By AMADO P. MACASAET

In absolute terms, the amount of foreign exchange used to import capital goods is far bigger than dollars spent on consumption goods.

However, there is a clear trend towards heavy dependence on imports of consumption goods while money spent on capital assets is erratically pointing downward for almost 10 years since 1999.

In that year, imports of capital goods declined by an unbelievable 43 percent. In absolute amounts, the value of imports in 1999 was $6.895 billion. On the other hand, imports of consumption goods went up insignificantly by .001 percent to $2.647 billion.

Figures obtained from the Bangko Sentral show that importation of capital assets – machinery and equipment, raw materials and semi-finished products – is declining while that of consumption goods which now include fresh vegetables, fresh fruits and even banana chips – not to mention billions of dollars worth of rice from Vietnam and Thailand – is steadily going up.

Last year, according to BSP figures, value of consumption goods bought from foreign sources climbed by 41 percent while dollars spent on capital assets went down by four per cent.

The figures paint a picture of deteriorating local production of consumption goods caused precisely by the decrease in the value of importation of capital goods.

Dependence on foreign consumption goods has the effect of subsidizing foreign producers while local companies that have the capability to produce the same goods are denied the market that is supposed to be their own.

The propensity to import consumption goods is brought about largely by the hauling down of tariff barriers to common low levels in compliance with conditions of acceding to the World Trade Organization.

Low tariff left local producers of consumption goods unable to compete with foreign sources which have more modern equipment and technology and more efficient management practices. And less strident labor to boot.

The situation is made worse by the apparent neglect of agriculture. Consequently, the Philippines has become the world’s biggest importer of rice.

Since 1999, there was only one year – in 2000 – when imports of capital goods went up by 13 percent. In that year, imports of consumption goods went down insignificantly by .047 percent.

Since then, imports of capital goods and consumption goods have been moving in opposite direction. Value of imported capital assets is coming down steadily and in fact declined by four per cent last year.

On the other hand, imports of consumption goods, many of which can be produced in the Philippines, except automobiles and other vehicles, soared by an incredible 41 percent.,

The figures obtained from the BSP explain why job creation has been slow and local production in the agricultural and manufacturing sectors is coming down or does not go up appreciably.

The same figures are a portent that efforts to industrialize the economy have failed. Similarly, the capability of the economy to produce consumption goods has been disappointing.

The numbers from the BSP may be interpreted to mean that the headlong jump into membership in the WTO did not help the economy.

The expected effect was for the Philippine economy to join globalization and compete with the giants. The result as indicated by the figures supplied by the BSP is alarming dependence on imports of consumption goods precisely because the importation of capital assets which could have produced these goods has been niggardly.

As indicated by the BSP figures, the country is headed towards heavier and heavier dependence on consumption goods.