Handicraft firms moving operations to provinces

CEBU, Philippines - The Philippine Exporters Confederation, Inc. (PhilExport) expressed support to the recent move of the handicraft companies to move their manufacturing plants outside of Metro Manila to cut production costs to sustain competitiveness.

In an interview with PhilExport president Sergio Ortiz-Luis, Jr., he said that exporters now are in jeopardy due to the strong peso that continues to threaten the already suffering export sector. It is a good move for manufacturing firms to make efforts in cutting down their costs.

He said if exporters will not make drastic moves in fighting for the weak global market amid the peso’s strengthening, more and more companies will decide to close shop, thereby affecting more workers.

Earlier, the Philippine Chamber of Handicraft Industries, Inc. (PCHI) president Dennis Orlina announced that more handicraft companies are relocating to the provinces as the rising cost in Metro Manila caused them to lose their competitive edge.

“To keep operating in Metro Manila would be a suicide. You have a very expensive environment here, you have the highest electricity [rate], water and labor cost,” said Orlina.

Orlina said bringing business operations in the provinces can be a practical alternative as they expect to reduce operation cost by as much as 20 percent.

According to Ortiz-Luis, the PhilExport is supporting the PCHI’s members’ move, and will open help if members will seek help from the regional chapters of the PhilExport.

Orlina said one of the alternatives, is for handicraft companies to transfer to the Cottage Industry Technology Center (CITC) located in the provinces.

The CITC is a line agency of the Department of Trade and Industry (DTI) that provides production-related training and technical assistance for furniture, gifts and housewares, fine jewelry and leather footwear industries all over the country.

Earlier, the Philippine Economic Zone Authority (PEZA) approved CITC’s accreditation as a PEZA zone.

As an enterprise registered with PEZA and operating within a PEZA zone gets to enjoy certain tax incentives, and this is good for the small and medium handicraft companies.

With this cost-cutting measures being implemented, Orlina said industry players are optimistic of achieving a 10 percent increase in export sales in 2012 from last year’s US$90 million revenues.

Ortiz-Luis added that aside from the high operational cost, exporters now are still aching because of the continuously strengthening foreign exchange due to the heavy inflow of foreign money to the Philippine financial system, largely considered as “hot money.”

With this, Ortiz-Luis said PhilExport is leading another round of urgent call to the Philippine government, and the Bangko Sentral Ng Pilipinas (BSP) to implement measures that will control the strengthening of the peso against the US dollar as not only the exporters are hurting, but also other economic drivers like the Business Process Outsourcing, tourism, and the families of Overseas Filipino Workers (OFWs).

He said the export sector is still not certain if it can achieve the 10 percent growth target this year, while some exporters are turning down orders, when they see that peso will settle lower than P42.50 a dollar.

Foreign exchange that will hit lower than P42.50 to a dollar, is no longer healthy for the exporters, Ortiz-Luis said. (FREEMAN)