Crayons and chalk, not produced in the Philippines until the postwar years, are now made by several firms. Producing capacity is reported at 100,000 sticks and 3,000 gross per day, respectively.

Cosmetics and Toilet Preparations

Production of soap (both toilet and laundry), chiefly using coconut oil as a raw material, is about 50,000 tons annually. The country is now self-sufficient in soap. In addition to production by large firms-Colgate-Palmolive (Philippines), Inc., the Philippine Manufacturing Co. (a subsidiary of Procter and Gamble Co.), and the Philippine Refining Co. (a subsidiary of Unilever, Ltd.)—there are many small manufacturers, and soap is also made in homes throughout the country.

Various other toilet preparations, including toothpaste, shampoo, and lotions and perfumes, are manufactured. Most of the expansion in these fields has been in the postwar period.

DRUGS AND PHARMACEUTICALS

The component ingredients for most Philippine-produced drug and pharmaceutical items are imported, with local production by both American and Filipino firms largely restricted to processing and packaging operations. Basic drug manufacture is confined in the main to such products as cough drops, cough medicines, elixirs, syrups, and tincture preparations because of the fact that such items require substantial amounts of sugar and alcohol, both of which are locally produced and on which there is a high internal revenue tax.

A leading factor which has caused American firms to set up processing and packaging plants in the Philippines has been the administration of Philippine import control laws which has tended to favor those who produce, assemble, or package their products in the Philippines.

The large producers engaged in processing and packaging in the Philippines include Sterling Products International, Inc., Home Products International, Philippine American Drug Co., Vick International, Inc., Sharp and Dohme (Philippines), Inc., and Abbott Laboratories. In 1953 Vick International, Inc., which had been carrying on local manufacture of some products since 1951, opened a modern factory in Rizal, near Manila, which is expected to produce more than 10 million packages of Vick's products a year. There are also 8 or 10 smaller producers of vitamins, patent medicines, and household remedies.

The Philippine Department of Health has a plant at Alabang, Rizal, which produced, as of 1952, cholera, typhoid, smallpox, and rabies serum, BCG (for combating TB), tetanus toxoid, diphtheria and tetanus antitoxin, and antivenom. Some of these products were manufactured in sufficient quantities to meet domestic demand. The antibiotic drug industry is in the initial stage of development. The Philippines has not been considered as a particularly satisfactory location for the establishment of a laboratory engaged in the production of antibiotics and such preparations as hormones, glandulars, and vitamins. The unit cost of manufacture is too high in the absence of a mass market, it is difficult to obtain an adequate supply of scientifically trained personnel, and the component ingredients have to be largely imported. With increasingly sharp curtailment of imports after 1949 there was, however, some interest in local antibiotic manufacturing. "Manufacture" on the whole at present consists of importing antibiotics in bulk and repackaging them as vials, injectables, tablets, ointments, troches, etc. As of 1952 four firms were producing or packaging antibiotics. Three of these, A. T. Suaco and Co., Inc., Philippine Chemical Laboratories, Inc., and Doctors Pharmaceuticals, Inc., were engaged only in packaging operations, which were confined almost entirely to packaging peni

cillin. The Araneta Institute of Agriculture was producing one type of antibiotic ointment on a small scale and was planning to package imported penicillin.

In addition to the four firms already in the field several others were, as of 1952, considering or planning local manufacturing. These were reported to include Eli Lilly and Co., Charles Pfizer and Co., E. R. Squibb and Sons (Philippine corporation), and Parke, Davis and Co. The Pfizer processing plant, which was to be started late in 1954, reportedly would concentrate on terramycin although producing other antibiotics, and Squibb's plant was to package hydrostreptomycin, crysticillin, and dicrysticin, as well as aspirin, vitamins, and hormones. Parke, Davis and Co. opened its pharmaceutical plant late in 1954 for the production of chloromycetin and camoquin hydrochloride, an antimalarial.

Production of Merck antibiotics was also reported to be planned and Wyeth International and Winthrop-Stearns, Inc., were said to be contemplating the erection of branch processing facilities.

CEMENT, CERAMICS, AND GLASS

Cement

The Cebu Portland Cement Company, which is Government owned,' and Madrigal and Co., Inc., with annual production of about 6 million bags and 1.8 million bags, respectively, furnish the major Philippine needs for cement. There are recurring shortages of cement, however, when construction work is heavy and at such times imports are required. In 1952, imports were about 19,500 tons, mostly from Japan. As of early 1954 the Cebu Portland Company was constructing a new plant at Bacnotan, La Union, which will have a production capacity of 8,000 94-lb. bags daily; and Madrigal planned expansion. Another private firm was also reported as interested in establishing a plant. These new developments are expected to ease the recurring shortages.

Concrete blocks are made by several companies and their production is considered more than adequate for present domestic consumption.

The Eternit Corp. (a Philippine subsidiary of a Belgian firm but locally owned in part), manufactures asbestos cement products such as corrugated roofing sheets and flat sheets for panelings or sidings, ridge rolls, hip rolls, gutters, and other accessories. Production in late 1950 averaged 75,000 sheets monthly. Local asbestos has been found of too low quality for permanent endurance and the firm imports high-grade asbestos from Canada. It also produces concrete pipes for drainage uses.

Bricks and Ceramics

In the postwar years there has been an expansion of the manufacture of bricks, tiles, and hollow blocks and pottery; by 1951 these industries were about 35 percent above the 1949 level.

The Marcelo Steel Corp. began the manufacture of refractory bricks in 1952 and the Fil-Hispano Allied Clay Products, Inc., was organized in the same year to manufacture chinaware and other porcelain items.

Glass

Although the Philippines imported glass products valued at about 6.5 million pesos in 1952 and almost 9.5 million pesos in 1951, some glass products, particularly bottles, are manufactured locally in quantity.

It has been reported that the Government plans to sell the Cebu cement plant to private interests.

Production of bottles has been carried on by the major brewery, San Miguel, for many years. As of late 1952 its new plant, completed in 1949, had a production of 150,000 amber and 150,000 flint bottles daily on a 24-hour shift. In addition to meeting its own bottle requirements for beer and soft drinks, the factory supplies other customers. The company's capacity meets most local demand for these items and may expand to meet any increased demand.

There are five small glass factories, four Chinese owned and one Filipino owned, all located in or near Manila. These concerns manufacture largely bottles but are expanding into the production of sheet glass and glass tableware.

METAL PROCESSING AND FABRICATION

According to the 1948 census of the Philippines the iron and steel industry was insignificant, accounting for about 2 percent of the total number of employees engaged in manufacturing, as well as of the total assets of manufacturing industries, and only 1 percent of the value of total manufacturing production. Total assets of the industry in that year were reported as 13,600,000 pesos.

There were no steel ingot melting furnaces and rolling mills in 1948; the industry consisted only of blacksmith shops, sheet-metal fabrication shops, foundries, and small shops smelting iron ore in crude furnaces for casting into farm implements and utensils. In the last few years, however, the Philippines has developed an infant basic steel industry. About 17 million pesos have been invested for the production of rolled steel products: there has also been considerable expansion in metal fabrication.

The little active interest in iron and steel production has been due largely to lack of suitable coking materials for reducing iron ore, deposits of which are extensive in the Philippines and constitute an important export. The general consensus outside Government circles has been that a steel industry would be uneconomic except in the interest of national defense.

How successful the new basic industry will be in comThe peting with producers abroad remains to be seen. present industry is totally dependent on scrap, the supply of which consists largely of sunken vessels and military equipment left in the country at the end of World War II. However, by the time the present large scrap supply is exhausted, new processes of steel manufacture not requiring coking coal and new methods of processing lateritic ores reported to have been worked out in more advanced steel-producing countries may be developed in the Philippines.

Important among the new developments is that of the Government-owned National Shipyard and Steel Corporation (NASSCO), which has been producing small quantities of steel castings from an electric foundry since 1951. It has now embarked on a much larger venture located near Iligan in Mindanao to take advantage of power that is to be generated by the Maria Cristina hydroelectric power plant. NASSCO's first phase of operations includes the manufacture of steel from scrap through an electric arc furnace and the rolling of merchant bars and rods for conversion into square and round bars, flats, I-beams, channels, T-beams, small machinery, farm implements, and building materials.

A second stage of the project, scheduled to be finished by 1955, provides for the production of pig iron from iron ore by an electric smelter and open-hearth furnace and a third stage plans for blooming, sheet, plate, and structural mills. As of October 1954, the Iligan plant, which previously had been making steel ingots, was ready to start the production of reinforcing bars, angles, and flats.

The Marcelo Steel Co., a private concern, has manufactured nails, wire, paper clips, and other products for some time and in 1952 began steel melting and rolling. The company, which received financial assistance from the Rehabilitation Finance Corporation, has a plant with

a reported capacity of 40,000 tons a year and consisting of three electric arc furnaces, an ingot mill, and a scrap rerolling mill. It produces rods, nail wire, flat and square bars, angles, beams, and other items.

A carbide and ferroalloy plant of the Governmentsponsored Maria Cristina Chemical Industries, Inc., was opened in late 1954.

The Philippine Blooming Mills is one of the largest consumers of scrap. The firm has a rerolling plant which, in 1951, had an output of about 10 tons daily of rolled steel bars for the manufacture of bolts, nuts, nails, and barbed wire. It is reported to have produced, in 1952, 1,179 tons of steel bars, 91,173 100-pound cases of nails, 10,464 50-kilogram cases of bolts and nuts, and 8,857 70pound rolls and 52 100-pound rolls of barbed wire.

The Ysmael Steel Manufacturing Co. started manufacturing various steel products such as filing cabinets, lockers, bathroom cabinets, metal desks, fluorescent fixtures, and kerosene stoves in mid-1950. Its new 2-millionpeso factory, partly financed by a loan from the Rehabilitation Finance Corporation, is now turning out rolled steel appliances such as refrigerators, electric ranges, and water heaters.

The Atlantic Gulf and Pacific Co. of Manila, a United States firm, is the largest plant operating in the heavy industrial field. Its structural steel fabricating shop handles most of the country's needs for structural steel and platework. Crude materials are imported almost entirely from the United States. As last reported, the plant had a capacity of 600 tons of fabricated steel per month. The plant also included a bolt and rivet shop, a foundry equipped with three cupolas capable of melting 20 tons of iron per day, and a large machine shop and welding shop.

There are two other firms also with steel fabricating shops, Earnshaw Docks and Honolulu Iron Works and the Philippine Engineering Co.

Steel drums used primarily for petroleum products have been manufactured in the Philippines since late 1952 at the rate of 300,000 55-gallon units per year. The manufacturing firm, Rheem of the Philippines, Inc., was formed with American and Philippine capital, a tieup of Rheem Manufacturing Co. of California and Andres Soriano, head of the Soriano enterprises.

There are 30 or more very small foundries producing native kettles, kitchen utensils, plumbing fixtures, cast iron soil pipes, and accessories from local scrap. Several of the large oil companies and a number of Chinese tinsmiths manufacture most of the country's limited requirements of tincans, bottle caps, tin-sheet metalwork, and lithographs. In 1950 Mayon Metal Windows, Inc., started the manufacture of metal windows. Zippers and nails are produced in quantities sufficient to supply domestic needs.

Some 9 or 10 nail factories, including the Central Steel Manufacturing Co. and Stonehill Steel Corp., as well as the Marcelo Steel Co. and the Philippine Blooming Mills mentioned above, produce nails. Several of these firms also make nuts and bolts. Other factories manufacture wire fencing, barbed wire, and enameled sheetmetal brackets. Zippers are manufactured by the National Fastener Corp. of the Philippines, which opened in 1951.

In 1954 the Reynolds Metal Co. completed plans to establish an aluminum foil and sheet plant near Manila. The American company reportedly will own 51 percent of the stock, the rest of the 6-million-peso financing to be furnished by a Filipino group (the Tuason, Litton, and Araneta families). Production of the plant for the first year is expected to be about 7 million pounds of aluminum products but the capacity of the plant is to be about three times that figure.

MACHINERY AND VEHICLES

Heavy machinery is not produced in the Philippines. All construction machinery, industrial machinery, and

heavy farm machinery is imported, primarily from the United States. Imports of machinery other than electrical, valued at more than 57 million pesos in 1952, constitute an important segment of Philippine imports.

International Harvester Co., one of the major suppliers of agricultural equipment, has a large assembly plant in Manila and several branches in the Provinces. It also assembles refrigerators, the rate being reported at about 8 per day in 1952. Most of the importers of Ameriean machinery maintain good service facilities for their equipment.

Recent years have seen a sizable development in the assembly of trucks and cars. Three companies have been assembling American makes of trucks for several years and in 1953 a Philippine company entered into a contract for the assembly of another make. Only one company assembled automobiles in 1952, but in 1953 two other companies started assembly and by 1954 four or five others were reported to be either negotiating for or seriously planning the assembly of various makes.

One of the companies assembled a British model, all others were assembling or planned to assemble American models. The basic reasons for the present planned increase in local assembly appears to be the tax system as applied to automobiles and the stimulus provided by import controls. In addition, some reductions in costs have been reported in trucks assembled locally and similar lower costs may be possible in the assembly of passenger

cars.

ELECTRICAL AND COMMUNICATION MANUFACTURES

Philippine manufactures in this field are small, consisting primarily of incandescent and fluorescent bulbs, batteries, and some types of radio equipment. Total imports of "electrical machinery and apparatus," which include items ranging from dynamos and generators to lamps, were valued at 22.2 million pesos in 1951 and more than 26 million in 1952.

The Philippine Electrical Manufacturing Co., a joint Philippine Government and private capital enterprise having licensing arrangements with Westinghouse Electric Co., manufactures fluorescent and incandescent bulbs. Operations began in 1951 with the production of fluorescent bulbs and in 1951 the plant started production of incandescent light bulbs. Output of fluorescent bulbs (40-T-12, 20-T-12, 30-T-8, 14-T-12, and 15-T-12), which averages about 600,000 bulbs yearly, meets the local demand, and small quantities have been exported. The production capacity for incandescent bulbs (100 to 120 volts, 10 to 200 watts; and 200 to 260 volts, 10 to 200 watts) is reported at about 2.5 million yearly; output takes care of domestic requirements for these sizes.

As of 1952 there were six or seven small shops which assembled receiving sets and various radio equipment, using imported parts and a limited range of locally manufactured amplifiers and transformers. The chassis used were largely fabricated in Manila and cabinets were made from domestic woods.

The Bolinao Electronic Corp., which has its own broadcasting station, was producing electronic equipment principally for its own use. In 1950 this firm assembled and manufactured on a commercial basis custom-built items such as transformers, receivers and transmitters, radiotelephone terminal apparatus, and teletype equipment for the Philippine Government's Bureau of Telecommmunications and for a local radio broadcasting company. The firm was reported to have had a chassis production as of 1951 of 10,000 units monthly, which were marketed through jobbers.

Radio Electronic Headquarters, Inc., of Manila is the largest producer of radios and equipment. Its output for the first half of 1951 was 686 radios, 225 transmitters, 82 amplifiers, 581 transformer pieces, and 50,000 electronic parts such as terminal strips, coils, filters, and

chassis. Other small radio shops have sporadic production, based largely on individual orders. In the fall of 1954 Radiowealth, Inc., was reported to be planning to manufacture television receivers under Motorola patent.

The Philippine Battery Manufacturers Association claimed in 1952 a combined production capacity at local factories of 7,000 storage batteries monthly. Union Carbide plans to assemble flashlight batteries in the Philippines for distribution throughout the Far East. In 1954 a new company, the Manila Battery Co., announced that it would start production of Burgess dry batteries in 1955.

SHIPBUILDING AND REPAIR

Two major engineering firms handle ordinary repair jobs on interisland and oversea vessels while afloat. Drydock facilities, provided by the privately owned Fernandez Shipyard at Cavite, are only suitable for interisland vessels. The Government's National Shipyard and Steel Corporation (NASSCO) project at Marivales, Bataan, which was inaugurated in April 1953, has drydocking facilities for vessels up to 10,000 gross tons, building ways to accommodate, at one time, 2 vessels of 3,000 gross tons, and barge-launching ways to accommodate 4 300-ton barges.

In addition to the facilities of the two major companies, there are several shipyards which handle small-craft repair. These include the Manila Shipyard of the Drydock and Engineering Co.; the Santa Mesa Shipyard and Engineering Co., which is associated with Luzon Stevedoring Co.; Cebu Shipyard and Engineering Works (Hoa Hin and Co.); and the Iloilo Dock and Engineering Co., Inc., which is associated with the Visayan StevedoreTransportation Co.

CONSTRUCTION

The construction industry is of major importance, accounting for about 236 million pesos of the national income in 1952 (6 percent of the total) and an estimated 260 million pesos in 1953 (7 percent). In the past few years the two broad components of construction activity-public and private-have shown somewhat divergent trends. Whereas public construction continues its general upward movement, private construction, particularly residential construction, has declined.

The wartime destruction of public buildings, roads, bridges, waterworks systems, and other public installations necessitated the early postwar expenditures, and the implementation of economic development plans has accounted for the increased expenditures for more recent public construction. In 1951 such expenditures amounted to about 240 million pesos and in 1952 and 1953 they were 161 and 163 million pesos, respectively. Under construction or completed are such developments as the shipyard at Bataan, the Maria Cristina hydroelectric and fertilizer projects, the textile mills at Narvacan, the paper and pulp mills of the Cebu Portland Cement Company, the Iligan steel mill, and the Ambuklao hydroelectric project.

No data are available on overall private construction, but the activity of this industry in Manila is believed to reflect the general national trend. In Manila the early postwar years brought heavy outlays, reflecting the acute housing shortage caused by widespread destruction of residential buildings during the war years. With easing of the acute shortage and with restrictions on bank loans for construction purposes, from 1949 on private construction was at a lower level. In the years 1950 through 1953 the permit valuation of building construction in Manila averaged about 50 million pesos annually, new construction being about evenly divided between residential and

nonresidential. Table II gives data for 1952 and 1953 on permits for construction in Manila.

Possibilities for the expansion of construction activities appear to lie in the erection of new manufacturing plants and in the spread of low-cost housing. As of 1952 less than a hundred low-cost housing units had been completed by private financing although expansion in this field was planned. Several firms have been engaged in the production of prefabricated houses, but recent data are not available.

The Government has continued its attempts to solve the housing problem through activities of the Peoples Homesite and Housing Corporation; plans as of 1952 were to complete 6,000 units by 1955. As of 1954 a Government prefabricated schoolhouse project, for which 600,000 pesos had been appropriated, was reported to be turning out 50 such units a month.

A large part of the capital investment and employment in the graphic arts is devoted to the publication of periodicals. Newspaper and magazine circulation was estimated at 1,750,000 in mid-1952 with well over a 100 periodicals published in Manila and some 40 or 50 in the Provinces. As of a few years ago there were 22 dailies in Manila.

Book publishing has not kept pace with newspaper and magazine production but has increased greatly in the past few years, and has been given considerable encouragement. It received added stimulus when, in 1951, a Presidential order stipulated that as many textbooks as possible were to be printed locally. The economic disadvantage of producing small quantities of books and the expense of importing such essentials as book paper, binding cloth, and printing inks have made the unit production cost high. The Philippines continues to be a major consumer of American-published books. Total imports of books in 1951 were valued at 5.4 million pesos and in 1952 at 3.8 million.

Lithography, an old art in the Philippines, is well developed and is generally of high quality. Most of the lithographic work consists of making seals and posters, various trade-marks (mostly of cigars and cigarettes locally made), cardboard boxes used as containers, and matches and calendars. Gravure printing and engraving are carried on by several firms. There are also some 150 commercial or job printers, only a small number of which have well-equipped modern plants.

COTTAGE INDUSTRIES

The various cottage industries of the Philippines constitute an important segment of the industrial structure, producing consumer goods for domestic use and for export markets. The total value of annual output has been estimated at about 20 million pesos.

Most of the products which have reached an appreciable volume for export (listed below with an export value for

Exports of craft goods reached an alltime high in 195152. An amendment to the Minimum Wage Act exempting "home workers engaged in needlework by hand," which was obtained in 1951 by the embroidery industry, has encouraged this industry to continue and expand.

The making of rattan furniture and abaca rugs has been developed by dealers located in the areas of raw material supplies where standardization and grading can be required from the home producers. At present considerable research and experimentation are being undertaken on the various fibers, such as buri palm, abaca, kenaf, and pineapple, which can be hand-woven into bagging, wrapping, and packaging materials.

Recent estimates indicate that more than 300,000 craftsmen are available in the skilled labor field for handicraft industries broken down as follows, in thousands: Needleworkers, 200; weavers, 50; potters, 20; fiber processors, 15; wood-bamboo workers, 10; hatmakers, 5; and pearl workers, 5.

As a class these workers are reported to be quick to learn and the Government is placing emphasis on vocational training in the schools as well as giving active support to a program to upgrade the existing adult craftsmen. One of the principal contributions of the handicraft industries is in making supplementary income available to agricultural workers.

The Philippine Department of Commerce and Industry was reported to be considering in late 1954 the establishment of an administrative agency to stimulate the marketing of cottage industry products abroad.

MISCELLANEOUS INDUSTRIES

No attempt is made here to mention more than a few segments of Philippine industry not covered elsewhere in this appendix. The industries discussed below are included either because of their present importance or because of recent interest in their possibilities.

Pearl Buttons

As of 1952 there were four manufacturers of pearl buttons in Manila, with a combined capacity able to supply domestic requirements as well as the annual export quota of 850,000 gross for the United States (established by the United States-Philippine Trade Agreement of 1946). Owing to the inability of manufacturers to obtain sufficient pearl shell, the export quota has not been met; however, exports have increased and in 1953 United States imports from the Philippines were about 803,000 gross.

Overall prospects do not appear particularly promising for an expansion of this industry in view of competition from plastic buttons and the fact that, as duties on the imports into the United States are imposed, Philippine buttons will find difficulty in competing with United States products. Lower production costs could, however, make such production competitive with pearl buttons produced elsewhere.

Coconut Oil, New Coconut Products

Coconut oil, largely inedible oil, is a major Philippine product. Average annual production in 1952-53 was about 111,000 metric tons; about half of this tonnage was exported, primarily to the United States. Under the United States-Philippine trade agreement an absolute quota is placed on coconut oil imports into the United States, but Philippine exports have been far below this level. The present market for coconut oil does not, however, appear promising for expansion.

Attention is being given to the utilization of coconut husks, coir, and other parts of the coconut usually wasted. In late 1954 a Philippine firm was attempting to obtain capital for the establishment of a plant to manufacture fiberboard from coconut husks, and further investigation is expected to reveal the possibility of other industries based on these raw materials.

Tourist Industry

There has been very little development of tourism in the Philippines despite the fact that the country has a number of scenic spots which might attract visitors. With Manila an important regional air center and dissident activities generally under control, opportunities for tourist development are better now than ever before. The Philippine Tourist and Travel Association has worked with the Government in simplifying regulations affecting oversea travelers and has also put on campaigns to publicize tourist attractions.

Any extensive development of tourism, however, must await improved accommodations. With the possible exception of Manila and Baguio, restaurant and hotel accommodations are inadequate to cope with a tourist trade and most of the present accommodations throughout the country are considered excessively priced for the services offered.