Structural and logistics reforms are necessary to support ongoing government efforts in ensuring a quick rebound of the country’s trade sector, the National Economic and Development Authority said.
The Philippine Statistics Authority reported today that the country’s total merchandise trade contracted by 59.8 percent, reaching USD 6.1 billion in April 2020, its lowest monthly decline since 1991.
Both merchandise exports and imports registered declines of 50.8 percent and 65.3 percent, respectively. Global trade flows remain hampered by production supply-chain bottlenecks and reduced external demand amid the 2019 coronavirus disease pandemic.
In particular, exports fell by half with double-digit contractions in agro-based products, forest products, mineral products, and manufactured products.
Imports, meanwhile, were pulled down by steep declines across all major commodity groups.
“For faster trade growth recovery, the government needs to intensify its efforts by prioritizing structural and logistics reforms that will serve as the backbone of ongoing efforts to improve the business environment and create development opportunities,” said acting Socio-economic Planning Sec. Karl Kendrick T. Chua.
Chua said structural reforms are crucial to the country’s efforts to promote itself as a complementary host, particularly in making the country an attractive investment destination.
In particular, the country needs to attract investments that can bring in the technology that we need to thrive under the new normal.
“We now need to pursue legislation that will facilitate better foreign investments in some sectors such as the proposed amendments to the Public Service Act, the Foreign Investment Act and the Retail Trade Liberalization Act,” Chua, also director-general of the National Economic and Development Authotity, said.
Logistics reforms include rationalizing the freight system, establishing strategic warehousing, and cold chain system to ensure that production would not be derailed.
Businesses wanting to expand would be provided incentives that are targeted, performance-based, time bound, and transparent through the Corporate Recovery and Tax Incentives for Enterprises Act.
“While the government is laying the groundwork with improved infrastructure, logistics, regulations and reforms, the business sector also needs to recognize the change in consumer preference. This is now an opportune time for them to reorient and re-design their production and supplies network accordingly,” Chua added.
Enterprises are also encouraged to take advantage of digital technology in streamlining its business processes and resort to online transactions which would become the new standard for engaging with clients, buyers and suppliers.