It found though that close to half of the surveyed exporters want to use the free trade pacts in the future, given the right information on how they will go about it.
Responding to the findings, a team from the international trade group (ITG) of the Department of Trade and Industry (DTI) told the researchers and representatives of export groups that the government has lined up a whole-year program to reach out to exporters across the country, to tell them what they can get out of the expanding trade agreements their negotiators have forged, and how the exporters could benefit from those pacts.
The ADB found that enterprises belonging to the automotive parts manufacturing group were the heaviest users of the AFTA privileges, followed by food exporters, particularly the smaller producers. Another surprise to them was the minimal use by the electronics industry of perks under AFTA.
They surmised that the high use of after perks by the automotive industry was driven by the high tariff difference between a non-user and a user of the AFTA tariff privileges.
Recent consultations by PHILEXPORT with embattled exporters indicated that what they clamor for today is the market access privileges opened by the new trade agreements, particularly with India, China, New Zealand and Australia, more than the lower tariffs to goods that are already sold to the trading partners.
This clamor was anchored on the continued depressed market in the United States, the country's biggest export market. -- Abe P. Belena, PHILEXPORT News and Features <--back
2. NCC jump-starts “masterplan” to build Subic-Clark-Batangas logistics corridor
The National Competitiveness Council (NCC) has embarked on an ambitious project to convert the Subic-Clark-Batangas corridor into an international logistics hub in the country's bid to service rapidly expanding intra-Asian trade and investments.
Private sector NCC chairman Cesar B. Bautista recently commissioned University of the Philippines professor on urban and regional planning Hussein S. Lidasan to prepare the Terms of Reference (TOR) on which the masterplan will have to be based.
Bautista and Lidasan signed an agreement for the initial work for the master plan last February 19.
Under that agreement, the NCC spelled out its vision of developing an inter-modal logistics system covering Mega-Manila that will be integrated globally at competitive costs and quality.
The initiative was also designed to decongest Metro Manila by gradually shifting the cargo traffic from its ports to the new ports of Subic and Batangas.
As a prerequisite to making the detailed masterplan, the Lidasan-made guidepost or TOR, will answer the questions, what needs to be done, what are the pressing issues and concerns that have to be looked at, what economic development concepts should be reviewed and evaluated that would really be appropriate for the corridor, what would give the private sector to actively participate in developing the corridor, and how would the development of the corridor's inter-modal logistics system be defined to be responsive to such development concepts.
To follow shortly after the TOR is written is the drawing up of a masterplan for the proposed Luzon Integrated Logistics Hub that covers the economies of Metro Manila, Bulacan, Pampanga and Zambales in Central Luzon, and the Cavite-Laguna-Batangas stretch in southern Luzon.
This proposed corridor already accounts for about half of the country's total output, Bautista pointed out.
The masterplan shall cover cities and provinces along the corridor which would be later owned up and implemented by their local governments in tandem with the national government, strong involvement of public and private sectors, with the private sector coordinating activities leading to the realization of the plan.
The idea of making the Clark Special Economic Zone as the logistics hub in Asia was first broached by President Gloria Macapagal-Arroyo. The NCC's innovation was to include land, air and sea transport along the proposed logistics corridor to the rest of East and South Asia. -- Abe P. Belena, PHILEXPORT News and Features <--back
3. Information campaign, simpler origin administration to improve RP use of FTAs
An Asian Development Bank (ADB) study recommends intensive information campaign and a simpler origin administration system to elevate the country’s use of free trade agreements (FTAs), thus fully take advantage of the potential benefits.
With 20% FTA utilization rate, said ABD study expects the country’s usage to dramatically improve, especially with strong FTA support services, particularly awareness and information campaigns and the establishment of a streamlined origin administration system.
Already, 41% of the surveyed firms plan to use the existing FTAs with most of these firms showing strong interest in the Chinese and Japanese markets, modifying their business plans.
The study notes strong demand for FTA information-related services. About 90% of the surveyed firms are calling for increased awareness campaigns, FTA training, impact studies on business, more consultation, and non-tariff measure (NTM) surveillance.
These support services are particularly needed by small firms, which unlike the large and giant firms do not have export departments that attend to all FTA documentation requirements. The study revealed an FTA utilization rate of 16% for small firms against 24% for large firms.
FTA support services are being provided by both public and private entities. Public support services are offered by the Department of Trade and Industry (DTI), which oversees the implementation of FTAs; Tariff Commission, which handles all tariff-related matters and disputes, and the Bureau of Customs (BOC), which is the sole issuing authority of preferential certificates of origin (COs) used to avail preferential treatment in the trade with FTA partners.
Private FTA support comes from business organizations such as the Philippine Chamber of Commerce and Industry (PCCI) and the Philippine Exporters Confederation, Inc. (PHILEXPORT), the umbrella organization of Philippine exporters. Both have policy advocacy units that facilitate stakeholder consultations and inform their members and other stakeholders of business and trade-related policy issues.
Having cited the various issues in origin administration faced by the surveyed firms, said ADB study proposes the introduction of self-certification to the origin application process and installation of the electronic data interchanges (EDI) into the system.
The self-certification mechanism would allow an exporter to declare or affirm that the items covered by the export invoice qualify as originating in that country for the purposes of claiming a tariff preference, obliterating the need to apply for a formal certificates of origin from the BOC.
The study likewise questioned the BOC’s monopoly over the approval and issuance of COs when most ASEAN countries have designated chambers of commerce and other accredited bodies issuing the same.
Arbitrary classification of product origin and confidentiality of information required in origin application are two of the pressing origin administration-related issues that discourage firms to utilize the existing FTAs. This holds true particularly for small firms and for sectors that are presented with minuscule margins of preference (MOP).
As cited in the study, wide margins of preference serve as a huge incentive for firms to utilize the FTAs as the benefits they offer outweigh the administrative costs of using these FTAs. That the transport sector uses the ASEAN free trade area (AFTA) the most, with utilization rate of 39%, can be partly explained by the MOP in their products, which range from five to 42.5 percentage points. Most-favored nation (MFN) rates range from five to 50% compared to AFTA rates of zero to five percent.
Conversely, the relatively low rate of utilization in food (19%) and electronics sectors (12%) can be attributed to smaller MOP. It is interesting to note, however, that although food exports of the country to Thailand and Vietnam enjoy high MOP, they are directly competing against the local food products in these countries. Similarity in the products between the Philippines and other ASEAN countries also contributes to the low AFTA.
Titled FTAs and Philippine Business: Evidence from Transport, Food, and Electronics Firms, the enterprise survey used in the ADB study was conducted in the Philippines between May and November 2008 on 155 randomly selected firms from the transport equipment, processed foods, and electronics sectors exporting manufactured goods. -- Ritchelle Alburo, PHILEXPORT News and Features <--back
4. Compliance to global safety laws, standards key to more food exports
Key stakeholders of the food industry sector will aggressively implement measures to further improve the country’s compliance to international food safety laws and standards that is crucial to increase competitiveness of local products.
In his speech read by Assistant Secretary Salvador Salacup during the opening of the 9th Philippine Food Expo, Agriculture Secretary Arthur Yap said the lowering of tariffs of few agricultural commodities brought by trade agreements would set the stage for a more intense clash between local and imported goods.
He said increased volume of commerce, along with improvements in transportation, infrastructure and technology, also heightens the risk of rapid spread and diseases across borders.
“In response to this challenge, we will equip our stakeholders with the necessary tools in order to survive and flourish in this new, open and brutal global trading order,” he noted.
Yap said apart from production, the department is capacitating farmers to value-add their products as it opens market for them domestically and internationally.
It will also continue implementing its disease eradication efforts with the private sector and aggressively pursue the advancement of the country’s food standards and safety system, he added.
Trade Secretary Peter Favila, in a message delivered by Trade Senior Undersecretary Thomas Aquino during the same event, said the government is likewise trying to align and harmonize all its food-related systems to meet international standards.
Favila said his department is continuously learning from experiences of other countries with regard to food safety, particularly on Good Manufacturing Practice (GMP) and Hazard Analysis Critical Control Point (HACCP) accreditation.
He added that while there are already a hundred food plants accredited with GMP and products certified with HACCP, the figure is just a fraction compared to neighboring ASEAN countries.
“It is my desire to see in the near future an increase in the number of accredited companies so that we can expand to more markets and make Philippine food products a staple in households worldwide,” he said.
Roberto C. Amores, president of the Philippine Food Exporters and Processors Organization (PHILFOODEX), said the better way for companies to compete is to continuously improve their products at home and expand foreign markets. Amores said there is a need for greater proactive government and private sector collaboration to create products that meet the market requirements.
He cited for example measures to increase investments in research and development to launch new high-value products tailored to the needs of existing and new markets.
The PHILFOODEX-organized food exposition held at the SM Megamall in Mandaluyong City will run until February 28.
A 100-member delegation of buyers from China, Hng Kong, Japan, Korea, Malaysia, Singapore, the Middle East and the United States are visiting the four-day food event. -- Danielle Venz, PHILEXPORT News and Features <--back
5. Cosmos International in Manila for business mission
Cosmos International, one of the biggest importers in Belgium, will be coming to Manila next week for a business mission to firm up plans to source garden furniture, holiday decors and specialty items from the country.
“The company almost no longer sources (its products) from the Philippines, it has other suppliers. It has now reconsidered to again source these from the country,” said Salvio Valenzuela Jr., executive director of the Philippine Chamber of Handicraft Industries Inc. (PCHI).
Valenzuela said local companies will present product requirements identified by Cosmos during a mini trade show slated on March 6.
He said the holding of the business mission here was agreed upon during the recent international trade show held in Belgium which Philippine handicraft firms participated apart from the Ambiente fair in Frankfurt, Germany and another one held in Amsterdam.
Valenzuela also reported that the Ambiente show had good turn out, as the number of buyers who came was slightly higher compared to that last year.
“In terms of sales, out of the 35 exhibitors of PCHI, almost 90 percent got orders,” he said in an interview.
Valenzuela particularly cited a number of micro firm participants who met prospective buyers who already asked for customized design. These companies were first-timers in an international fair.
“The major feedback from the buyers was that they expect the turnaround in the market late this year and early next year. What happened was, they booked orders this early because they need to replenish their shelves to prepare for the recovery,” he stressed.
For her part, PCHI vice president Chiqui Veneracion said business activities during the recent international shows were estimated to have increased by 20 to 30 percent from last year.
“This meant many buyers requested for samples and there were also many negotiations. It takes three months for us to know if these will translate into actual sales,” she said.
Nevertheless, Veneracion said the outlook was very positive although the market was turning around slowly.
She thus raised the need for the private sector and the government to work more closely to better address the impact of the global economic crisis.. -- Danielle Venz, PHILEXPORT News and Features <--back
6. Task force recommended for 5-yr strategic furniture plan
A task force composed of major stakeholders and key players in the furniture export industry is needed to craft and implement a five-year sustainable strategic marketing plan meant not only to promote local products abroad but also market the country as a preferred investment site.
The public-private sector task force is recommended to be chaired by Department of Trade and Industry (DTI) Secretary Peter Favila and headed by DTI Senior Undersecretary Thomas G. Aquino and PHILEXPORT President Sergio Ortiz-Luis Jr.
Rashmi Tolentino-Singh, vice president for industry relations of the Chamber of Furniture Industries of the Philippines (CFIP), in an interview, said the task force is intended to foster cooperation among stakeholders implement the action plan that could fast track the recovery of the sector.
“It will help expand the scope of what we call exports. The thrust is export promotions but export is just the other side, because when they (buyers) meet us abroad, we can also bring investors to invest in the Philippines. We are like ambassadors of the country because we always go out,” she explained.
In a report, Singh said they could encourage foreign investments in the sector through joint ventures and exclusive production facilities, among others.
She said the export marketing action plan of the sector identified the different markets with active Asian markets as top priority, particularly China (including Hong Kong and Macau), India (including the Maldives and Mauritius) and Japan.
Other priority markets were the Middle East, United Kingdom, Singapore, United States, Brazil, Russia, Korea, Thailand, Malaysia, Brunei and Germany.
Singh said increased penetration to these target markets could be realized through participation in trade shows as a Philippine pavilion and joining incoming and outgoing trade missions especially to high development areas with no trade shows.
She said the plan also aimed to open a one-stop Export House in Manila, Cebu and key cities to showcase products and facilitate requests for creative services, and grow the Philippine-based international shows Manila Now, Cebu X and Manila FAME.
The furniture industry ranked fourth as the country’s biggest dollar earners, generating $270 million in 2007.
Other top exports included electronic products, articles of apparel and clothing accessories, coconut oil, and ignition wiring set and other wiring sets used in vehicles, aircrafts and ships, latest government data showed.
Meanwhile, industry players are all set for this year’s Manila Now 2010 furniture show to be held on March 3 to 7 at the SMX Convention Center in Pasay City.
Hundreds of buyers from Europe, North America, Middle East and other Asian countries are expected to observe the industry’s latest product offerings. -- Danielle Venz, PHILEXPORT News and Features <--back
