With the effective implementation of AANZFTA on 1 January 2010, the tepid trade relations of the Philippines and Australia are bound to change, noted Trade Assistant Secretary Ramon Kabigting. For one, the implementation of the AAZFTA will level the playing field for Philippine exports which have been competitively disadvantaged by the tariff-free entry of Thailand exports to Australia, thanks to Thailand's bilateral FTA with Australia and New Zealand, he added.

Wiring harness, food products, garments, fashion accessories, and furniture are among the country's exports to Australia that are facing fierce competition from Thailand.

Under Thailand's bilateral FTA with Australia and New Zealand, Thailand's ignition wiring sets and radio receivers will be levied a 5% tariff, while the country's export of the same are imposed a duty of 10%.

With AANZFTA in force may come the end of the dominance enjoyed by Thailand's exports and the start of a strong showing of Philippine exports in the Australian market.

AANZFTA prescribes Australia to eliminate duties on 96.4% of its tariff lines this year. These include numerous products of export interest to the Philippines like processed food, beverages, minerals, chemicals, fine and costume jewelry, furniture, and basketware, among others.

The agreement, being a comprehensive undertaking, is expected to make Australia an attractive market for Philippine exports and vice versa as economic linkages between the two countries are strengthened.

Unlike other FTAs, AANZFTA is a single undertaking where nothing is agreed unless everything is agreed. Thus, concessions are made all at once in the areas of trade in goods and services, sanitary and phytosanitary measures, safeguards, movement of natural persons, investment, competition, and intellectual property, among others. -- Ritchelle Alburo, PHILEXPORT News and Features <--back

2. PHILEXPORT calls for contingency list, waiver of 70% export record in 2010 IPP

The umbrella organization of Philippine exporters this week urged for the extension for another two years of the Contingency List of projects entitled to Board of Investments (BOI) incentives under the 2010 investment priority areas.

The appeal was made in reaction to the draft list of priority projects released during a consultation meeting called by the BOI earlier this week.

The contingency list was a temporary incentive package approved by President Arroyo early last year to help save jobs enterprises battered by a global trade slowdown that mauled the whole export sector for 12 strait months since October 2008. The list was dropped in this year's Investment Priorities Plan.

In its position paper, PHILEXPORT appealed for the re-inclusion of the contingency list and suggested it to be renamed “Export Recovery List” of projects, reasoning that due to drastic measures including the lay-off of workers, shortened work-weeks, suspension of operations and selling to the local market to stay afloat, the exporters failed to take advantage of the incentives last year.

The incentives were offered to enterprises that adopted projects that saved old jobs and created new ones during the crisis period.

Sought to be covered are projects designed to (1) re-instate laid-off workers to equal those in a company's payroll during the pre-crisis period in the first year, and creation of incremental jobs in the second year; (2) corner new markets in Asia and elsewhere meant to enlarge the country's global market base and 3) regain lost markets in the US, Japan and Europe.

PHILEXPORT also pointed out that exporters also could not seek incentives for their export activities as they sought to dispose to the local marketplace goods that were ordered and later canceled by foreign buyers.

That regular incentive package could not, in the first place, be availed of by exporters because of the pre-qualification requirement that dictates that a Filipino export company gets BOI perks if it sells at least 70 percent of its production abroad.

Only the biggest boys in the sector, meaning the top electronics exporters, would have complied with the requirement last year if they were able to get rid of their inventories.

As part of government assistance to the export recovery thrust, PHILEXPORT requested BOI to suspend this 70% export requirement from 2010 to 2011. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. PHILEXPORT urges BSP to rethink strong peso policy thrust

After hearing renewed grumbling among its members over the strengthening peso, the Philippine Exporters Confederation, Inc. (PHILEXPORT) this week asked the Bangko Sentral ng Pilipinas (BSP) to rethink its continued support to a strong peso to artificially rein in inflation.

That policy, PHILEXPORT concluded, has had devastating impact on the most productive segments of the economy; the domestic industries that are losing out to cheap imports, the OFWs whose services have become more expensive than other labor-exporting nations, and the exporters whose goods and services are getting more costly in international markets.

The exchange rate stood at P46.25 to the US dollar Tuesday. The Monetary Board earlier assured the public the peso will remain strong throughout the year and will rein in prices of imported goods.

During its meeting Thursday, the PHILEXPORT board passed a resolution formally asking the BSP to start rethinking its exchange rate policy that has equated a strong peso with a vibrant economy since during the American occupation.

That belief in a strong peso driving a strong and vibrant economy has not worked well for the country for over a century.

The export leaders acceded that the BSP's primary mandate is to keep inflation or the rate of price increases of basic products low.

In contrast, they pointed out that exchange rate and fiscal policies of the most advanced nations including the fastest growing ones in recent years were used in propelling and sustaining economic progress.

They also named Japan and China whose central bankers have zealously defended their weak currencies to propel and sustain their export offensives and emerged as the second and fourth biggest economies on earth.

The strong peso policy's impact on the domestic economy has been brutal. PHILEXPORT leaders batted for a more informed exchange rate and fiscal policy that will help propel the development of the key sectors of the economy that will bring in real and shared progress to the people. -- Abe P. Belena, PHILEXPORT News and Features <--back

4. Two-year recovery seen for furniture, furnishing sector

The country’s furniture and furnishings sector is expected to recover at least two more years should the present global economic activity continue to improve.

In a report, Rashmi Tolentino-Singh, vice president for industry relations of the Chamber of Furniture Industries of the Philippines, stressed that the palpable upturn of the survivors of the crisis is not the state of the industry.

“The companies who have downsized have to get back at least to their 2006 to 2007 levels of production. Those that stopped operations in 2006-2009 will have to be convinced that it is worthwhile to re-open. The fence sitters have to be excited enough to get moving,” she said.

Singh stressed this despite revenue gains in various markets enjoyed by the sector in the third quarter of 2009, especially in the United States and some of the European countries.

Apart from these countries, industry players have also increased presence in the Gulf Region particularly in Abu Dhabi, Qatar and Kingdom Saudi Arabia.

“There is a marked shift in attitude on certain markets from traditional competitors to potential buyers. These are the Asian markets, notably China, India and Thailand. There is also renewed interest in studying and developing our presence in Japan, Korea and Macau,” she said.

Likewise, Russia, Scandinavia and Brazil are also good markets for the country’s furniture and furnishings sector, she added.

Despite slight revenue gains, Singh cited the need for the country to continue implementing aggressive marketing strategies to penetrate more markets especially as competition grows stiffer.

She said the industry has to fine-tune its mapping of new markets by studying the reports from experts, intensify on the ground presence through outbound and inbound business matching and trade fair participation and expand buyer database and promotions of Manila FAME, Manila Now and CebuX.

To better serve foreign buyers, Singh added there is an immediate need for serious planning and implementation of programs for design and product development, capacity building, materials development, marketing skills and product standardization.

“We have tagged the Philippines as the design destination in Asia. However, we still do not enjoy the global recognition enjoyed by Japan in design, quality and technology. Thailand has just about dislodged us from our ‘throne’, and Singapore is doing its best to improve the perception of what they offer,” she said.

Singh said industry players must also improve partnership ties with the government as well as forge links with private entities like PHILEXPORT and the Philippine Chamber of Commerce Industry for more effective networking.

“…A sustained support mechanism in terms of information and networking campaigns; training and marketing programs; banking policies; materials importation policies; etc. will be go a long way in the sector’s recovery and development,” she stressed.

Finally, Singh said participation in government-subsidized international trade fairs and country trade show promotions is also crucial, as these activities are “tools for country branding and export industry boosters”. -- Danielle Venz, PHILEXPORT News and Features <--back

5. Safety, quality and standards to help minimize export recalls

Condemnation and recalls of export products are expected to be minimized as the government pursues vigorously product standardization and strengthens the implementation of food safety and quality systems.

Gilberto Layese, director of the Department of Agriculture’s Bureau of Agriculture and Fisheries Product Standards (BAFPS), in an interview in a forum, said key stakeholders of the food industry sector identified action plans doable in the next five years aimed mainly to ensure consumer safety.

Layese said these include, among others, the adoption of relevant Codex standards as Philippine National Standards (PNS) and intensified implementation of food safety and quality assurance systems such as Good Agricultural Practices (GAP), Good Animal Husbandry Practices (GAHP) and Good Aquaculture Practices (GAP).

He said they would pursue the farm-to-table approach in terms of product standardization that they are now developing.

The bureau is also spearheading a Philippine food control system program through a forum for all concerned regulatory agencies so they can come up with coherent regulatory measures, he added.

“If you adopt the national standards which are harmonized with the international standards then, there will be no more questions regarding your product. They can enter foreign markets,” he stressed.

Layese said failure to comply with internationally-accepted standards could result in either condemnation or recall of products, or to the extreme of blacklisting should companies continue exporting products which are banned by importers.

He added that the implementation of product standardization and food safety and quality systems could address this problem, noting the significant reduction in export product recalls.

“So far, we don't have as many product recalls like what we experienced between 2006 and 2007,” he said.

Moreover, Layese said medium-term targets also include the development and adoption of commodity specific product standards that are of economic importance to the country and attainment of international recognition of locally certified bodies more specifically on organic agriculture.

“Most of these are ongoing but we have a good aquaculture practice which is a farm food safety and quality system. We will implement this as soon as we get clearance from the BFAR (Bureau of Fisheries and Aquatic Resources) to put up a certification system,” he said.

Layase added the bureau is conceptualizing the National Quality Seal that certifies products are hygienically produced and meet standards.

”We are given the task to lead in the implementation of the national quality seal. We have a dry run and then full implementation this year,” he said. -- Danielle Venz, PHILEXPORT News and Features <--back

6. Climate-proofing in transportation key in national plan

Key stakeholders of transport sector are proposing the adoption of low-carbon development strategy, particularly the climate-proofing of transport facilities in the country, taking into account the economic costs of last year's typhoon devastations.

George Esguerra, assistant leader of a team formulating the National Transport Plan (NTP) for the next six years, in a workshop bared that such measure is included in the proposed strategies under the transport plan.

“Discussions focused more on adaptation; climate-proofing of transport facilities, making sure that roads would remain passable even during inclement weather and this addresses perennial concerns on flash floods,” he noted.

Citing World Bank estimates, Esguerra said this measure is imperative, considering the $4.38 billion damages and losses brought about by last year's typhoons that were equivalent to around three percent of the country's gross domestic product.

He said they are proposing the promotion of alternative fuel to mitigate carbon emissions.

Esguerra said stakeholders also intend to implement environmentally-sustainable strategy, including those that accords priority to public transport over private transport, promotes non-motorized transport and environment-friendly mass transit systems.

Also included in the NTP are inter-modal connectivity and the metropolitan area mobility enhancement strategies.

The former covers national road development, road roll-on, roll-off terminal system development, the international gateway and domestic airport network development and transport logistics infrastructure development.

“Focusing on the economic growth objectives of the Philippine government would mean that transport authorities consider seriously a strategy on inter-modal connectivity,” Esguerra noted. “We are looking at basically addressing accessibility, mobility and connectivity issues as part of the refined strategic national transport.”

He said logistics infrastructure development addresses traffic congestion affecting metropolitan areas. -- Danielle Venz, PHILEXPORT News and Features <--back