IF British voters decide to exit from the European Union (EU) this week, this will not have a significant impact on Philippine exports and the rest of the domestic economy, community leaders said.
“I personally do not think our exporters need to worry about anything. It will be the British economy that would suffer in the long term by exiting the EU rather than the rest of the EU states and countries they trade with,” said Fred Escalona, executive director of Philexport Cebu.
Sabino “Ben” Dapat, chair of the European Chamber of Commerce of the Philippines (ECCP) Cebu Business Council, said he is personally against Britain’s exit from the EU, but maintains that the Philippines is only a spectator to this tension.
“We are just observers from afar. I’d like to believe that the arguments of the group who are for Brexit (Britain’s exit) are greatly founded on the chaotic effects of refugees and emigrants that are making their way into most of Europe and greatly affected the economic well-being of the countries affected and its people,” Dapat, who was in Manila, told Sun.Star Cebu in a text message yesterday.
British voters will decide in a referendum today whether or not to stay in the 28-nation European bloc, as well as a host of complex trade and other deals associated with the EU.
If they do leave the EU, Escalona said, British buyers or importers will not be able to enjoy perks such as the Generalized Scheme of Preferences (GSP)+ wherein 6,724 Philippine products may enter the EU duty-free.
“Trade with the EU, whether we are exporting from the Philippines or exporting as part of ASEAN, will continue to prosper,” he said. (ASEAN stands for the Association of Southeast Asian Nations.)
Senen Perlada of DTI’s Export Marketing Bureau, in his visit to Cebu last May, said that while the country’s exports to the EU are only about 12 percent, it grew by eight percent last year, which means the EU GSP+ is gaining traction.
Exporter Pete Delantar, owner of Nature’s Legacy Eximport Inc., echoed Escalona’s sentiment, saying the UK’s exit will not have an effect on Philippine exports.
He noted that it is Britain’s competitiveness that may be affected because the EU may opt to buy from alternative countries.
“The EU is six times larger in population versus Britian. So Britain must continue to innovate if they want to continue serving the EU market,” said Delantar.
The country’s exports to the UK include costume and fine jewelry, holiday decor, houseware, garments, furniture, seaweed, footwear and leather goods. Big-ticket exports in 2012 included cruise ships, ferry boats, excursion boats and other vessels.
What we sell them
Exports to the EU include digital monolithic integrated circuits; coconut (copra) oil; other vessels for the transport of goods and other vessels for the transport of both persons and goods; electrical and electronic machinery, equipment and parts; static converters; electronic micro-assemblies; storage units; boards, panels, consoles, desks, and other bases; and semiconductor devices manufactured from materials on consignment basis.
“There is no significant effect to the Philippines, whichever that thing goes,” Dapat reassured. If Philippine exports to Europe is a concern, he said the UK’s decision will have no dramatic way of changing the situation.
Those that want Brexit assert that the economic bloc has been holding Britain back, because the EU imposes too many rules on business and charges billions of pounds annually in membership fees for little in return, the London-based media network BBC has reported.
In addition, the anti-EU sentiments stem from their desire to take back Britain’s full control of its borders and reduce the number of migrants. One of EU’s main principles is “free movement.”
International Monetary Fund Managing Director Christine Lagardehas warned last May that quitting the bloc could have adverse economic effects, potentially entailing “sharp drops in equity and house prices, increased borrowing costs for households and businesses, and even a sudden stop of investment inflows into key sectors such as commercial real estate and finance.”
The principal dealer of British car brand MINI in the Philippines, Willy Q. Tee Ten, said he sees Brexit’s impact on the domestic car industry as being insignificant. The dealer in a phone interview that there has been no major news warning Mini importers on the possible impact if most voters decide that Britain should leave the EU. He declined to comment further on the matter.
Also sought for comment, the British Embassy Manila through its communications manager Lynn Ayers Plata said the embassy is restrained from speaking about the matter at present.
In terms of the global financial markets, the exit of UK from EU could have some negative impact on the global financial markets in the short term, according to COL Financial president Dino Bate in an email.
That’s because this creates some uncertainty. His advice for clients is to hold whatever positions they have in the market today.
“However, if the local market experiences a sell-off on the back of this development, then one should view this as an opportunity to accumulate stocks as the Philippines remains the best growth story in Asia,” said Bate.
Standard Chartered Bank’s (SCB) Global Research on Brexit said that a majority vote to leave the EU on June 23 “could trigger significant risk aversion in global financial markets, spilling over into the international economy.”
No other EU countries are planning an EU membership referendum.