Under the ACFTA, about 93 percent of trade goods between China and the ASEAN countries will be exempted from tariffs starting this January.

The consumers on both sides will have wide-ranging choices of more than 7,000 zero-tariff items in the market. -- Danielle Venz, PHILEXPORT News and Features <--back

2. Gov’t to further promote RP’s educational services abroad

The Philippines will aggressively promote its educational services abroad to increase its export revenues next year.

Bureau of Export Trade Promotion (BETP) director Senen Perlada identified China, Korea, Vietnam, Indonesia and LaMarCa (Laos, Myanmar and Cambodia) as good markets for Philippine education.

Perlada said an exhibit on the country’s educational services was already conducted in Vietnam last year. It introduced English language programs being offered by Philippine schools to Vietnamese students in college, secondary school and business people.

He said the “Study in the Philippines” promotion exhibit resulted in the country’s signing of memorandum of understandings (MOUs) with seven institutions in Vietnam.

With its success, the BETP, the export promotion arm of the Department of Trade and Industry, has proposed the conduct of another outbound business matching covering education service sector in Vietnam this April.

Michael Dodjie R. Fabian, assistant director of BETP, said they are eyeing export niches through nursing and information technology (IT) programs.

“These are the sectors which we think the country could be tapped for education services. Actually, nursing (program) in China did very well so, we are trying to tap into Vietnam,” he said.

Apart from these, the Center for International Trade Expositions and Missions (CITEM) earlier said the Philippines could also niche on programs such as medicine and English language.

Specialized education is among the priority export industries of the Philippine Export Development Plan (PEDP) for 2008-2010.

Such emerging service, along with health and wellness, medical tourism, logistics and entertainment, have been identified to give focus on the country’s competitive advantage as potential investment in the region and as the most preferred labor resource in the world. -- Danielle Venz, PHILEXPORT News and Features <--back

3. Bamboo a solution to climate change issues -- economist

An economist has raised the need for the country to increase its bamboo production which could help in carbon sequestration and thereby help mitigate global warming.

Conrado S. Perreras, chairman of the Bamboo Network of the Philippines, said bamboo is a solution to climate change issues. The large emission of greenhouse gases has been blamed for global warming.

“It is the best material for sequestering carbon. If you plant one bamboo, it starts sequestering carbon within three years as opposed to a tree which takes 15 to 20 years. And once you cut a tree, it’s gone. In the case of bamboo, you keep harvesting because it is reproducible,” he explained.

Perreras pointed out that bamboo is also an ideal reforestation material because it grows very fast.

“It can then be harvested and can be used immediately; we don’t need elaborate process,” he said.

To this end, Perreras expressed optimism that the executive order on the development of the bamboo industry for signing by President Arroyo could pave the way for the increased bamboo production in the country.

“It calls to task the different agencies of government to work with the private sector so that they can plant and process the bamboo for local consumption and for export as well,” he said.

Perreras said the country should seize the export opportunity offered by the $813-billion global market for bamboo products, especially as China is expected to be depleted off its bamboo resources in the coming years.

“It is a big opportunity for the Philippines because we have the land and the people,” he said. “Some Chinese businessmen are already here investing in bamboo production so that they will be assured of adequate supply in the future. But why leave it to them, why not do it ourselves?”

The Department of Trade and Industry (DTI) has identified the bamboo industry as one of its flagship projects which it also considers environment-friendly and can help in the mitigation of climate change.

The agency initiated the implementation of the engineered bamboo project meant to help promote and produce bamboo enough to supply about 25 percent of the P10-billion desk requirements of the Department of Education. -- Danielle Venz, PHILEXPORT News and Features <--back

4. Export dive bottoming out; dramatic recovery unlikely

Buffeted by a global economy in recession, Philippine exports retreated to their lowest ebb of two-digit below zero growth in the first nine straight months of 2009.

An indication that a recovery is close to happening came in October when at revenues of $3.66 billion, the decline has eased to negative 8.3 percent compared to the same month the previous year. There was also a slight growth compared to exports the previous month.

If the October figures were an indication the worst is over for the segment of the domestic economy hobbled by the global economic crisis, projections then point to an eventual recovery.

The over-all picture for next year does not however promise a dramatic improvement. By year-end, the dollar income losses from merchandise sales is seen to top the $13 billion mark, the biggest retreat in foreign sales of Philippine goods since statisticians started tracking down export performance.

The ebb and flow of the country's international trade over the past 10 years had shown that whenever bad times hit the export sector, the battering was quick and hard. That happened in 2001 when a global trade slump pulled down exports by 16 percent.

From a hefty $38 billion in sales the previous year capping the peak of a yearly winning streak of double-digit growth rate since 1993, sales in 2001 nosedived to $32 billion representing earning losses of $6 billion.

It took the exporters three painful years to earn back what was lost in just one year and returned to over the pre-crisis peak to $39.5 billion in dollar earnings only by the end of 2004. Real growth came again in 2005 but this time around, the two-digit rate attained during the 90's has turned elusive.

The rate of export growth inched up to again peak at $50.46 billion in 2007 but the following year, a seemingly domestic problem of the financial system in the United States turned out to be a global economic tsunami that hit Philippine shores, particularly the exporters, by the last quarter of last year. The bull run of growth suddenly stopped which saw the beginnings of a sudden export winter, a winter which is now only beginning to thaw.

Given that historical track record of sudden decline and painful, three-year, recovery in the past, coupled with the fact that the value of foregone exports has more than doubled in just one year, the quick and high-rate of rebound trade officials are gunning for, looks unlikely.

Major export products have not changed much in the past 10 years. The biggest ticket industry, electronics and semiconductor, is highly dependent on how fast the country's top export destinations namely, the United States, Japan, Europe and China, recover their taste for buying new, hi-tech electronics gadgets and equipment. This will depend much on how fast their industries get over the recession rut.

The October export figures gave a surprise flash of hope in the export of ignition wiring sets for all types of motor vehicles from airplanes to cars at a hefty growth of 30.3 percent. It had shown signs that globally, the transportation industry is one of the first to bounce back. Which, in turn, signals that the flow of goods and people within nations and across economies is again on the rise.

The growth in banana exports and the resiliency of Philippine woodcraft and furniture also give some hope that indigenous exports, those that use local materials like food and natural-resource based products, have better chances of faster recovery than those that rely on imported raw materials like the garments industry.

Food, furniture, handicrafts and other “green shoot” products will have to shake off domestic baggage like unsteady supply of raw materials, the impact of climate change and sluggish growth in farm and fishery productivity – to sustain a high growth path over the long haul. -- Abe P. Belena, PHILEXPORT News and Features <--back

5. RP may need to decouple from old markets to speed up trade

Whenever the US economy got the colds in the past century, the Philippine economy caught the flu.

In the new century, as the US economy plunges into recession, the Philippine economy only loses steam to growth close to zero, a little improvement but not much.

This phenomenon fascinated participants in a briefing on the prospects for faster recovery for the Philippines through South-South trade or trade between developing and emerging economies particularly in Asia. The event was organized by the semi-government think-tank Philippine Institute of Development Studies (PIDS) before the Christmas holidays.

A resource speaker from India had argued that the Philippines, which is now strong on high technology and medium technology products like electronics and automotive parts, has good chances of hastening its recovery by expanding trade with emerging economies in the Asian region, particularly China and India.

It came out during the forum that the economy of most developing countries are still closely linked to traditional markets like the United States, Japan and Europe which have sunk into deep recession as a result of the global financial meltdown.

As such, some economists suggested that the Philippines must start decoupling its economy from that of its big traditional markets, particularly the United States.

Enlightening the participants, Export Development Council (EDC) assistant executive director Emma Mijares revealed that as early as 1999, the EDC, in its three-year rolling export plan, has initially adopted the decoupling strategy by cultivating the ASEAN and subsequently, the Chinese markets.

Records had shown that trade with members of the ASEAN have steadily increased since that year. Meanwhile, trade with China now makes up about 70 percent of all Philippine exports each month.

EDC executive director and Bureau of Export Trade Promotions chief Senen Perlada, also shared the strategy of the EDC at taking advantage of the new trade partnership the ASEAN has forged with dialogue neighbors including India, China and Australia in a new strategy to ride on the crest of the starting global trade recovery.

The EDC earlier announced it is calling for leaders of the export sector and officials of the international trade group of the Department of Trade and Industry to review in early January the present export plan and map out new recovery strategies, plans and programs for the export sector to be incorporated in the 2011-2014 export plan.

It was realized that for the country to stage a faster economic recovery, it must develop new markets in Asia and elsewhere as recovery in the highly developed world was seen to be slow. -- Abe P. Belena, PHILEXPORT News and Features <--back

6. Food exporters “up in arms” against the termination of local sugar allocation

It will be a less merry Christmas and a gloomy New Year for food exporters.

Members of the Philippine Food Processors and Exporters Organization, Inc. (PHILFOODEX) are “disgusted” after the Sugar Regulatory Administration (SRA) rejected their appeal to reconsider its decision to terminate their “D” sugar allocation.

Roberto C. Amores, President of PHILFOODEX, said that the loss of access to “D” sugar or the more competitively-priced local allocation “disregards the interest of sugar-based food exporters who have been a vital source of foreign exchange earnings and employment for the country”.

Instead of the reinstating the “D” allocation, the SRA issued Sugar Order No. 4 series of 2009-2010 converting C-1 sugar produced as of November 8, 2009 of crop year 2009-2010 to “B” sugar.

This latest Order completely undermined the appeal of the food exporters to maintain the “D” sugar allocation even at 2%, which was revoked with the issuance of SRA Sugar Order 1-A series if 2009-2010 dated November 3, 2009.

Also affected by this policy are members of other food organizations namely the INFOMAPP, FEOP, Cocoa Foundation, Chamber of Food Manufacturers and the Manufacturers & Exporters-Banana Chips Association of the Philippines who also signed the appeal.

The food groups likewise stressed that the latest order violates SO No. 7 where 25,578.80 bags of “D” quedans are needed by companies that participated with Sugar Order no. 4 series of 2008-2009 (allowing advance swapping of new “B” to “D”) which has a deadline to replenishment on December 31, 2009 as per Sugar Order no. 7.

“By this new sugar order, SRA is effectively depriving such legitimate food exporter-companies of their right to buy “D” sugar,” he noted.

SRA Sugar Order No. 1-A terminated the 2% allocation for “D” sugar to boost the allocation for “C” sugar to 6% in view of the supply tightness in the domestic market. While this expanded the buffer stock for the domestic and U.S. markets, which already have an allocation of 90% and 4%, respectively, it denied sugar-based food exporter access to competitively-priced sugar.

Whereas the “D” sugar allocation of 2% is too small to make a dent on the profits of sugar producers, the termination of which rings death knell for many of the food exporters, Amores stressed.

Access to the competitively priced “D” sugar is critical to food processors as sugar imports are levied a duty of 38%. Without the “D” sugar, food exporters will be immensely disadvantaged, as sugar accounts for 30 to 40% of their production cost. The ensuing conversion of the “D” to “B” sugar has the same effect of obliterating exporters’ access to competitively priced sugar amid slackened global demand for food products and escalating competition from ASEAN countries.

According to Amores, food exporters can accept the world market price currently averaging at US$640 to 650/MTwhich is equivalent to P32.00 per kilogram, but to buy local sugar at P42 per kilogram would kill the industry.

The removal of this year’s “D” sugar is then seen by exporters as a “way to take advantage of high International prices of refined sugar which may be seen as profiteering and exploitative on the part of the sugar producers”.

“With the global recession affecting our sales, it will be very difficult to increase prices as a result of the increase in the local sugar prices. Our ASEAN competitors, whose domestic sugar price is 30% lower than ours, are already eating up into our market share in the global market,” he said.

As Amores pointed out, it is not only the food exporters that are being pushed to the razor’s edge by the high cost of sugar in the country, but also the local food processors as they face intense competition with sugar-based food products from ASEAN countries which are levied an import duty of only 5% as prescribed by the AFTA-CEPT. -- Ritchie Alburo, PHILEXPORT News and Features <--back