By Justine Irish D. Tabile, Reporter
PHILIPPINE EXPORTS will likely miss this year’s target under the Philippine Export Development Plan (PEDP), according to the exporters organization and the Department of Trade and Industry (DTI).
Bianca Pearl R. Sykimte, director of the DTI-Export Marketing Bureau, said the department remains optimistic about exports growth, even if it falls short of the $143.4-billion target set under the PEDP.
“We are optimistic that we will exceed the Philippine Development Plan (PDP) target of $107 billion this year, but it will be extremely difficult to reach the PEDP target of more than $140 billion. We will need to recalibrate,” Ms. Sykimte told BusinessWorld in a Viber message.
Total exports under the PDP are expected to reach $107 billion this year, comprising of $61.58 billion in merchandise exports and $45.42 billion in services exports.
Last year, Philippine exports only amounted to $103.6 billion, well below the $126.8-billion goal under the PEDP. It also failed to hit the 5% growth target set by the DTI last year.
In a separate interview, Sergio R. Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc., said that the PEDP is undergoing continuous recalibration.
“What we are doing now is that, on a yearly basis, we look at the trend to see if it is going up. But we think that the almost $145-billion target could instead be met in 3 years,” he said in a mix of English and Filipino.
“Well, maybe in two years we also can, but it is impossible to do it in one year. Because, as it has been said before, to be able to beat that, we’ll have to grow 40%,” he added.
Earlier this year, Philexport and the DTI said that they are targeting up to a 10% increase in exports in 2024. If realized, this would exceed the $107-billion export value target under the PDP.
Asked about the growth drivers, Ms. Sykimte said: “We’re expecting recovery in semiconductor exports, lower global inflation, continued recovery in tourism and sustained demand in IT-BPM (information technology and business process management) to drive exports this year.”
“This would be higher than the 4.8% increase last year and could be driven again by services, especially tourism, as well as improvements in the regulation for mining and exports of some agricultural products, which increased last year,” Mr. Ortiz-Luis said.
Preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed that services exports increased by 17.4% to $48.29 billion in 2023.
Broken down, exports of travel services more than doubled to $9.11 billion in 2023, while exports of telecommunications, computer, and information services rose 6.4% to $7.1 billion.
BSP data also showed fruit and vegetable exports grew by 3.4% to $2.27 billion, making it the only commodity group to register export growth in 2023.
Ms. Sykimte said that the decline in merchandise exports was due to the decrease in electronics and coconut exports, reflecting global trends.
On potential risks to the outlook, Mr. Ortiz-Luis cited geopolitical issues that affect shipping, prices, and the supply chain.
“Aside from these, there are also issues between China and the US, particularly the trade war, so that may affect our projections for our trade with China,” he added.
The DTI and Philexport said free trade agreements (FTAs) will help spur more trade and increase exports.
“We are also optimistic that the pending implementation of the Philippines-Korea FTA this year will have positive impact to our exports, given that Korea is among our top 10 export markets,” Ms. Sykimte said.
Data from the Philippine Statistics Authority showed that South Korea is the country’s fifth biggest export market in 2023, accounting for $3.53 billion or 4.8% of the total exports.
Last month, the DTI said the Philippine Senate is expected to ratify the country’s FTA with South Korea by mid-year.
“These agreements help. Because, as you will see, we only have a small number of agreements compared to other countries like Thailand which has 13 or 14. So how will we be able to compete with them,” Mr. Ortiz-Luis said.
However, he said that the Philippines must do something to ensure that the exporters are able to utilize these free trade deals and avail of duty exemption.
“For instance, our garments and wearables exports can’t utilize the benefits under GSP+ (Generalized Scheme of Preferences Plus) because there are issues with rules of origin,” he said.
“We don’t have a textile industry, so what we do is import all the textiles we use, mostly from China, and so our products can’t enter because they have issues with China,” he added.
Under the GSP+, Philippine garments that enter the European Union (EU) are duty-free, but because of the EU’s strict rules of origin, Philippine garments that use imported fabric do not qualify for zero duty.
The country participates in the EU’s GSP+, which is a special incentive arrangement for low- and lower-middle-income countries. It charges zero duty on 6,274 Philippine-made products.
Last month, the EU and the Philippines formally resumed FTA negotiations, seven years after it was stalled due to concerns over the human rights record of then President Rodrigo R. Duterte.