CEBU, Philippines - The Philippines’ export industry was already suffering from a deteriorating competitiveness long before the global economic crisis has ever begun.
This according to economist Emilio T. Antonio, Jr. who believes that the industry had been suffering from a self-inflicted trauma more than the destruction brought about by the US injected global recession.
“From Philippines perspective, demand is infinite as long as it can sell at the prevailing dollar price, at a required quality,” he said.
The key for the export sector to get back on its feet again is to seriously address the competitiveness issue, “the key is competitiveness in terms of production cost and quality. It’s less a matter of demand—more a question of supply capability,” Antonio said.
He said even before the global recession, the country’s export growth had already been declining, while other countries were still enjoying double-digit growths.
“Is demand really our problem? I doubt. We are just like a sidewalk vendor in front of a big mall. We are very small, the demand is there and infinite, the key is to strengthen our competitiveness,” he reiterated.
Antonio cited the closure of Intel’s Philippine plant saying it was not because of the current crisis, but Intel had left the Philippines so many years ago because of the country’s competitiveness issue, more than the global recession.
Because of this, exporters are urged not to focus on the perceived weakening of the worldwide market demand, instead check on some toxic factors that have been affecting the sector, and the killer-factor is “competitiveness”.
The export sector is contributing about 30 percent to the Philippine economy. While a lot of our exports are using imported raw materials, only 10 percent of which is a true-export technically.
Although, it is true that some orders for exports have been cancelled or delayed because of the financial crunch, Antonio said exporters could have hold on strongly, if the country’s competitiveness issue had been addressed few years back.
The country’s competitiveness problem could be addressed by both the government and the private sectors. Individual companies should formulate its own competitive standard, while supported by good policies and incentives offered by the government.
If this main problem will not be addressed, Antonio warned that further deterioration of export sector in the Philippines will not be too far from reality, with or without crisis.
Cebu’s furniture industry alone is one of the causalities of the economic recession, while the industry had been suffering from declining growth even before the onslaught for the world wide crisis.
Cebu contributes 60 percent of the US$300 million worth furniture exports value of the Philippines.
Furniture makers described the years 2008 and 2009 as terrible years for the industry, “it does not get worst than this,” said Charles Estreegan, CFIF vice president and owner of one of the
largest furniture exporters in Cebu, Pacific Traders.
However, although “terrible” it also provides a sober realization for some furniture exporters whether to continue with the business or “call it quits,” Estreegan said. - Ehda M. Dagooc