The committee, he said, sought to find a permanent solution to the problem so that Philippine exports will better compete in foreign markets. That was when they discovered the many fees that the shipping lines charged their customers. The additional charges were imposed for the shipping lines by their forwarders based in the country’s major ports of exit.

He particularly objected to the charging of deposits for containers used by exporters which often take several months, if not years, to be refunded after the containers are returned.

He further disclosed that the Association of International Shipping Lines (AISL) that ship Philippine goods to different destinations abroad are practically beyond the reach of the Philippine government. No agency has been mandated to scrutinize and regulate their fees.

He said that he has recommended that one agency should regulate these shipping lines. This, he said, will be best done with an executive order issued by the President. -- Abe P. Belena, PHILEXPORT News and Features <--back

2. Humbled Cebu furniture makers turn to local market

For lack of foreign orders, world-class furniture makers in Cebu are turning to the domestic market to survive, an export leader from Cebu revealed yesterday.

Allan Suarez, PHILEXPORT trustee for furniture sector, said in an interview with the PHILEXPORT News and Features, that the industry, one of the few that withstood previous crises like the Asian financial collapse in 1997 and the global trade slump of 2001, saw its worst beating last April.

Latest government figures showed that the furniture export industry got the highest decline of minus 44.3 percent on revenues of $51.21 million last April. It however managed to keep its rank as the fifth largest export of the country.

Cebu is known as the furniture export capital of the Philippines, accounting for about 60 percent of monthly exports.

“They are resorting to selling locally. The problem of Cebu furniture makers is that, they are no match to their Luzon competitors due to the high cost of shipping to Manila,” Suarez said. “Seventy percent of the domestic furniture market is in Manila,” he added.

He said that the promised government help to distressed export enterprises has not reached Cebu. Only the assistance of the Department of Labor and Employment (DOLE) has come in, helping retrain laid-off workers.

Suarez said that it will take a long time for the industry to get back on its feet as home construction is only beginning to perk up in the United States. It will take many more months before those new houses will need furniture and home furnishings. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. WB to fund national single window project to facilitate RP’s international trade

Automation of customs operations in the Philippines is getting a big boost with the World Bank (WB) coming into the picture to fund the national single window to facilitate trade.

This was announced yesterday by Paul Kimberley, WB consultant on single window programs across Asia who has been going the rounds consulting different stakeholders on their comments regarding the plan to adopt a system of customs administration comparable to the best in the world.

Per agreement with President Gloria Arroyo, he said that the single window program will be demonstrated n the first quarter of next year when Philippine customs operations will be linked up to the rest of the ASEAN under the regional trade bloc’s ASEAN single window program.

Kimberley told representatives of shipping lines and exporters in a meeting at the Bureau of Customs (BoC) that once in place, it will reduce to a minimum person-to-person contact in export and import transactions and will be a powerful weapon at minimizing rampant smuggling in practically all Philippine ports of entry.

Stakeholders all welcomed the program as it will not only help boost the revenue-raising capability of government but will also facilitate trade.

The WB consultant said the project will be expensive, but did not yet put a price tag. He only said that President Arroyo wants it to take-off as soon as feasible.

The same lending agency has been financing customs modernization throughour Asia. -- Abe P. Belena, PHILEXPORT News and Features <--back

4. Export dev’t and promotion projects of SMEs to get bulk of P1-billion support fund

Export development and promotion projects of small and medium-sized enterprises (SMEs) will receive the bulk or 70 percent of the P1 billion Export Support Fund (ESF) provided by the government to help the sector cope with the impact of the global financial crisis.

Philippine Exporters Confederation Inc. (PHILEXPORT) president Sergio Ortiz-Luis Jr. said bigger exporters like business process outsourcing (BPO), semiconductor and electronics, gaming, leisure, tourism and construction companies, will get the remaining 30 percent or P300 million of the export fund.

“The ESF will be released in tranches. We are expecting the first tranche of P200 million to be released by the Department of Budget and Management very soon. So we are preparing initially the priority projects,” he said.

Ortiz-Luis said the first projects identified that would likely receive funding support include the MANILA F.A.M.E. International tradeshow, overseas trade fairs and a special promotions project submitted by a group composed of the electronics, information technology and BPO firms.

This big-ticket project is meant to promote the competitiveness of Filipino workers to foreign investors, buyers and partners.

The export leader also outlined the committees for this exporters’ fund. Considering the amount of money allocated for the fund, Ortiz-Luis said there will be an ESF approving authority (EAA) composed of nine members – five from the export sector and four from the government.

Three technical evaluation and monitoring committees which will function simultaneously will also be established. One committee will monitor and examine the project proposals of the big exporters applying for P300 million, while two others for the P700-million grant.

Ortiz-Luis said each committee will have six members - three each from the export sector and the government.

Moreover, an industry champion will be designated as an ex-officio member of the committee for a particular project, he added.

Ortiz-Luis said the ESF has two components: export development and export promotions.

Export development activities eligible for the grant are capacity building; establishment of common service facilities; product design, development and innovation; market/competitive intelligence; and benchmarking and enhancement of export competitiveness.

Outbound and business matching, trade fairs and exhibitions, electronic marketing, export advertising, non-traditional marketing communications and country image building and branding projects aimed to market Philippine products abroad also qualify, he added.

Ortiz-Luis stressed that project proposals that have been submitted earlier for purposes of this new fund will have to be re-submitted or re-crafted to fit the 70:30 guideline.

“We are starting from scratch here and so proponents have to re-submit proposals,” he advised. “The rule of thumb is that a minimum of 20 percent (of project cost) must be counterpart (fund of exporters),” he related. -- Danielle Venz, PHILEXPORT News and Features <--back

5. RP’s GDP seen growing over 2% this year

A businessman expects the country’s gross domestic product (GDP) to grow over two percent this year despite the measly 0.4-percent economic growth in the first quarter.

“The second quarter is a leveling quarter but hopefully, these third and fourth quarters will have some growths,” said Donald Dee, Philippine Chamber of Commerce and Industry (PCCI) chairman emeritus and Vice Chairman of the Philippine Exporters Confederation, Inc.

Dee said once the economy started growing this second semester, recovery will continue until next year.

He said the United States economy is nearing bottom and is showing signs of recovery.

“The US is looking at a very good 2010 and it will take about six months for us to feel it,” he noted. “Just like when they entered into a recession in the second semester of 2007, we were hit already last quarter of 2008 and first quarter of 2009.”

Dee said the global crisis hit Philippine exports hard especially electronic products, coupled with the very low growth of the agriculture sector.

The country’s GDP only grew 0.4 percent in the first quarter this year as the industry posted its lowest growth for the last 20 years to 6.6 percent from 0.1 percent in the previous quarter. The significant weakening of the manufacturing sector contributed mainly to the industry’s lower growth.

Dee’s economic projection jibed with that of economist Bernardo Villegas who expects the GDP to grow to 2.5 to 4 percent in 2009.

Villegas said this year’s growth drivers are overseas Filipino workers' remittances, government infrastructure spending, agriculture, domestic tourism and expenditures of political candidates who will be running for the May 2010 elections.

He said economic growth will accelerate to a high of six percent in the fourth quarter, from three percent in the second quarter and then 4 to 5 percent in the third quarter. -- Danielle Venz, PHILEXPORT News and Features <--back

6. SBC assures more financing for MSMEs

The Small Business Corp. has assured the micro, small and medium enterprises (MSMEs) that it will continue providing financing services to help them ride out the economic slump.

Josefina Flores, SBC Corporate Planning Office Department Manager, made this assurance as she recognized the sector’s vulnerability to the movement of the economy especially now where that there is global financial crisis.

Flores said the agency believes that MSMEs are resilient enough to cope with difficult times.

“SBC continues to open our doors to our clients. If they defaulted an account in other banks, they can still come to us,” she said in a workshop on MSME financing.

To provide the sector more access to financing, Flores said SBC has been practicing the risk-based lending which no longer requires collateral from the borrower.

She said the borrower’s cash flow, capitalization and financial capacity of owners are among the agency’s lending criteria.

SBC account office Rebecca Narciso in an interview said part of the risk-based lending is the use of borrower risk rating (BRR) system to assess the risk of a particular enterprise.

“The score is from 1 to 5, one the highest and 5 the passing score. If borrowers get a score of 6, we might not provide loans to them,” she explained. “The data that we used in terms of administration, marketing, production and financials will have scores. It’s qualitative and quantitative (scoring system).”

Narciso said the BRR tool serves as an early warning device for them to detect borrowers experiencing some difficulty in meeting payments.

“With the BRR tool, we monitor the borrower every six months, every year. The early warnings are returning of checks and deferred payments,” she said.

Narciso urged these MSMEs to communicate with their creditors and seek advice regarding their loans before it is too late.

“Renegotiate payment terms that would be easier for the firm,” she said, assuring “SBC will still grant loans to borrowers with a clear market.” -- Danielle Venz, PHILEXPORT News and Features <--back

7. Explore new market opportunities in Japan, exporters were told

Special Trade Representative of the Foreign Trade Service Corps (FTSC) Roman Baltazar advised exporters to explore new market opportunities in Japan even during this time of crisis.

His 20-year immersion in the Japanese way of doing business as the Philippine Commercial counsellor in Japan has contributed to the valuable assistance provided to local exporters whose products made good business in Japan.

According to Baltazar, it is admittedly very difficult to export to Japan, but it is indeed a rewarding market. He said that Japan is an ideal market because it is the second largest economy after the United States despite the recession. It has a huge population with an average cash savings of $150,000,000 and an average income of $70,000.

In addition, he noted that the yen is very strong and Japan's customs tariff rate is one of the lowest among developed countries. There is also a cultural shift towards a more internationalized style in food, clothing and housewares.

The signing of the Japan-Philippines Economic Partnership Agreement (JPEPA) is also an opportunity for Philippine exporters of industrial goods, agricultural and marine products, leather articles, etc.

“The Japanese consumers love to bargain, they are wise and they focus on price, quality, and functionality. They are also known to be capricious and brand conscious”, he said.

On specific business posture, he added that the Japanese are punctual in appointments and delivery, appropriately dressed for appointments and have preference for long-term relationships. They would usually start with small sample orders and gradually develop mutual trust and sincerity with their business partners. Products have short life cycle resulting from oversupply.

“The business culture of the Japanese has to be understood and the value of patience will pay off”, he added.

Baltazar’s advice to potential exporters is to use one of the Filipino’s strongest assets – the facility of the English Language; participate in trade local and international trade fairs for exposure; join trade missions in Japan; be ready to spend; develop unique products or re-engineer; and work closely with Japanese importers regarding design and packaging of products; know market segmentation; be abreast of market developments and trends; and lastly, contact the DTI-Foreign Trade Service Corps for assistance. -- Dinah B. Dimatulac, PHILEXPORT News and Features <--back