Aquino administration moves to expand Philippine exports

15:44, July 16, 2011      

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In the wake of a contraction of Philippines exports in May, officials of the government of President Benigno Aquino III and the private sector are exerting all efforts to achieve its target of doubling the country's exports to 120 billion U.S. dollars by 2016 or at the end of Aquino's term.

According to Sergio Ortiz-Luis, president of the Philippine Exporters Confederation, the goal, which is defined in the new Philippine Export Development Plan, is now within reach with 200 million pesos (one U.S. dollar equals to 42.9 Philippine pesos) investment to the Export Support Fund (ESF).

Ortiz-Luis said that President Aquino has committed to sourcing the amount from the Presidential fund. The first tranche of 100 million pesos could be allocated this year to fund the remaining approved projects of exporters under the previous ESF but were never funded, Ortix-Luis said.

To boost exports, the PEDP has adopted a three-pronged approach using product, market and promotions strategies.

As part of its market strategy, the Philippines would maximize the benefits of free trade agreements (FTAs) that it has signed with other countries and target high growth emerging markets in the region.

Philippine exporters had originally asked for 1 billion pesos as ESF during the Arroyo administration following the global financial crisis in 2007 but only 200 million pesos had been granted.

Ortiz-Luis said Philippine exporters were not worried about the decline in exports in May and the strong performance of the Philippine peso, adding that they are still confident that they will be able to hit its 10 percent growth target this year.

Officials said that exports in the third and fourth quarters of the year are traditionally higher than the first two quarters and such expected growth could make up for the declines in the previous quarters.

Under the PEDP, the expected growth target would increase the country's GDP by 58 percent and provide 9.1 million new jobs by 2016.

Export earnings in May dropped by 3.2 percent to 4.1billion U.S. dollars from 4.2 billion U.S. dollars recorded during the same period last year.

But the National Economic and Development Authority (NEDA) said that despite the drop in merchandise exports in May, total export receipts in the first five months of the year grew by 7.5 percent to 20.62 billion U.S. dollars from 19.18 billion U.S. dollars during the same period in 2010.

NEDA said exports of mineral products from the Philippines increased by 81.2 percent year-on-year due to the rise in the value of outward shipments of copper metal and copper concentrate, which grew by 119.6 percent and 212.0 percent from year ago levels, respectively.

"This may be traced to strong foreign demand and upward trend in mineral prices in the world market. The World Bank projects metal prices to increase by 20 percent in 2011 due to strong demand, particularly from China, and supply constraints for some metal such as copper and tin," said Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr.

Data released by NEDA showed that the United States was the top destination of Philippine exports in May 2011, with a share of 17. 1 percent. Japan was in second place with a 15.2 percent share followed by China with 11.9 percent, Singapore with 9.2 percent, and Hong Kong SAR with 7.8 percent.

Exports to other Association of Southeast Asian Nations (ASEAN) members dropped year-on-year by 13.1 percent in May 2011 as semiconductors, which accounted for 47.5 percent of the country's total shipments to the region, declined by 34.5 percent.

According to the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI), the weak performance of the electronics sector in the second quarter of 2011 can be attributed to the industry's high dependence on the Japanese market.

Nevertheless, SEIPI maintained its projected 8 percent to 12 percent growth in electronics exports in 2011 owing to the good performance expected in the third and fourth quarters.

"We expect to turn the corner in the second half," Ernie Santiago, SEIPI president, told Dow Jones Newswires.

Santiago said the sharp fall in electronics exports in May is a further manifestation of the impact of the earthquake and tsunami in Japan. He said the impact of the disaster was already felt as early as April.

Electronics is the Philippines' main export items, accounting for half of exports in the January-May period.

Paderanga said that as demand for electronics softens, the country is now banking on agro-based and mineral products to fuel the continued growth of Philippine exports.

"Continued favorable world market prices for coconut products and copper metal pushed exports growth of agro-based and mineral products," said Paderanga.

Source: Xinhua
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