Endless Possibilities

Market expansion and business growth awaits

Endless Possibilities

The global export environment is evolving opportunities for the Philippines to grow exports of merchandise and services by forty percent in 2011-2013 and double the prior-period average in 2016.

By 2016, total Philippine exports will exceed one hundred twenty billion U.S. dollars (US$ 120B). This is achieved by building on the current business for the period 2011-2013 and developing Key Export Sectors that have high potential for growth. In the subsequent three years (2014- 2016), growth is attained by implementing an agro-industrial resource-base export development program.

The characteristics of exports and global trade are radically changing as the world recovers from the recent global financial crisis and the natural disasters in Japan. Moreover, the unfolding political events in the Middle East and North Africa (MENA) will contribute to volatile market conditions. The key features are the faster growth of emerging economies with large consumer populations and the slower single-digit growth of developed markets. This is resulting to a re-balancing of consumption, export market size and supply chain configurations in relation to pre-crises periods.

Free trade agreements and international trade negotiations become important factors in this changed environment as these elements are significant determinants in re-deploying resources of global export products and services. Further influencing these changes are emerging economies that are moving up the value chain like China, India and ASEAN among others. The immediate consequence of these developments is the re-migration of certain supply chain components to strategic locations that can access large consumer base markets and at the same time provide a deep pool of cost-effective manufacturing and knowledge workers. The situation presents an opportunity for the Philippines to capture export-oriented investments considering that sixty-eight percent (68%) of PHL merchandise exports are intermediate goods. This means that the main drivers of Philippine exports today are global supply and value chains as well as direct investments.

Equally, the emergence of new middle class consumers in developing countries and the recovery of mature economies offer Philippine finished goods renewed opportunities for growth. However, income mobility and improved technological capabilities have created intense competition in the marketing of finished goods necessitating investments in innovative consumer-capture activities.

The key elements defining opportunities in this new world order are: a) supply and value chain management; b) international trade negotiations; and c) innovations in finished goods marketing.

In this context, the Philippine Export Development Plan (PEDP) 2011-2013 identifies Key Export Sectors controlling eighty-seven (87%) of current business to drive export growth. These are: IT-BPO and other services; electronics; agribusiness products (food, coconut and other resource-based products); minerals; shipbuilding; motor vehicle parts; garments and textiles; homestyle products (furniture, furnishings, decors); and wearables (fashion accessories, shoes, bags, jewelry).

These products and services belong to large categories in growing markets. Importantly, they have a reasonable probability of continued success based on current volumes, supply chain attributes, local value-added and total employment. Also, these sectors are consistent with the priorities of the Philippine Development Plan 2011-2016 and significantly contribute to inclusive growth.

Organic and natural products, as well as “green exports”, shall be managed as a continuing product strategy. It will be linked with tourism, trade and investment promotions to expand its application on a wide product and service spectrum according to opportunities presented by a rapidly growing consumer base worldwide.

Based on these global market opportunities and the capabilities of the Philippine exporting community, the PEDP formulated core strategies designed to achieve target revenues. These core strategies are applicable to all export sectors. Sector-specific strategies are defined in their individual roadmaps.

The core product strategies are:

The core market strategies are: The key export promotion strategy is integrating tourism, services and merchandise trade not only to maximize returns on promotional spending but also to achieve market share growth and the capacity to sustain it. Furthermore, export promotions shall focus on precision (quality) rather than profusion (quantity).

To be able to implement the PEDP strategies, the Export Development Council shall be strengthened and the Export Development Act revised to conform to changing realities. Through these renewals, a legislative agenda will be pursued to arrive at a more cohesive domestic and international policy environment.

A National Export Development and Competitiveness Fund (NEDAC Fund) shall finance integrated promotional efforts, SME assistance in finished goods marketing and continuous training for workers in the exporting community.

The source of the fund will initially come from the Office of the President (OP) amounting to P100 million per year starting 2011 until it is subsequently included in the budget of the DTI. The DBM will facilitate transfer of the initial funds from the OP to a DTI line budget item. Finally, the exporting community believes that the key to the success of Philippine exports is the President of the Philippines.

The PEDP reaffirms the President as the champion of Philippine exports. Through his inspired and inspiring leadership, the EDC partnership will be strengthened, motivated and empowered to grow exports through 2013 and double it by 2016.

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Cebu Merchants Inc.

Talamban Road, Cebu City 6000 Philippines

Telephone: +63.915.945.4646

Email: [email protected]

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