places. The most recent data available indicate reserves of over 12 million tons with ratings of 8,000 to 12,000 BTU. No deposits have proved coking possibilities and, in fact, few coal deposits found thus far in sketchy explorations have warranted commercial exploitation.

Extensive field investigations and laboratory experiments are now under way to develop more reliable information on the quantity and quality of Philippine coal with the hope of displacing expensive imported liquid fuels for industrial, rail, and shipping use. Techniques for the upgrading of coal are also receiving attention and experts believe that treatment such as that employed in connection with Texas lignites may be entirely feasible.

Production of coal, principally from Government mines (three in Cebu and one in Zamboanga), amounted to 154,905 metric tons in 1953. The Government's cement-making operations consumed almost the entire output and enlarged facilities have recently increased requirements substantially. Other users are foundries and blacksmith shops. Plans of potential new consumers and the possible reconversion to coal of some prewar users may serve to promote expansion of mining if current surveys and other investigations show favorable results.

Some observers feel that the inadequacy and high cost of transportation facilities for marketing will continue for some time as major impediments to widespread use in the Philippines of domestic coal. However, should coking coal be found available in quantity, a deterrent to domestic iron and steel manufacture-lack of fuelwould be removed. Moreover, Japan would appear to offer a profitable outlet as it imports large amounts.

Oil seeps, residues, and natural gas emanations have been discovered in many places in the Philippines which have geologic formations similar to those in oil-producing Far Eastern areas. No commercial oil deposits have been located as yet, but exploration and drilling have been very limited. Some survey work has been accomplished in the past several years by the Philippine Bureau of Mines and one private firm has actively explored for oil since the war. In 1952 and 1953 the company drilled without success on Bondoc Peninsula, southern Luzon, and Panay Island. Earlier efforts in Cebu were abandoned.

In 1954 there was an increased interest in exploration for petroleum as indicated by applications of several companies, including American companies, for concessions. The opinion has been expressed, however, that the Philippine policy in respect to oil leases is too restrictive and privileges granted Americans in connection with the development of natural resources, resulting from the 1946 United States-Philippine Trade Agreement, are too short lived to attract American capital.

Other Nonmetallics

Clay, lime, silica sand, building stone and other construction minerals, sulfur, and pyrites are the nonmetallics in addition to coal which now receive considerable attention in the Philippines. There are also deposits of guano, phosphate rock, a number of abrasives, asbestos, barites, gypsum, magnesite, and mineral pigments, as well as potash and salt.

Pottery household articles and structural clay products are produced in quantity, chiefly from local raw materials. The growing glass bottle industry uses high-quality silica sand from Palawan and limestone from Bulacan and Rizal Provinces, but must import soda ash. Production of cement by four plants is also aided by availability in the Philippines of ample supplies of limestone and silica. Gypsum, however, has not been produced in sufficient quantities to meet requirements. About 50,000 tons of native sulfur are said to be available and this sulfur plus that obtained from pyrites is scheduled to supply the needs of the Government's fertilizer plant in Mindanao.

MINING LAWS1

Philippine mining concessions are governed by four main laws. Most mining claims now held and developed were acquired in the form of mining patents under provisions of the Act of the United States Congress of July 1, 1902, as amended. While no claim may now be located under this law, those registered before November 15, 1935, the date of establishment of the Commonwealth and the effective date of the Philippine Constitution, are still governed by its provisions.

Mining leases and temporary permits may now be obtained under provisions of Commonwealth Act 137, known as the Mining Act. Coal leases or revocable permits are granted under Legislative Act 2719, or the Coal Land Act, and rights to explore for oil and gas are obtained in accordance with provisions of and regulations promulgated under Republic Act 387, the Petroleum Act of 1949. A brochure entitled "How To Acquire Rights on Mineral Lands in the Philippines," issued by the Philippine Bureau of Mines in January 1953, as Information Circular No. 14, outlines the main provisions of these laws and should be consulted by persons interested in exploring for or exploiting minerals.

Under terms of the Mining Act, mining claims may be acquired through lease contract entered into with the Government or permit issued by the Government. Claims are granted only upon the establishment of discovery of the mineral, the locator registering the discovery with the Mining Recorder. Upon the granting of a lease, extrac

1 See chapter XII for information on mining taxes and chapter XIII for information regarding property rights.

tion of the mineral deposit is subject to payment of rentals, royalties, and taxes.

Prospecting for oil and gas is regulated through permits or concessions issued by the Secretary of Agriculture and Natural Resources after approval by the Director of Mines. Concessions which may be granted for specified areas include nonexclusive exploration permits; exploration concessions, which grant exclusive right to explore; and exploitation concessions, which grant exclusive right to develop petroleum production. The law also provides for refining and pipeline concessions.

The nonexclusive exploration permit is granted for a period not exceeding 2 years; the exclusive exploration concession for 4 years, twice extendi

ble at 3 years each; and exploitation, refining, and pipeline concessions for 25 years, renewable for a like period. Upon the concessionaires' compliance with requirements, the law makes it obligatory that the Government grant exploitation concessions to holders of exploration concessions and, under certain conditions, refining and/or pipeline concessions to holders of exploitation concessions.

Coal leases, granted by the Secretary of Agriculture and Natural Resources, are issued for 25 years, with one renewal, for areas within specified limits; coal revocable permits are issued for considerably smaller areas. Holders of permits pay a tax, but do not pay royalties or rentals as do lessees.

CHAPTER VII

1

MANUFACTURES 1

Manufacturing in the Philippines is relatively limited in scope. Even with the considerable expansion in recent years, this segment of the economy accounts for only about 15 percent of the national income compared with about 40 percent for agriculture. The Filipinos are, however, looking to industrial expansion and diversification as a major key to economic independence and to a higher standard of living, and in their economic development plans they are placing strong emphasis upon industrialization. The future can be expected to bring advances in manufacturing although the particular lines and rate of development are not clear.

As

The latest economic census, taken in 1948, reported 29,463 operators and 170,956 persons employed in manufacturing establishments. sets of the manufacturing establishments were 560,996,000 pesos and production was valued at 944,845,000 pesos. Comparable data for more recent years are not available. A survey made in 1953, however, estimates the value of industrial production at about 1,288,750,000 pesos, of which the production of electric light and power plants accounted for about 60,300,000 pesos. The remaining 1,228,450,000 pesos may therefore be considered as representing the value of production of other industrial establishments. This 1953 survey included the important factories but was less complete in coverage than the 1948 census.

If "manufacturing" is considered as including all activities concerned with processing, the production figures would be considerably higher. As in other predominantly agricultural economies much manual processing is done by farmers on their own premises to prepare their products for family consumption. Moreover, small-scale cottage and handicraft industries, such as the making of textiles and articles of wood, metal, fibers, and pottery, are of importance although not generally included in statistical data on industry such as those given above.

1 See appendix A for further details concerning manufacturing industries.

1 These data, based upon returns from a questionnaire sent to Philippine establishments, do not cover all manufacturing establishments but only that portion of Philippine manufacturing for which recent statistics are available. Excludes edible oils, which are included in food products.

Source: Production of Selected Manufacturing Establishments by Kind of Manufacture, 1953, a release issued by the Philippine Bureau of Census and Statistics, Manila.

dustries, sugar led with an output valued at 227,700,000 pesos in 1953; cigarettes were in second place, with 141,500,000 pesos; lumber third, with 96,500,000 pesos; and coconut oil fourth, with 79,500,000 pesos (table 6).

Manufacturing enterprises in the Philippines are of two major types: (1) Those centered around the processing of products, chiefly agricultural raw materials, for the export market; and (2) those producing chiefly for home consumption, drawing largely on raw materials from abroad. Prior to World War II industrial activ

Value

Quantity (millions of pesos)

ity was primarily of the first type. Many years of expanding markets in the United States, based upon duty-free entry of Philippine products, attracted domestic and foreign capital to the establishment of such industrial undertakings as sugar centrals, coconut oil and desiccated coconut mills, cordage and cigar factories, a pineapple canning plant, and saw and planing mills. Considerable private capital also entered the processing of metallic minerals and certain handicraft industries were developed which produced such items as embroideries and pearl buttons mainly for the American market.

Table 6.-Production, by Manufacturing Establishments, 1953

Product

1,000 metric tons..

Refined.

Desiccated coconut..

.do.... .do....

227.7

19.0

Glass products.

30. 8

Bricks, tiles, concrete pipes, etc. Others...

11.7

22.7

2.4

n. a.

9.9

Soil pipes...

Others.

Furniture and kitchen utensils:

Metal furniture.

Enameled wares.

Other..

Zippers..

Steel doors and window grills.

Other metal manufactures.

Electrical machinery, apparatus, and supplies..

n. a.

2.0

n. a.

1. 1

5.9

Others..

Textiles.....

Jute bags and sacks.

n. a.

1.3

Storage batteries.

Electric light bulbs, fluorescent lamps....do...

56. 4

Refrigerators....

.do...

Others..

Knitted fabrics in the piece.. Piece goods..

Others (cordage, yarn, thread).

Wearing apparel and other made-up textiles.

Motorcars (assembly)..
Others.....

Miscellaneous manufactures.

Copra cake.

581

4

Other readymade clothing, towels, blankets.

n. a.

23.6

Copra paring and sweeping. Molasses.

n. a.

13.6

Buttons.

1,000 pairs.. do.. thousands..

972

9.4

869

.4

Starch (mostly repacking) Others.

1 Large manufacturers only.

Source: Production of Selected Manufacturing Enterprises by Kind of Manufacture, 1953, a release issued by the Philippine Bureau of Census and Statistics, Manila.

Some industrial enterprises for the domestic market were also developed before World War II. These included cotton textile mills, shoe and cigrette factories, fish and meat canneries, and the production of vegetable lards and soap as byproducts of the coconut oil industry. There were several paint factories in Manila, using mainly imported pigments and oils, and shortly before the war a paper and cellulose mill was established in one of the important sugar areas, using bagasse as raw material.

The domestic manufacturing industry was, however, wholly inadequate for consumer demands. Cheap power was lacking, labor and transportation costs were relatively high, and locally made products on the whole could not compete with imports from the United States. Well-established industries in other Far Eastern countries, moreover, catered to mass demands, acting as a further deterrent to the establishment of similar undertakings in the Philippines.

In the postwar years there has been extensive rehabilitation of the prewar industries centering around the processing of raw material, but little new development of industries based on domestic resources. On the other hand, additional industries producing for the domestic market have increased considerably, especially after 1949 with the protection afforded and opportunities created by import and exchange controls. Among the industrial enterprises which have been developed since the war are several nail factories and factories for the manufacture of certain paper products and the production of rubber-soled shoes. Plans for the erection of a pulp and paper mill have also been inaugurated.

The assembly of motorcars and trucks was undertaken, component parts being almost entirely imported, and the production of tires and tubes was initiated on a small scale. The manufacture of beer was expanded and the output of soft drinks has increased to meet domestic requirements. American as well as local investment capital entered the field of processing drugs and pharmaceuticals from imported ingredients. Jute bags, glass bottles and glass containers, wood furniture, plywood, and wallboard are also produced in plants erected since the war. The Philippines has now achieved self-sufficiency in the manufacture of a number of commodities, including such items as zippers, combs, soap, rubber shoes, concrete blocks, rope and cordage, cigars, common types of fluorescent tubes and incandescent bulbs, nails, steel desks, file cabinets, and carbonated beverages.

It has only been in the past year or two that new heavy industry has started in the Philippines, much of it under Government ownership. In connection with the Maria Cristina hydroelectric development a carbide and ferroalloy plant has now opened. The starting of operations of an American company's petroleum refinery in late 1954 marks another major development.

Distribution of Industry

There is a marked concentration of manufacturing in and around Manila. This is primarily due to the existence of a major part of the Philippine market in this area, coupled with the fact that many industries, dependent on imported raw materials, find location near the port of entry advantageous. With the new power expansion and the

development of heavy industries in new locations in the future other areas may become of relatively greater importance in the industrial picture.

As of 1948 Filipinos owned the greatest share, by value, of industrial enterprises, Americans were second, Chinese third, and British Commonwealth citizens fourth (table 7). Of the privately held new industries established in the 1946-52 period, Filipinos were reported to be first in ownership and Chinese second. If larger industrial enterprises were considered separately from the smaller ones, American foreign capital would take on an increased significance; data regarding owner distribution by size of operation are not available, however.

From the beginning of the Commonwealth in 1935 Philippine officials have manifested increasing interest in the overall economic development of their country, placing special emphasis on industrial progress. Prewar economic planning of the Government was geared to a long-range program which would prepare the Philippines for economic as well as political independence from the United States in 1946. The overall program of the National Economic Council, created in 1936 for the purpose of economic planning, was implemented by the establishment of various Government entities, chief of which was the National Development Company (NDC). The NDC remains in the postwar period the largest Government-owned corporation concerned with industrial projects.

2

Various studies and reports prepared by or for the Philippine Government in the early postwar economic planning laid primary emphasis on industrialization. In 1947 a technical memorandum prepared for the Joint Finance Commission covered recommendations for various types of manufacture. In the same year a survey was made by

2 The National Economic Council consists of several Cabinet officers primarily concerned with resources and economic development, the Governor of the Central Bank, Director of the Office of Economic Coordination, and other key Government officials, as well as representatives of commercial and industrial interests. 3 Philippine Economic Development, a technical memorandum prepared by Thomas Hibben, U. S. Department of Commerce.