with Japan and other exporting countries.
Vitrified tile is a type of ceramic product which is noted for its high resistance to water absorption and abrasion. It can be both glazed and unglazed and can be produced in different colors and sizes (mosaic, 4¼" x 4¼", 6" x 6", 6" x 12", etc.). Vitrified tiles are produced by firing different ceramic materials to vitrification (nonporosity) temperature ranging from 1,000 C. to 1,300 C.
Locally-produced vitrified tiles (unglazed) are primarily used as flooring materials for comfort rooms, kitchens, washrooms and showers but it can also be used in other places like lobbies and reception rooms of buildings and offices, in building facades, in terminals of public buildings and in open places like parks and sidewalks.
Vitrified tiles were listed in the 1st and 2nd Investment Priorities Plan but the measured capacity has since been filled up. This product is being proposed for inclusion in the Export Priorities Plan because of existing potentials of exporting to the U.S., the number one importer, as a result of the decrease m the production of ceramic products in Japan.
The manufacture for export of clocks and watches is proposed in responseto the active to foreign investors, principally Japan, in engaging jpint-venture setups m develops Southeast Asian countries as a result of increasing labor costs in Japan and other clock-producing countries.
The proposed production scheme will involve the local manufacture of the following components: body, backplate, glass, dials, winding lever and hands. The movement or the "engine" will be imported from Switzerland.
Other raw materials such as stainless steel sheets and brass bars will also be imported while plastic cases will be locally procured.
The products proposed for export under this category are wooden toys with the small and intricate parts to be made of plastic. The toys will be designed with special consideration on safety in order to meet the regulations imposed by government bodies in the U.S., Canada, and Europe. The United States remains as the largest export market. Similarly, the markets are growing in Western Europe, Canada, Australia, Sweden and Denmark. Initially, the toys envisioned are such items as trains, airplanes, tugboats, etc. with moving parts.
The major steps involved in the production are carpentry, plastic moulding, painting, aasembly, packing and shipment. Carpentry covers the various physical transformation processes that wood materials go through like planing, cutting, slitting, forming, finishing, etc. The plastic components are manufactured either by compression or injection mouldings. Painting and assembly follows, after which the toys are packed and shipped by containers.
The cigarette lighters being proposed for local manufacture will utilize butane as fuel and will have a replaceable butane container in contrast with the throw-away lighters wherein the whole unit is discarded as soon as the butane is exhausted.
The manufacture of butane lighters involves the in-house production of the head or the mechanism which acts as the release valve of the container and at the same time furnishes the spark to ignite the gas. The plastic body will be subcontracted to local tube manufacturers. The head is produced by diecasting and machining. The material for the body will be imported while the plastic tube will be locally procured.
Like clocks and watches, cigarette lighters have attracted the interest of foreign investors. The Philippines has definitely a labor cost advantage over Hongkong in attracting foreign investments especially from Japan in the export production of cigarette lighters.
Locks may be classified into padlocks, night latches, push locks and deadlocks. These items are used primarily as safeguards in homes, factories, buildings and to close containers, compartments and boxes for safekeeping.
The manufacture of locks essentially involves diecasting, machining and press work of the components. Zinc alloy, brass sheets, steel plates, steel wires and brass rods are the principal raw materials. Eighty percent (80%) of the total materials will be locally procured. Zinc and brass alloys will be recovered from locally-generated scrap.
Woven fabrics are the products of the spinning, weaving and finishing of natural and man-made fibers used essentially for clothing. They are also used for draperies, mosquito nets, waddings, paddings, surgical and clinical gauzes, etc.
Woven fabrics may be unbleached, scoured, bleached, dyed, printed, mercerized, napped, etc. The designs may also be produced by additional warp or weft threads introduced during weaving.
Cotton has been the major raw material for fabries. Man-made fibers like rayon, nylon, polyester, acrylics, etc. have, however, been developed as substitutes or for blending with cotton to improve the quality of fabrics (to add strength, resistance to creases, stains, mildew, light, etc.)
The inclusion of woven fabrics in the EPP is expected to serve as an encouragement for the private sector to go into fabrics manufacture which can subsequently be sold to garment manufacturers and exporters. It will likewise help alleviate the present raw materials shortage of local garment manufacturers.