Exports: Recovery elusive

Friday, December 30, 2011

SHRINKING global demand and more intense competition among Asian exporters are among the challenges the export sector anticipates for next year, according to the Philippine Exporters Confederation Inc. (Philexport)–Cebu.

The organization hopes economic problems in Europe and the United States will be settled right away, as recovery in their economies would boost the export industry in 2012.

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Citing figures from the National Statistics Office, Philexport Cebu executive director Fred Escalona said export performance figures in the first nine months of this year were “either flat or in the negative territory” compared to 2010.

The expected full recovery of the export sector this year from the 2008 economic meltdown did not materialize.

In Central Visayas, export values dropped 18.7 percent to $967,029,084 for the first semester this year, while import values dropped 48.9 percent at $834,901,498.

First hit

Although Cebu’s merchandise export earnings increased in the first two months of this year, Department of Trade and Industry (DTI) 7 Director Asteria Caberte said this increase was not sustained, as global demand for the region’s products softened along with the weakening of the recovery of the US and European economies.

“Among the industries in the region, exports, being the most vulnerable to offshore developments, are always the first to experience the impact of external turmoil such as the global financial crisis,” Caberte said.

Cebu, however, was supported by the growth in information technology-enabled services, business process outsourcing, and tourism and real estate industries this year.

Cebu Business Club president Dondi Joseph noted these industries are Cebu’s “compensating factor” for the slowdown in the export sector.

“Cebu exporters are known to be resilient and open to exploring other business options to ride out any crisis or difficult challenge,” Caberte said.

Innovate, diversify

Cebu-GTH president Ramir Bonghanoy said the outlook of the GTH sector for next year remains positive, despite close competition with other Asian players such as China and Vietnam.

So long as exporters will continue to innovate and diversify their products and market, they’ll be able to withstand market competition and economic woes, he said.

“Cebu is rich in natural materials, so we just have to capitalize on this. We just need to do ‘a right mix’ or presentation because buyers look for expertly handcrafted products,” said Bonghanoy, who owns Bon Ace Fashion and Tools.

In a presentation before the Export Development Council and DTI, members of the Cebu Fame (Fashion Accessories Manufacturers and Exporters) Foundation said they are positive about increasing exports this year, following the 81 percent improvement in exports from 2009 to 2010.

In earlier reports, Cebu Fame executive director Lovejoy Malicay, however, admitted Europe could soon “decrease in importance” as an aggregate market because of the financial turmoil.

Caberte said the government is encouraging exporters to diversify into other products and markets and increase intra-regional trade.

Domestic

Creative industries like furniture, gifts, toys and housewares (GTH) and fashion accessories can maximize the country’s free trade areas (FTAs), target high-growth emerging markets, and look toward the BRICA countries (Brazil, Russia, India, China, and the ASEAN) to market their products, she added. 

The three industry sectors will also maximize the demand in the domestic market and take advantage of the services under the Tindahang Pinoy Project.

Just this month, the DTI, in cooperation with the Cebu-GTH Foundation Inc., opened Tindahang Pinoy at Bridges Town Square in Mandaue City. Tindahang Pinoy is a depot for export-quality products in the Philippines.

The Cebu Furniture Industries Foundation (CFIF), on the other hand, has also pursued several projects to better promote their products to other markets. For instance, the organization revisited existing trade missions and expositions and reached out to new buyers with the help of their networks with embassies and trade attaches.

In a report, the Center for International Trade Expositions and Missions (CITEM) has also urged Filipino exporters to increase trade in China, due to its “rapidly growing middle-class market and increasingly affluent lifestyles.”

CITEM supervising trade industry development specialist Romleah Ocampo said that to penetrate China’s market, local furniture makers can find a niche by supplying furniture parts or high-quality and well-designed furniture.

Among other Philippine products fast becoming popular in China are crab paste, laing, banana chips, polvoron, mango, calamansi, coconut juice, purees, and concentrates.

“We continue to seek funding support from the European governments and NGOs to do in-depth studies on the value chains of our major exporting sectors in order to troubleshoot problems, gaps and bottlenecks to become more competitive in shrinking markets,” Escalona said.

Government has also pledged P80 million for the Export Support Fund (ESF) this year. The Philippine Export Development Plan hopes to grow exports to US$89 billion by 2013 and $120 billion by the end of 2016.