On the other hand, the Philippines’ offensive interest to EU are fishery, seafood and marine products (Mindanao; tuna), broilers, agricultural products (Mindanao), fresh fruits (bananas), muscovado, processed fruits (mango, pomelo, banana chips), processed or semi-processed coffee products, chemicals oleochemicals), coco-based products (VCO and beauty byproducts, e.g. soap, perfume), natural rubber, biofuel products, mining products, furniture, jewelry, handmade paper, cameras, health and tourism, ICT services and services sector (skilled labor).

The study also finds that should an FTA is successfully entered with the EU, existing EU companies in the country will be encouraged to expand their business and put in more investments in the country.

It further recommends the immediate commencement of RP-EU talks through Secretary Peter Favila of the Department of Trade and Industry (DTI) initiating a communication with EU Commissioner for Trade Catherine Ashton indicating Philippines interest for an FTA.

Ambassador Donald G. Dee, U-ACT Chairman and CEO, sees the need to fast track the crafting of a position paper for the resumption of RP-EU for the Philippines to take advantage of the opportunities, considering that its neighboring countries are also taking the same route.

“EU might no longer be interested in engaging the Philippines if one country has already signed with them with the same market as ours,” he added. -- U-ACT, PHILEXPORT News and Features <--back

2. RP needs to strengthen export focus

Senator Jinggoy Estrada has raised the need for the country to shift its focus to exporting more locally-made products rather than just relying on the billions of remittances coming in to support foreign exchange reserves.

“We need to shore up our balance of payments (BOP). We cannot continue depending on the remittances of our OFWs (overseas Filipino workers) to beef up our foreign currency reserves,” he said at the opening of the week-long 35th Philippine Furniture and Furnishings

Festival ongoing until November 30 at the Megamall in Mandaluyong City. While the OFW remittances have already hit $17 billion yearly on the average, Estrada stressed that the country could not continue exporting Filipino workers in the coming decades.

The BOP is a summary of the economic transactions of a country with the rest of the world. Such transactions are grouped into two major categories: the current account that covers trade in goods, services, income and current transfers; and capital and financial account.

Estrada said Philippine-made products are known for their world-class quality that both the local and foreign buyers are going for.

He particularly cited as example the furniture industry, one of the country’s top dollar earners, which excels in the manufacture of elegant furnishings.

“The industry has quietly earned a reputation for itself based in quality and function of its products and more importantly, this industry has promoted Filipino products while other sectors continue to import other products,” he stressed.

Senator Edgardo Angara, another guest to the event, said the creative Filipino talent can be a source of wealth for the country.

Angara reasoned that creative artists, designers, architects and animators earn 40 percent higher than salaries of professional workers such as lawyers and accountants. -- Danielle Venz, PHILEXPORT News and Features <--back

3. PCCI continuously monitoring completion of key infrastructure projects

The Philippine Chamber of Commerce and Industry (PCCI), the largest business organization in the country, is continuously working with the government towards ensuring the completion of key infrastructure projects that would spur development and economic growth.

PCCI President Edgardo G. Lacson in a recent business conference said through the pro-performance steering committee for infrastructure, they continue to actively monitor over 150 key projects nationwide as well as oversee quality control, completion and the developmental impact of many of these undertakings.

Lacson identified some of these infrastructure projects as the Grand central terminal at the intersection of EDSA-West and North Avenues, the Light Rail Transit 1 South extension project, the Metro Rail Transit (MRT) 7 North extension project, MRT 9 and common bus terminals in Cavite and Bulacan.

He said these projects also include the circumferential road 6, the North Luzon Expressway extension to Pangasinan and Subic-Clark-Tarlac Expressway extension to Aurora and La Union, Manila Skyway North Extension Stage 3 and the Diosdado Macapagal International Airport.

“We have proposed (these) new projects that have either already materialized and are up for bidding,” he said.

The completion of C6 and DMIA Terminal 2 is seen critical in the development of the Subic-Clark-Batangas Logistics Corridor, according to the PCCI.

Apart from the LRT 1 South Extension and the NLEX Extension to Pangasinan, the business group also asked the government to speed up implementation of MRT 2 North and South Extensions and the Caticlan runway extension.

Lacson earlier said the completion of key infrastructure projects could attract foreign investors to put in their money into the country.

This could provide more job opportunities for Filipinos, he said. -- Danielle Venz, PHILEXPORT News and Features <--back

4. Local sales help furniture exporters survive

Manufacturers and exporters of furniture products catering also to the local market have survived the impact of the global recession, while many businesses serving only the export market have closed shops.

mmanuel P. Padiernos, vice president for market development of Chamber of Furniture Industries of the Philippines, in an interview said offering goods to the local buyers is an option for some industry players to sustain operations as the exports sector continues to reel from global recession.

“Many of those businesses closed because they have no fallback,” he said, adding “Our tourism sector expectedly will grow. The (local) real estate would need more furniture.”

Padiernos said the holding of domestic shows similar to the ongoing furniture and furnishings festival is especially designed for other companies intending to open up a local market and those keen on expanding their domestic market especially in Manila.

“There were many indicators the market has already recovered especially the United States and Europe, although recovery is slow. Some are saying that full recovery may take another two to three years,” he said.

Padiernos pointed out that the result of the October Manila FAME trade show may confirm this, as many foreign buyers came but only a number of them placed orders.

“They are very cautious; they are still watching domestic market (developments) in their country. They said we are here to find new products and suppliers. Some only asked for prices, while others were on the look out for their competitors and what they are buying,” he said.

Apart from selling to the domestic market, Padiernos said furniture exporters are also organizing trade missions abroad to gain more customers, adding that they have their sights on the emerging markets like Brazil, Russia, India and China (BRIC) that have buoyant economies.

“These are countries we are penetrating now. We don’t rely only on the US and Europe because we know it would still take two to three years for these countries to fully recover,” he added.

To prepare for the expected economic rebound, Padiernos said furniture exporters are gearing their efforts towards product development.

“Since the market is weak, we are busy with product development, while our production activities have slowed down. This is the best time that we make new products, new concepts and new designs so when the economy recovers, the products we will offer are more competitive,” he said.

With these efforts, Padiernos expressed optimism that export revenues of the furniture industry will reach around $270 million in 2010 from this year’s estimate of more than $250 million.

“For the last two to three years, industry exports have been declining. It started during the Asian crisis and exacerbated by this global economic downturn,” he said.

“But next year, we should have fully recovered if not even generate growth figures. By 2011, we project that we will feel the full recovery (of the market),” he added. -- Danielle Venz, PHILEXPORT News and Features <--back

5. DOLE warns against illegal subcontracting

Exporters have to ensure that they engage subcontractors under the current labor policies, or they may face legal and financial responsibilities.

An increasing number of firms in the country opt to subcontract part of their work to minimize administrative and labor costs and meet demand surge and tight deadlines.

According to Marlane Villareal, President of Bueno Mano Crafts, subcontracting has allowed her greater flexibility in managing the ebb and flow of orders. It also enables her to tap those people who can only work in between chores at home.

While subcontracting presents a myriad of advantages, Atty. Joel Petaca of the Department of Labor and Employment (DOLE) stressed the importance for the principal to ensure the legitimacy of the subcontractor, or she may have to assume unnecessary legal and financial obligations.

According to him, it is important for the principal to make sure that her subcontractor is legitimate. Otherwise he becomes the employer of the workers supposedly employed by the contractor, while the contractor becomes a mere agent.

As an employer, the principal will have to engage contractual employees beyond the duration of the contract or provide them with just compensation should he wish to terminate them.

Department Order (DO) 18-02 defines the legitimate subcontractor as those who do not engage in labor-only contracting and therefore should have a substantial capital to carry out the contracted service. He should also have control and supervision of the workers; can afford to pay them all their entitlements under Labor Code.

A subcontractor should likewise not be engaged in prohibitive acts, which include requiring employees to sign antedated resignation letter, blank payroll, waiver of labor standards as precondition to their employment or continued employment, in-house agency contracting or contracting services directly related to the principal's business on occasion of strike or lock-out; and is not de-listed from the registry of legitimate contractor maintained by DOLE.

Aside from establishing the legitimacy of the subcontractor, the principal is advised to clearly specify in the contract all pertinent obligations of the subcontractor, including the wage rate applicable to the individual contractual employee and the penalty for delays.

Villareal noted that specification is indeed essential to keep the interest of the contractor in line with that of the principal. She said that her firm included a clause that disciplines copying of design, as she encountered a case where a former subcontractor was paid by an exporter to do Buena Mano designs for them.

Atty. Petaca particularly mentioned posting of a bond by the principal as a safeguard measure, and failure to do so will require the principal to answer all the liabilities the subcontractor may have incurred on his employees.

Under Article 108 of the Labor Code, an employer or indirect employer may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same.

While DO 18-02 seeks to promote the welfare of the contractual workers by according them all the rights and privileges enjoyed by regular employees, exporters find this policy highly unfavorable to them, as they compete with other countries where labor standards are relatively low.

Villareal further noted that all the financial obligations of the employer to her workers in the country tempted her to consider subcontracting to China where contractual workers are paid by piece and minus other remunerations. However, her commitment to provide jobs to Filipinos has so far prevailed. -- Ritchie Alburo, PHILEXPORT News and Features <--back

6. Revenue losses from shrinking exports hit $11.26 Billion

Foregone dollar earnings from shrinking exports hit an all-time high of $11.26 billion for the first nine months while the numbers indicated the industry may not yet stage a recovery by the end of this year.

Latest data from the National Statistics Office (NSO) indicated that the January to September exports this year tallied only $27.6 billion, a huge 28.95 percent drop from the $38.90 billion earned from the same sources in the same period last year.

With imports mostly of parts for the electronics industry also diving by 25 percent September of this year, this is seen to translate to an export decline between 25 and 30 percent for the month of October, export analysts said.

This indicated that lost dollar earnings from exports by the end of the year may equal the total dollar remittances of Overseas Filipino Workers (OFWs) this year. It will also throw back export sales to levels equivalent to that in the year 2000 or nine years ago, when it already hit $49 billion.

Industry performances indicate that the decline in exports this year may be at least 25 percent, year-on-year.

Historically, Philippine exports had surged dramatically between the months of September and November, as buyers abroad stock-piled on their inventories in preparation for the shopping month of December.

This, however, did not happen last year as exports month-on-month performance suffered a 30 percent retreat. The decline has eased in September, but the numbers for October did not promise any recovery this year.

The dismal performance of the segment of the economy that fuelled high over-all economic growth in the past decade likewise indicated that the whole economy may have difficulty recovering next year. -- Abe P. Belena, PHILEXPORT News and Features <--back