THE sharp decline of the country’s export industry also mirrors that of Cebu’s export performance.
An official from the Philippine Exporters Confederation (Philexport) Cebu yesterday said the industry is already far from hitting its target and would likely end the year with negative growth.
“We are very far from the target already, if you refer to the national figures in the Philippine Export Development Plan (PEDP). I personally feel we will miss our target by a double-digit drop of between 10 percent and 15 percent. I am rather pessimistic because the softness of the markets has continued in October and the first week of this month,” said Philexport Cebu executive director Fred Escalona in an email.
The Philippine Statistics Authority reported that exports dropped 24.7 percent in September, the sharpest decline since September 2011. For the first nine months, exports plunged by 6.9 percent to $43.746 billion from $46.976 billion in 2014.
Under the PEDP for 2014 to 2016 submitted by the Export Development Council (EDC) to President Aquino, total exports are targeted to grow by eight to to 9.3 percent in 2014 from $78.5 billion in 2013.
According to Escalona, the national figure somehow reflects the drop in exports in Cebu and the region. For exports outside economic zones, an 8.6 percent drop for the first 10 months was recorded. From January to September 2015, only the month of June posted a positive figure of 9.4 percent compared to June last year.
He noted that among the sectors struggling are those in the food sector. Growth, meanwhile, was observed in furniture, which is under wearables, but Escalona thinks the growth may not be sustainable.
“We have slow orders. Before, we used to receive orders from China, for example. But now there is none. Winners and losers now are per company and not per sector. Those who already have captured markets are doing well, but those companies whose engagement are in economies that have problems are suffering,” said Escalona.
Global pressures
Philexport-Cebu lost around 38 company memberships due to non-payment of dues, closures and suspension of operations.
Escalona blames the weak global market and other factors that further add pressure to the industry such as the impending elections in the US; no clear signs of sustainable recovery from deflation in Japan; the Greek problem and the refugee problem in Europe, which puts pressure in the economies of nations that will host these refugees; the China economy, which is still on a down spin; and the intense competition in the ASEAN region by next year.
Moreover, the Philippines’ own regulations continue to hurt the export sector.
“Our government is putting a lot of barriers to trade by implementing rules and laws that are overlapping, tedious, redundant and sometimes an overkill. We do not have a national quality infrastructure body in place that could address overlapping of government agencies roles’ and their mandates,” said Escalona.
Asked if the current exchange rate also affects the export growth standing, Escalona said the dollar-peso parity rate is not the problem at the moment.
“The problem is the shrinking market shares and slowing imports from our traditional trade partners.There is no advantage for exporters if the US dollar will continue to strengthen if there are no orders,” Escalona said.