Government looking to rehash garments ecozone plan

THE GOVERNMENT could revive plans to establish economic zones for garment exporters as growing demand from China may spark a flurry of factory expansions, a Board of Investments (BoI) official said.

The zones will be needed even as efforts to gain preferential access to the United States market has stalled and left projections of increased export sales and investments unrealized, BoI Executive Director Lucita P. Reyes told BusinessWorld last Tuesday.

“We’re not shelving it,” Ms. Reyes said in a chance interview, referring to Trade department plans announced back in 2008 for a “garment and textiles town” which would house an integrated industry and offer income tax holidays and other perks to locators.

The plan was to establish three zones in Clark, Cavite and Cebu where players across the garment supply chain — from textile mills to garment assemblers and logistics firms — would be clustered, Ma. Teresita Jocson-Agoncillo, executive director of the Confederation of Garment Exporters of the Philippines (CONGEP), said in a separate interview.

“It was intended [to serve orders from] the United States but even without [the preference program] we can make use of it for China,” Ms. Reyes said.

A decision could be made in two months after ongoing studies are completed, she added.

The Trade department has been lobbying Washington to pass the proposed “Save Our Industries Act” which will grant duty-free entry to Philippine-made garment exports to the US as long as these use American fabrics.

The 211th US Congress, however, failed to approve the bill before its term ended last month.

The trade incentive will add $1.1 billion to annual export sales that have currently stagnated at $2-2.5 billion since 2006, according to CONGEP estimates, and also lure $480 million worth of factory investments in the first two years of the law’s implementation.

Growing demand from China could justify factory expansions in the meantime, Ms. Reyes said.

Earlier this week, visiting officials from the China National Garments Association said high-end apparel retailers back home were looking overseas for manufacturers as domestic factories specializing in mass market items were unable to meet growing demand for luxury wear.

Local officials said this could be an opportunity for the Philippines could use its niche in high-end apparel to exploit the Chinese market. –JESSICA ANNE D. HERMOSA, Senior Reporter, Businessworld