Capacity building, output boost to push exports

February 14, 2019

Stakeholders need to focus on capacity building and revitalizing the local manufacturing sector in order to counter the foreseen slowdown in exports, the country’s top trade official said.

Department of Trade and Industry (DTI) Secretary Ramon Lopez told reporters Tuesday that the 1.8-percent decline in exports in 2018 was mainly due to external factors such as softening global demand and the impact of trade friction between the United States and China.

Philippine Statistics Authority (PSA) data showed that merchandise exports revenue in 2018 slipped to USD67.49 billion from USD68.71 billion in 2017.

“It’s quite apparent that the downward trend in exports was brought about by softening global demand induced by global growth slowdown as well as increased uncertainty amid escalating US-China trade tensions,” said Lopez.

“Electronics supply chain in the region was adversely affected as lower orders from one country can lead to lower orders in other supplier countries,” he added, noting that electronics export growth settled at 2.8 percent last year from its usual growth of 5 percent.

The trade chief said this trend was also evident in the lower manufacturing Purchasing Managers’ Index (PMI) of ASEAN states in December 2018.    

For non-electronic products, capacity issues and supply constricting factors have also affected the country’s export performance last year.

“For instance, wood manufacturers’ exports were drastically affected by the fire that gutted the biggest exporter in the industry. The company has just rebuilt its plant and is expected to resume it exports supply moving forward,” he said.

“Chemical products are mainly affected by ports and logistics efficiency issues in their import-export operations, as well as the police security and control procedures that affect chemicals trade,” Lopez added.

Lopez said coconut, mango, and other agricultural inputs were affected by supply and price issues, likewise processed food exports were held back by the high cost and low supply of sugar.

“Sugar cost in the country must therefore be competitive to improve our capabilities to export more processed food," he added.

The government has plans to liberalize sugar importation to lower the prices of said commodity.

“In general, we reiterate our views to focus efforts and gather all support in building our capacities for a more robust, innovative, competitive manufacturing sector that will allow us to do more import substitution as well as improve our export performance in the long term and help address the perennial issue on trade deficit," Lopez said.