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29 April 2019

By Gina Yap | Market Innovation Division (MID) | DTI-Export Marketing Bureau

Published also in Business Mirror

IN 2018, the US was the biggest export market (out of 211 Philippine markets), fourth-largest import supplier (out of 198  suppliers) and the third-largest major trading partner of the Philippines (out of 221 trading partners).  

Philippine exports to the US increased by 9.13 percent from $9.66 billion in 2017 to $10.54 billion in 2018 due mainly to the increase in exports of semiconductor devices manufactured from materials on consignment basis; other parts of airplanes or helicopters; photosensitive semiconductor devices;  transistors, other than photosensitive transistors; and static converters.

Total bilateral trade was valued at $18.36 billion.  One of the factors that contributed to the growth of Philippine exports is the trade preference program or the Generalized Scheme of Preferences (GSP) granted by the US to the Philippines.

Under the US GSP program, tariffs are eliminated on about 5,000 tariff lines if beneficiary developing countries meet the eligibility criteria established by US Congress. GSP criteria include, among others, respecting arbitral awards in favor of US citizens or corporations, combating child labor, respecting internationally recognized worker rights, providing adequate and effective intellectual-property protection, and providing the US with equitable and reasonable market access.  

In 2018, US GSP imports from the Philippines stood at $1.73 billion, an increase of 15.57 percent from $1.49 billion in 2017.  

Recently, the Office of the United States Trade Representative announced that India and Turkey will be removed from the US GSP.  

In 2018, India exported goods worth $6.31 billion under the GSP. The majority of India’s exports to the US consisted of intermediate goods; organic chemicals, auto parts, furniture, leather goods, textiles and apparel, electrical parts, stone, sand and cement, plastic materials, rubber, wood, glass materials, gem and jewelry.

Turkey exported $1.92 billion worth of goods under the US GSP Program in 2018.  The leading GSP import categories were vehicles and vehicle parts, jewelry and precious metals, and stone articles.  

Philippine exporters of similar products may find their products are now more price competitive to US buyers and importers.

15 April 2019

Published also in Business Mirror

Philippine Trade Secretary Ramon M. Lopez addresses delegates to the China-Philippines Summit held on March 29 in Manila.

DURING the China-Philippines Summit on March 29, Trade Secretary Ramon M. Lopez said the Philippines is seeking to maximize its good relations with China by pushing for trade balance and more investments. The summit was attended by Chinese business leaders seeking investment opportunities in the Philippines.

“The Philippines and China have a special relationship that began when President Duterte visited China in 2016 right after his assumption into office. Today’s summit will help us deepen our trade and investment relationship,” Lopez said.

Philippine exports to China grew by 8.5 percent to $8.7 billion in 2018, from $8.02 billion in 2017, making China the Philippines’s fourth largest export market. However, Lopez wants to promote more exports not only of agricultural products, but also higher-value products like luxury furniture, automotive parts and electronics.

In line with this, the Department of Trade and Industry (DTI) is already preparing for the upcoming second China International Import Expo in November 2019. For the first CIIE, the Philippines featured 36 exhibitors that sold $124 million in goods during the five-day fair. This year, DTI is targeting a bigger presence with 100 exhibitors.

“There is great demand for Philippine products. We just have to increase production of agricultural and manufactured goods for us to meet this demand,” Lopez said.

With around $962.61 million in approved investments in 2018, China is the country’s top source of foreign investments, according to the Board of Investments (BOI). The country leapt to the top from being 14th in 2016 ($31.99 million) and ninth in 2017 ($46.3 million).

Lopez said this is an indication of the Chinese government’s trust and confidence in the Philippines, which is seeking investments in manufacturing, e-commerce, infrastructure and tourism from that nation.

Also at the summit were Transportation Secretary Arthur P. Tugade, Public Works Secretary Mark A. Villar, Tourism Undersecretary Benito C. Bengzon Jr., Public-Private Partnership Center Executive Director Ferdinand A. Pecson, Cagayan Economic Zone Authority Acting Corporate Secretary Joy Alameda and Chinese Commercial Counsellor Jin Yuan.

By John Benedict Santos | Market Innovation Division (MID) | DTI-Export Marketing Bureau

Published also in Business Mirror

KAZAKHSTAN, a landlocked country at the heart of Central Asia and strategically connected with Europe and Asia, is a market largely untapped by the Philippines.

As an export partner, Kazakhstan ranks 112th out of 211 export partners of the Philippines. Trade is valued at $1.57 million. That country ranks 12th in oil reserves and 20th in gas reserves in the world, with their top exports crude petroleum ($19.9 billion in 2017) and petroleum gas ($2.4 billion in 2017).

Despite gaining independence only after the Cold War, Kazakhstan transitioned its economy from lower middle-income to upper middle-income status in less than two decades. Its GDP is 60 percent of Central Asia’s, making it the most economically developed country in that region and greater than the combined GDP of the remaining Central Asian economies.

Similar to the Philippines, Kazakhstan finds itself in the influence of China’s Belt and Road Initiative (BRI). Because of the country’s abundance in oil and natural-gas reserves, China sees Kazakhstan as a critical component of the BRI land bridge through Eurasia. China and Kazakhstan recently agreed to upgrade their common border area in Khorgos and is poised to rival Germany’s Duisburg by becoming the biggest dry port in the world. This will prove to be economical for China, Kazakhstan and their neighboring countries, cutting travel time of cargoes to about 15 days from the previous four weeks to six weeks.

Kazakhstan encounters a domestic fruit-production shortage of roughly half a million tons a year. According to the Kazakhstan State Statistics Commission, 628,000 tons of fruit produce were imported by the country in 2015. Grapes, apples, dried fruits and nut mixes, citrus and bananas were the top 5 products imported by Kazakhstan in that period. Demand for fruits is expected to rise by 5 percent year-on-year.

Similarly, Kazakhstan imported 520,000 tons of vegetables, with the top 5 products being onions and garlic; carrots, turnips and beets; potatoes; cabbages; and tomatoes. Kazakhstan largely imports its produce from neighboring countries Uzbekistan and Azerbaijan.

Most of Kazakhstan’s processed fruits and vegetables such as juices, vegetable sauce, canned goods, or frozen fruit and vegetables are imported. The Kazakhs are huge consumers of processed fruits and vegetables, and they depend on overseas companies to supply the remaining demand of their citizens. The country produces around 19,000 tons of processed fruits and vegetables yearly, while imports reach around 229,000 tons a year. The trend is expected to grow at an annual rate of 2 percent and is expected to hit 252,000 tons.

Some of the food fairs in Kazakhstan are WorldFood Kazakhstan, the region’s leading international forum for engaging with the country’s food and beverages sector; ColdChain Kazakhstan, a Cold Chain Services Exhibition; and InterFood Astana, an international exhibition of food, drinks, packaging and equipment in the food industry.

Exporters interested in the Kazakhstan and Central Asian Market may contact the DTI-EMB Market Innovation Division at (+632) 465.3300 local 218.

15 April 2019

Published also in Business Mirror

THE Philippines and Czech Republic agreed to pursue deeper economic ties as they convened the inaugural meeting of the Philippines-Czech Republic Joint Economic Commission (JEC) on March 28 and 29, 2019, in Prague.

Consistent with the thrust of Trade Secretary Ramon M. Lopez to engage new trade and investment partners, the Philippine delegation led by Department of Trade and Industry (DTI) Undersecretary Dr. Ceferino S. Rodolfo Jr. met with Czech counterparts led by Ing. Vladimír Bärtl, deputy minister of Industry and Trade.

The JEC serves as a platform to discuss initiatives to improve bilateral trade, investment and economic cooperation. The inaugural JEC meeting sets the tone for future cooperation in areas, such as manufacturing, investments and banking, agriculture and food, energy, transportation, health, tourism, environmental technologies and disaster-risk reduction management.

The JEC allows the Philippines to capitalize on the Czech Republic’s expertise in environmental technologies in water treatment and management, modern agricultural equipment and technologies, and building efficient transportation systems. It also aims to strengthen industry links for manufacturing and promote investments in specific sectors like aerospace, electronics (i.e., Integrated Circuit design) and automotive.

The official Philippine delegation was accompanied by a 12-member business delegation that considers the Czech Republic as an alternative market for products (e.g., sauces, seafood, fish products, coconut products, pet foods, processed food and beverages, garments) and source of investments and partnerships (e.g., construction, electronics, water rehabilitation).

The business delegation led by Rodolfo visited the auto electronics manufacturing facility of Integrated Micro-Electronics Inc. (IMI), a leading Philippine electronics company recognized as one of the top electronics manufacturing services providers globally. The delegation also visited Aero Vodochody aerospace facility to identify potential collaborations between the Philippine and Czech aerospace sectors. Closer collaboration in these areas will be made easier through the signing of the Memorandum of Intent between the Board of Investments and CzechInvest that aims to promote and facilitate investments.

“The convening of the JEC is a strategic means to engage individual EU member-states. The JEC allows us to identify and harness complementation between two of the fastest- growing economies in each other’s regions. We are both gateways to Asia and Europe, and we can also serve as viable markets for each other’s products. In the same way that the Czech Republic is one of the Philippines’s strongest supporters in the EU, we invite them to see the Philippines as their friend in the Asean,” Rodolfo said during the JEC meeting.

The convening of the JEC is in line with the Philippines’s strategy of engaging non-traditional partners in Europe. In 2018, the Czech Republic was the Philippines’s 33rd top trading partner (out of 221), 23rd export market (out of 211), and 42nd import supplier (out of 198), with total trade amounting to $361 million.

15 April 2019

Published also in Business Mirror

PHILIPPINE exporters are looking to diversify product offerings and expand markets overseas to grow revenue by 5 percent to 6 percent this year.

“Our forecast for this year is not even exactly according to the target for the year, but we have already products that we are looking to improve our exports on so that we will be able to make that target still feasible or attainable for this year,” said Senen M. Perlada, director of the Export Marketing Bureau of the Department of Trade and Industry (EMB-DTI).

Perlada said these include non-electronic products, such as cars, desiccated coconut, coconut oil, footwear and wearables.

“There are products that are growing fast although they are not as big as the semiconductors or something but it will, at least, be able to make us closer to the target than we have forecasted,” he noted.

Perlada said service exports are also “doing very well. But because of the very high targets that we projected for, or that we assumed for 2018 to 2022, that is something that we can revisit,” he added. The trade official further said local exporters are, likewise, looking to expand market destinations.

“Some of these markets are Russia; we are looking also at the Eastern Bloc countries. Hopefully, we can follow up the missions that we have had in Africa. We went to Mexico just recently. They are already trading partners but they are what we have not actually taken full advantage of,” Perlada said.

January 2019 trade data showed that exports further declined by 1.7 percent, recording only $5.279 billion compared to $5.373 billion in the same month last year. For the whole of 2018, exports declined by 1.8 percent while imports grew by 13.4 percent.

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