Rigodon in garment industry bucked

MANILA, Philippines — The domestic garment and textile industry has opposed a plan by the Department of Trade and Industry (DTI) to transfer the function of Garment and Textile Industry Development Office (GTIDO), the agency which oversees the industry, to the Center for International Trade Expositions and Missions (CITEM), the government’s export promotions arm, saying the move fell short in understanding the current realities in the industry, which is now based on contract manufacturing rather than price points and government-sponsored marketing programs.

This was the position of the five industry associations in a letter addressed to DTI undersecretary for industry and investments group Cristino L. Panlilio. These associations are the Confederation of Garment Exporters of the Philippines (CONGEP), Foreign Buyers Association of the Philippines (FOBAP), Garment Business Association of the Philippines (GBAP), Textile Mills Association of the Philippines TMAP) and Federation of Indian Chambers of Commerce (Phils.) Inc.

“While we respect and are cognizant of DTI’s objective to rationalize its processes, we wish to underscore the various needs of the industry that might necessitate a reconsideration of said proposal,” the letter said.

“It is our position that GTIDO be maintained as a separate office, with a need to strengthen the organization, akin to the former Garments and Textile Export Board to handhold the industry into making our mark globally and contributing significantly to the nation’s economy,” the letter added.

The offices of President Benigno S. Aquino and DTI secretary Gregory L. Domingo were also copy-furnished of the same letter.

Department Order No. 11-39 issued by Domingo has placed the GTIDO under the supervision of the executive director of CITEM with the GTIDO head, Thelma Dumpit-Murillo, reporting directly to the CITEM Executive Director. The order also directed that the CITEM Board confirm the additional supervisory functions of the Executive Director. The DO dated August 8, 2011 was to take effect immediately.

Domingo has also created a GTIDO special committee composed of the Undersecretary for Industry and Investments as chair, the undersecretary for regional operations and development group and the executive director of CITEM. This special committee shall continue to act as the policy-making body of the DTI on all export-related promotion activities of garments and textile, the DO stated.

The transfer of GTIDO is part of Domingo’s ongoing restructuring and realignment of DTI and BoI functions.

The DO noted that CITEM is the export promotions arm of DTI the thrust of which is to promote the Philippines as a reliable source of high-quality and services through trade fairs, special exhibits, in-store promotions, trade missions and other promotion activities here and abroad. Similarly, the GTIDO performs export promotion functions aside from its import-related functions and development of the industry.

The realignment of such functions was seen to promote further efficiency in the export promotion functions of the two agencies.

But the industry pointed out that the plan of the DTI does not respond to the current realities of the industry where the “landscape has departed from one that is dictated by price points to one that is characterized by consolidation of businesses which greatly relies on an effective, working and viable vertically integrated supply chain.”

“The current reality is that contract manufacturing is the lifeline of our garments exports,” the letter added.

The industry exported $2.1 billion in 2010 under a contract manufacturing set-up. The US continues to monopolize with a market share of 80 percent of the industry’s total exports.

Under a contract manufacturing set-up, garment manufacturing relies heavily on the dictates and buying patterns of buyers not only in the US, but also Europe and Japan.

“It is for this reason that for the past 4 to 5 decades and at its prime during the quota years, self-contained or country-industry promotions has taken a back seat and has not been a priority factor to encourage,” the letter pointed out. Thus, placing it under CITEM was not a good move.

The industry associations cited the failed government-sponsored marketing programs of Thailand and Singapore for their respective garment and textile industry.

“While both their governments have invested funds to develop their garment marketing program, specifically on the development of fashion or brand products, the Thailand and Singapore Fashion fairs have not gained enough momentum as their lifeline remains to be the contract manufacturing sectors, such as what we have here in the Philippines,” the letter said.

The associations further added that its survival remains to be under a web of complicated inter-related market access issues that transcend investment and industry development issues.

The groups have reiterated an earlier presentation with the DTI on six priority programs that would revive the industry back on its feet as the country’s number export.

These programs include administrative, market access, regulatory, investment promotion, industry and labor, and export promotion.

On the administrative concern, the industry said there is a need for a comprehensive industry mapping to provide an accurate profile of the industry. To improve market access, the industry is also pushing for a focused coordination by the GTIDO with other government agencies for the passage of SAVE Act. Generalized System of Preferences with the EU market as well as the Philippine-Japan Economic Partnership Agreement will also need attention.

There is also a need to enforce an accreditation system to serve as a means to weed out companies involved in illegal activities such as third party shipments, transshipments, technical smuggling and tax credit scams.

On investment promotion, the industry said the DTI could work on the full implementation of the “supply chain city” framework program, as this would guarantee the migration of investments into the country within the next two years.

On industry development and labor, the industry has pushed for the implementation of an ILO recognized labor program and to come up with a bilateral agreement with the US on labor compliance.

The industry said it could provide jobs to over 200,000 workers immediately upon the implementation of the Save Act, another 80,000 to 100,000 if the EU GSP and PJEPA market access would be resolved.

On export promotion, the industry said they agree with the government for a brand developmental program but this would entail a separate track and can be spun off with an integrated textile and export manufacturing program, the group said.

“The inter-relation of the functions above is also the platform to enable small and medium scale companies to move up the value chain. This, plus, foreign direct investments, will propel the revitalization of the industry,” the group said. (BCM) –Manila Bulletin