2013 not a good year: exporters

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Sunday, December 29, 2013

EXPORTERS started the year with a bullish forecast of strong growth after years of tepid performance. Many in the industry looked forward to a recovery.

Not this year.

The two calamities that hit the region in the fourth quarter derailed the sector’s performance.

“Growth of the industry this year is still weak,” said Fred Escalona, executive director of Philexport Cebu. “It hasn’t recovered fully.”

He cited the weak global demand in electronics, particularly for semiconductors, whose contraction is expected to range from 10 percent to 12 percent by yearend to affect overall exports growth.

Electronics is the country’s major export product.

“We started strong but we ended flat,” he said. “We have the same view with Philexport-Manila that the industry will not be able to achieve the 10 percent growth target from a weak export performance in 2012.”

Consumer confidence

Consumer confidence in global markets hasn’t also picked up.

Escalona said that although the peso gained strength over the dollar, consumers are on a wait-and-see stance to invest on high-value products in a sputtering economy and slow recovery of global markets.

“2013 is better than 2012 for the furniture industry but we still have a very long way to go to recover from the worldwide recession,” said Robert Louis Booth, president of the Cebu Furniture Industries Foundation Inc.

The domestic market was the “saving grace” of export players after the global recession.

“Those who were able to ride the growth in real estate had a better 2013, compared to those who did not explore opportunities in the domestic market,” said Escalona.

The seaweed sector also had a tough year.

Max Ricohermoso, a top official of the Seaweed Industry Association of the Philippines (Siap), said 2013 is “not a good year” because of a shortfall in seaweed crop harvest due to successive unfavorable weather condition.

In 2012, the Bureau of Agriculture Statistics (BAS) reported 18 million tons fresh seaweed harvests but it estimated that 2013 will be short by about 15-20 percent.

This resulted to 35-40 percent price increase or P60-P80 per kilogram. Around $250 million industry sales will be maintained this year sustained by raw material imports mostly from Indonesia.

Aside from the weak global demand, subcontractors of exporters in Bohol and Cebu were severely affected by the recent earthquake and typhoon.

Pete Delantar, president of Cebu Gift, Toys and Houseware (GTH) Foundation Inc., reported that the sector had a strong three quarter growths this year until the twin calamities disrupted the supply chain.

The earthquake, for instance, disrupted the weaving and handicraft production in Bohol, which is valued at P1.2 million to P2 million weekly. Subcontractors of fashion accessories in Northern Cebu and Leyte were also affected.

“We estimated that a quarter of their production is gone,” he said.

The seaweed industry, on the other hand, had a good crop harvest until typhoon Yolanda destroyed most of the seaweed farms along its path, which comprises about one third of the country’s source, said Ricohermoso.

He said the estimated damage is around P2.8 billion, including the harvest shortfall for the first quarter of 2014. About P778 million is needed for rehabilitation.

“The Bureau of Fisheries and Aquatic Resources (BFAR) has allocated P265 million for seaweed development during the year. Unfortunately, due to the recent national election and several typhoons, hindered delivery of assistance to the fisherfolk beneficiaries,” Ricohermoso said.

Power supply

Power interruptions, as a result of the typhoon, is also a major concern.

Department of Trade and Industry 7 Director Asteria Caberte said Cebu exporters still has to adapt and find ways to adjust to the daily rotational brownouts.

“Downtime due to power interruption is revenue lost,” said Escalona. “We hope things will normalize as soon as possible.”

Booth, on the other hand, pointed out government policies that hurt furniture players.

He said this includes the exportation of wood and rattan poles, which creates artificial shortage and increase in cost. He said the expensive inter-island shipping is also making it difficult for furniture players to be competitive in the domestic market.

But amid the challenges, exporters are hopeful of a better 2014.

“If the SIAP new roadmap would be implemented we expect better 2014 industry performance,” said Ricohermoso.

He said that aside from the traditional carrageenan-based seaweeds, the industry is looking forward to development of gracillaria, caulerpa, sargassum and other commercially available seaweed varieties. Rehabilitation on seaweed farms in also underway.

“2014 should be an improved year over 2013 but growth will be very slow,” said Booth.

“It will continue to be a difficult environment as the Philippines is not that competitive in the market as compared to our neighbors like China, Vietnam and Indonesia.” But opportunities abound for furniture players in the domestic scene, according to Caberte, as massive rehabilitation in calamity-stricken areas start in the first quarter of 2014.

Caberte said demand on home furnishings, houseware and furniture is expected to increase next year.


While the impact of the recent calamities will still have lingering effects in the first quarter of 2014, Escalona urged exporters to look for alternate sources of raw materials. He noted though that the exploration might trigger increase in material and logistics cost.

“But these are just temporary setbacks. We remain optimistic of the year ahead,” he said.

“Producers have been trying to open up other markets to diversify to countries like Brazil, India, Russia and China, among others,” said Booth.

Delantar also said design and material innovation will help exporters do better 2014.

Published in the Sun.Star Cebu newspaper on December 30, 2013.


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