Export agency confident 2016 shipments will breach $100B

DAVAO CITY — The government remains confident export earnings will breach the $100-billion mark in 2016, despite a slowdown in the first quarter this year, led by processed agricultural and mineral products as well as information technology services, an Export Development Council (EDC) official said.

The 11 identified “champion” sectors for export are processed fish, crustaceans and mollusks, processed fruit and vegetables, vegetable and animal oils, carpentry and joinery, non-ferrous metals, electronic components and boards, computers and peripheral equipment, measuring and testing equipment, motor vehicle parts, and IT-business process outsourcing services.

“These export products with increasing market demand are called champion industries and this is where importers from Davao and even from the whole country should focus on,” said EDC Deputy Executive Director Emmarita Z. Mijares, during the Philippine Export Development Plan (PEDP) Regional Seminar held here on Monday.

These sectors were selected based on export value estimated at more than $1 billion in 2013, the potential to employ workers at an above-median level, and growing demand since 2006.

“We are not telling industries to shift, but to check out the champion industries in the export market and see if their businesses are included in the value chain of these industries… The end goal of the PEDP is to fully integrate the Philippine economy into the global production network,” Ms. Mijares said during the seminar series funded by the European Union.

Preliminary data released by the Philippine Statistics Authority earlier this month showed that while the export performance in March showed a recovery from a downtrend dating to December 2014, the first quarter still declined 0.2% decline to $14.247 billion from a year earlier.

In 2014, export revenue grew 9% to $61.81 billion, higher than the government’s 6% target and faster than the growth of 7.9% in 2012 and 8.8% in 2013.

PEDP FUND

Meanwhile, the EDC is awaiting final approval from Malacañang for a P1.76-billion fund that will bankroll the 2014-2016 PEDP, covering the Aquino administration’s last three years in office.

Once approved, the PEDP fund will be incorporated into the budget of the Department of Trade and Industry (DTI) for the establishment of the National Quality Infrastructure, setting up certification and labeling systems, improving exporters’ access to financing, training and capacity building, product and design development assistance, global value chain analysis and investment and marketing promotion.

Ms. Mijares also pointed out that the Philippines has been lagging its neighbors within the Association of Southeast Nations, particularly Thailand, Vietnam and Indonesia in terms of export earnings.

“Between 2006 and 2012, Philippine exports grew more slowly at 5.2% annually, compared to the double-digit growth of Vietnam (at) 18.5%, Indonesia, 11.1%, and Thailand 10.3%,” the official said.

One of the factors blamed for the weaker performance of the Philippines is the high concentration of revenue in just a few goods and services, making it vulnerable to changes in demand and supply.

Edwin O. Banquerigo, DTI Davao City director, said nearly half of the goods exported by the Philippines are from four categories: semiconductors (30.7%), electronic data processing (7.9%), woodcrafts, furniture and fixtures (5.4%) and chemicals (4.6%).

Mr. Banquerigo added that the country’s exports are highly dependent on 11 economies, four of which account for more than half of exports — Japan, China and Hong Kong, and the United States.

SSFS

In a related development, the DTI Davao Region office is set to establish 56 Shared Service Facilities (SSF) this year with a P34 million continuing fund carried over from last year. SSF, first introduced under the 2013 national budget with a P770-million allocation, seeks the establishment of communal processing centers for micro, small and medium enterprises.

In Davao Region, 13 SSFs have been established so far for various agricultural products and jewelry production.

Romeo L. Castañaga, trade and industry development specialist chief, said the priority industries for the region’s SSFs are coconut by-product processing, cacao beans fermentation, packaging equipment for processed fruits and juices, shellcraft products, coffee processing, meat processing, organic fertilizer production, and banana powder processing.

The Mindanao Development Authority (MinDA), in its inclusive growth program jointly undertaken with the Philippine Business for Social Progress (PBSP),has named three C’s — coconut, coffee and cacao — as the priority crops for development given the high potential for growth.

These crops, said Undersecretary Janet M. Lopoz, MinDA executive director, are expected to help relieve rural poverty. MinDA, with assistance from other government agencies and local governments, will identify suitable production areas while PBSP will encourage investors to finance the venture.

Ms. Lopoz said for cacao, Mindanao has a modest production target of at least 100,000 metric tons.

For coconut, the country’s top agricultural export last year, the inclusive growth program is assisting with efforts to replant trees that will replace those destroyed during typhoon Pablo in 2012.

MinDA studies also indicate that one strategy that can be pursued is to intercrop cacao with coconut, which will increases the average profit ratio of a farm to 70% and the potential area for expansion could reach about 1.6 million hectares.

Mindanao’s highlands, meanwhile, are being eyed for coffee plantations to meet local and export demand. — Carmencita A. Carillo, Correspondent with Carmelito Q. Francisco and Maya M. Padillo, Businessmirror