Welcome to Philippine Exporters Confederation, Inc.

July 2, 2010

1. Gov’t urged to end smuggling to raise revenues, plug deficit

The multisectoral Fair Trade Alliance (FairTrade) is urging the new administration to stamp out the scourge of smuggling to raise revenues and plug fiscal deficit without necessarily imposing additional taxes.

FairTrade lead convenor Wigberto Tañada estimated that the country is losing P198.98 billion a year in revenues due to smuggling. “By stopping smuggling, the government will be able to close the annual fiscal gap and avoid the divisive and unfair imposition of new taxes.

By stamping out smuggling, the government will also help save domestic industries being injured by cheap and untaxed imports and, therefore, help save local jobs,” he said.

Mario Sereno, executive director of the Association of Petrochemical Manufacturers of the Philippines, noted that the petrochemical industry is adversely affected by uncontrolled smuggling.

Sereno said it is presently facing intense competition with imports from fully integrated sources due to low tariffs.

He cited various “modus operandi” of smugglers, including misdeclaration through using product description outside appropriate chapter heading, misclassification and fraudulent valuation.

As a result of these, Sereno said the sector’s lost revenues due to resin smuggling were estimated at P2.9 billion in 2006. Other identified sectors affected by smuggling are shoes, sugar and car manufacturing.

For its part, Atty. Homer Maranan, secretary general of Car Manufacturers Association of the Philippines, is asking the strict implementation of the ban on the importation of used vehicles and the immediate stop to smuggling of vehicles.

“We would like to see a strengthening of current anti-smuggling laws wherein severe penalties will be imposed and wherein even government officials involved in the perpetration of these illegal activities be made accountable for their actions,” said.

To squarely address this problem, Tañada urged President Benigno Aquino III to certify as “urgent” the Anti-Smuggling Bill that will be filed this 15th Congress given the exigency of raising the needed reforms for the government.

He also called on the President to facelift revenue-generating agencies, the Bureau of Customs (BoC) and the Bureau of Internal Revenue (BIR), by installing competent and incorruptible officials in the said agencies.

President Aquino, in his inaugural speech, vowed to strengthen tax collection and overcome corruption in the BIR and BoC.

Aquino said this will enable his administration fund quality education, health services for all and housing programs.

The Chief Executive added it would also undertake various measures in order to provide an environment conducive to business.

“We will cut red tape dramatically and implement stable economic policies. We will level the playing field for investors and make government an enabler, not hindrance, to business,” he noted. -- Danielle Venz, PHILEXPORT News and Features <--back

2. Electronics industry calls for more investments

Industry players will mount an aggressive campaign and undertake other measures to increase investments in the electronics sector.

“We need to find the formula to attract more foreign investments in our industry to propel us for the next 10 to 20 years and that’s the challenge that we have,” said Semiconductor and Electronics Industry of the Philippines Inc. (SEIPI) chairman Arthur Young.

Young believed that promoting the Philippines could effectively attract investments into the sector at par with neighboring countries.

“Our investments in the last two years have not been that great. Vietnam got most of the investments $5 billion, $10 billion but we are only getting $500 million, $700 million,” he stressed in an interview.

Citing Board of Investments (BOI) and Philippine Economic Zone Authority (PEZA) figures, Young said electronics investments only reached $1.4 billion in 2007, but later declined to $394 million in 2008 and $484 million in 2009.

“Hopefully with the new government, we can go back and re-position what we believe the strategies for the coming years and make the sector grow,” he noted.

Young said the electronics industry could grow between 25 to 30 percent this year, as he expected no risk to this growth target.

“All indicators point to a very strong recovery for Philippine electronics industry in 2010,” he said.

However, Young said the projected higher global gross domestic product (GDP) for next year could influence consumer spending.

“As the global GDP grows, consumers are spending. So what is initiated in this crisis is innovation of new products and applications. Consumers even in a bad market will continue to buy new products as long as the new technology is great,” he said.

Philippine merchandise exports rose by 27.4 percent to $3.6 billion in April 2010, bringing the average revenue growth for the first four months to 38.9 percent to $14.9 billion, according to National Statistics Office (NSO) data.

Electronics exports comprised around 59 percent of total exports during the four-month period. -- Danielle Venz, PHILEXPORT News and Features <--back

3. Relaxation of vulnerability criterion in EU GSP pushed

EuroCommerce is calling for relaxation in “vulnerability” criterion should this be maintained in the GSP+ scheme under the next European Generalized System of Preferences (GSP) 2012-2015.

“If sustainable development is the purpose of the GSP+, the EU should have an interest to offer this special incentive to more than only low income economies,” it said in a position paper published in a business briefing of the International Trade Centre (ITC).

The group noted that the definition of the vulnerability criterion is too restrictive, citing particularly the criterion of a small percentage of total GSP-covered imports.

The Philippines has been listed among the countries considered vulnerable in the sense of Article 8 of the GSP regulation 2009-2011 for its 0.66-percent share in total GSP covered imports.

Vulnerable countries are those with GSP-covered imports into the European Union market representing less than one percent of total value.

The GSP+ offers additional tariff reductions to support vulnerable developing countries in their ratification and implementation of relevant international conventions in these fields.

EuroCommerce said the application windows for the GSP+ should be adapted to developing countries’ needs.

It needs to be timed in such a way as to enable the announcement of all elements of GSP+ one year prior to its entry force to ensure the necessary predictability and legal certainty, it said.

The group added the time for which GSP+ is granted should be aligned with the duration of the general GSP scheme.

To qualify for GSP+ scheme, a beneficiary country must have also ratified and effectively implemented 27 specified international conventions in the fields of human rights, core labor standards, sustainable development and good governance.

EuroCommerce said measuring such kind of achievement is problematic and it is difficult to identify transparent and convincing criteria.

It said the International Labor Organization (ILO) would still be best suited to measure the achievements currently included in the GSP+.

Moreover, the group said the GSP as a system for development is still needed for beneficiary countries to receive technical assistance or development cooperation to deal with the system and its rules of origin and the upcoming demand of registered exporters.

“This could be done by a follow-up system through country reports (both in-country and analysis) from the European Commission and the beneficiary country, where the developing country could identify problems and receive assistance. There is Aid for Trade and IF (International Fund) and EDF (European Development Fund),” it said. -- Danielle Venz, PHILEXPORT News and Features <--back

4. Crisis-related assistance still in place as global uncertainty persists

Crisis-related assistance stays as uncertainty continues to pervade the global economy on the back of dismal unemployment figures and unsustainable public debts.

Despite the call for an open trade and gradual dismantling of fiscal stimulus programs by multilateral institutions like the World Trade Organization (WTO) and the United Nations Conference on Trade and Development (UNCTAD) and country groupings and alliances such as the Group of 20 (G20) to aid steady global economy recovery, protectionist measures are still in place in a number of countries.

A few of the G20 countries, which made an official commitment to resist protectionism until the end of 2010, have been found to retain some of the stimulus and emergency support measures and even introduced new programs, according to an ITC report released late last month.

These programs which are aimed at rescuing firms and sectors of systemic importance like banks, preserving jobs, stimulating demand such as consumption tax reductions and “buy national” provisions in government procurement legislation may have greater potential impact on trade than the traditional trade restrictions.

The G20 is made up of 19 finance ministers and central bank governors from 19 advanced and emerging countries that aim to promote open and constructive discussion between member countries on key issues related to global economic stability. These include Indonesia, China, India, Russia, Brazil, France, Japan, United Kingdom, Germany and the U.S.

In the same report, UNCTAD and the WTO stressed the need to scale back these programs at a prudent, but deliberate pace so as to send a clear and strong message that trade activities are expected to take place on a commercial basis and that schemes enacted to mitigate the effects of the crisis will be made permanent.

Meanwhile, the expected withdrawal of fiscal stimulus programs and of emergency measures is likely to nudge countries to resort to other protectionist measures.

UNCTAD noted that while the inclination to resort to protectionist measures has so far been relatively influential country groupings, G20 leaders should remain vigilant as economic conditions will continue to engender protectionist pressures.

UNCTAD is calling for the extension of G20 Leaders’ official commitment to resist protectionist measures and continued public reporting on their trade measures, added the report. -- Ritchelle Alburo, PHILEXPORT News and Features <--back