Garments sector seen to grow 15%

Garments and Textile Export Board (GTEB) executive director Serafin Juliano is optimistic that the garments sector will recover in 2005 with a growth of 15 percent, in dollar value, even though the sector is likely to register a flat growth this year.

However, in achieving the 15-percent growth in 2005, Juliano warned that the garments industry would have to undergo some consolidation and even possible closures just to be able to maintain its dollar business.

The projected flat growth this year is due to the non-availability of the carry-over provision of the garments quota.

The quota allocation system is set to expire this year and local garments manufacturers would face stiff global competition.

Local garments manufacturer Manny Tan and Willie S. Lim of the Children’s Apparel Association of the Philippines (CAAP) predict that competition would be in pricing rather than on quality and that the industry faces "tough" times ahead.

However, for Rudy Mallari of the Foreign Buyers Association of the Philippines (FOBAP), the Philippines should concentrate on "multiple, short-run" and higher value-added garments to compete than on long-run garments.

Multiple, short-run garments, Mallari explained, are items which are flexible in terms of reorder as against long-run which are single type, quantity items which countries such as China are more geared to produce.

Under the quota system, the country is able to advance some of its quota allocation for the country is able to advance some of its quota allocation for the following year and most of the time this is drawn upon the so-called "critical" category.

The so-called critical category is comprised of pants, jackets and T-shirts.

However, only up to six percent of the existing quota is allowed to be advanced.

As such, the quota to be filled this year has actually been used up already, and since next year there will no longer be a quota allocation, this year’s garments exports cannot be boosted by advance exports.

In fact, based on last year’s performance, exports of garments and textiles had fallen 3.65 percent.

In the past, because of such advance availments of the garments quota, have average annual growth was 23.8 percent for exports to the US and up to 24.3 percent for exports to the European Union.

But aside from the critical category, the growth for other apparel exports was actually negative.