Exporters must diversify to achieve faster growth
The Philippine export sector has to diversify its products and markets to achieve greater growth potential, a trade official said.
Agnes Legaspi, assistant director of the Department of Trade and Industry's Export Marketing Bureau (EMB), noted Philippine exports are very concentrated in few products, making them vulnerable to demand and supply changes.
"One major weakness of Philippine exports is its high concentration in few products," Legaspi told a regional seminar on the 2014-2016 Philippine Export Development Plan in Cebu last Friday.
"In contrast to some diversification in goods export, services exports have become more concentrated," Legaspi also said.
The DTI official presented data to local exporters showing that 49% of the country's total goods exports consisted only four products namely semiconductors (30.7%), electronic data processing (7.9%), woodcrafts, furniture, and fixtures (5.4%) and chemicals (4.6%).
EXPORTS
As of 2013, goods accounted for 72% of Philippine exports while services made up 28% of the total.
Manufactured goods comprised 84% of total exported goods while mineral, petroleum and agro-based products and special transactions made up the remaining 16%.
As for services, the information technology-business process outsourcing sector accounted 67% of total services exports.
Legaspi also pointed out the markets for Filipino products are also not diversified, noting four markets -- Japan, the US, China and Hong Kong -- accounted almost half of the total export market.
"Apart from high concentration of exports on few products and markets," the assistant director said, "export growth has been constrained also by slow or declining demand in the world market."
She explained Philippine exports are not only smaller in value but have also slower growth compared to exports of other Asean (Association of Southeast Asian Nations) economies.
The official emphasized that sectors with significant export potential have to be supported as a way to achieve product diversification.
But these, she added, have yet to contribute significantly to export revenue.
According to EMB, emerging export goods include medical devices, marine and aquaculture products, chemicals, organic goods, metal components, electricals and activated carbon.
Legaspi said the agency has asked for a fund allocation for the PEDP implementation amounting to P1.76 billion. The money will be spent for support programs for key sectors, establishment of the national quality infrastructure, improving financial access to exporters, capacity building trainings and investment and export promotion, among others.
To support export sectors, the DTI has pushed for the removal of unnecessary domestic regulations that impede product movement, productivity improvement, export quality upgrade, exploitation of opportunities in the economic integration and free trade, access to finance and the PEDP fund.
TARGET
The Philippine government is targeting a 10.1% export growth this year, amounting to between US $92.4 billion and US $94.6 billion. It is also projecting an 11% growth for 2016.
But Legaspi suggested there may be a need to revisit the 2015 target, considering the constraints faced by the sector.
The Philippines' statistics agency reported that exports rose 2.1% in March this year for the first time in four months to $5.38 billion.
But that was not enough to raise the first quarter total which fell 0.2% to $14.3 billion year-on-year.
In 2014 export revenue totaled $86.65 billion, posting an 8.26% growth.
DTI Central Visayas director Asteria Caberte said: "Export figures have improved; 2015 is a crucial year for all of us."
"We focus on important issues that redound to a stronger industry and stronger working relationship between government and the private sector," Caberte told exporters.