Unstable year for exports

While all other industries showed robust growth as influenced by the spectacular economic growth of the country in the last three year, the export industry remains unstable.

The industry’s performance would depend largely on how fast consumer confidence could rebound in our main markets and develop new markets in the region, said Fred Escalona, Philippine Exporters Confederation, Inc. (Philexport) –Cebu executive director.

“Performance will depend on how our main markets such as the United States (of America), EU (European Union) and Japan recover. China and India should be studied seriously as potential markets in the region. Export growth could again be flat at 3 to 5 percent in 2013,” said Escalona.

The industry last year was greatly affected by the still slow economy in the major markets and the continued strengthening of the peso which all the more made industry players especially the small ones unable to compete effectively, said Venus Genson, Philexport Cebu president in an interview.

According to the Philippine National Statistics Coordination Board, the average exchange rate of Peso to Dollar (US) was P43.31 to a dollar as of November 14 last year which is P1.8 lower than 2011’s average of P45.11 rate.

While there was no major plant closures reported last year, officials of some firms said they were continuously finding solutions to keep operating despite the increasing cost of input, which also included the P22 wage hike approved in November last year.

Mari Booth, vice president of furniture export firm, Mehitabel Inc., said the company had reduced the number of employees from 1,000 in 2008 to only 350 to “just survive.”

“The exporters feel orphaned. We don’t feel the support of government. First there was the exchange rate problem then the wage hike,” said Genson.

Highlights

The National Statistics Office figures showed 2012 opened with an slight show of recovery in the industry with merchandise export registering a year-on-year increase of three percent in January last year.

Philippine merchandise exports for January 2012 registered a $4.121 billion revenue which is three percent higher than $4 billion in January 2011 after a recorded decrease of eight months starting May 2011.

On a monthly basis, receipts from merchandise exports went up by 21 percent from $3.407 billion posted in December 2011.

The industry continued to soar in February last year with a 14.6 percent year-on-year growth or a revenue of $4.431 billion compared to only $3.865 billion recorded in February of 2011 and an increase of 7.4 percent from the previous month.

The sector slowed down by 1.2 percent (year-on-year) with receipts only amounting to $4.302 billion compared to $4.356 billion in 2011. On a monthly basis, the month also registered a 2.9 percent decrease from that of February.

The aggregate merchandise exports for the first quarter of 2012, however showed an increase of 4.6 percent to $12.856 billion from $12.286 billion posted during the same quarter in 2011.

In April, export performance improved by 7.6 percent year-on-year and a 7.2 percent improvement on a monthly basis.

The trend was maintained in May with a 19.7 percent increase year-on-year, the second highest increase as of October last year, and a month-on-month growth of 6.4 percent.

Export earnings in May 2012 reached $4.931 billion which is a huge jump from only $4.119 billion recorded in May of 2011.

In the month of June however, export performance dropped by 12.6 percent on a monthly basis but still 4.2 percent higher than that of the same period in 2011.

Export earnings in June 2012 was 4.2 percent higher or $4.310 billion from $4.135 billion recorded in June of 2011.

However, on a monthly basis, it decreased by 12.6 percent from $4.932 billion posted in May 2012.

Cumulative merchandise exports for the first semester of 2012 on the other hand, showed a 7.7 percent increase to $26.753 billion from $24.846 billion posted during the first semester of 2011.

July showed better turnouts with 7.8 percent increase year-on-year and 11.4 percent increase from that of June figures.

Biggest Drop

August registered the biggest drop in performance last year with a decrease of 9 percent year-on-year or only $3.798 billion in revenues compared to $4.173 billion in August 2011.

On a monthly basis, the month also showed the biggest decline of 19.7 percent from $4.727 billion in July.

According to the NSO report, the decline was brought about by the decrease in value of shipments in major commodities including articles of apparel and clothing accessories, coconut oil, bananas (fresh), electronic products, pineapple and pineapple products and ignition wiring set and other wiring sets used in vehicles, aircrafts and ships.

Combined merchandise exports for the first eight months of 2012 however recorded a positive growth of 5.4 percent to $35.283 billion from $33.479 billion posted during the same period of 2011.

Biggest Growth

The industry however recovered in September with a year-on-year increase of 22.8 percent or $4.784 billion revenue, the biggest growth registered last year.

On a monthly basis, September also registered the biggest growth of 26 percent.

NSO reported that the growth was brought about by the increase in value of shipments of commodities such as tuna including fresh, frozen, prepared or preserved in airtight containers, metal components but excluding brakes and servo-brakes, fresh bananas, woodcrafts and furniture, ignition wiring set and other wiring sets used in vehicles, aircrafts and ships, petroleum products, coconut oil and electronic products.

Escalona said that the year saw an unstable trend and that any projections for November and December would be difficult to give out.

top exports

Based on the report from NSO, electronic products emerged as the country’s top export with total receipts of $1.9 billion as of October last year. It accounted for 43.1 percent of the total exports revenue and slightly grew by 0.3 percent in October 2012.

Other top exports include Woodcrafts and furniture with revenue valued at $237.25 million.

Cathodes and sections of cathodes of refined copper followed as the third top export earner in October last year with total receipts of $149.63 million.

Ignition Wiring Set and Other Wiring Sets Used in Vehicles, Aircrafts and Ships consisting only of electrical wiring harness for motor vehicles with earnings amounting to $124.85 million.

Metal Components (excluding brakes & servo-brakes) posted receipts value of $117.59 million.

Other commodities included in the top ten list are coconut oil, fresh bananas, articles of apparel and clothing accessories, and Tuna, which posted the highest annual increase among all the top ten comodities of 294.4 percent.

Total receipts from the top ten exports reached $2.962 billion, or 67.2 percent of the total exports.

2013 prospects

“After a lackluster 2012 every exporter is hopeful that 2013 will hold well for the expected full recovery in 2014,” said Escalona.

“The obvious growth driver for the industry next year would naturally be the electronics sector, after having been in the negative territory for most of 2012. Our food sector will continue to grow modestly while home decor and some wearables will have a firm performance,” said Escalona.

Escalona urged the government to provide taxpayers and forex earners with incentives and other support instead of taxing the industry more at a time when the future looked bleak and to ensure the survival of the industry and realize the projected industry recovery by 2014.

He also called the draft Administrative Order 31 as a threat to the industry.

“There is however a draft being finalized, for an administrative order (AO 31) to increase government export fees, licenses and permits, which we are vehemently opposing. If implemented this could add pressure on exports in 2013. Another issue is the continued appreciation of the peso. I am just worried that when it breaks P40 it can go down sharply to around P35,” said Escalona.

He suggested the deregulation of the industry if this would be implemented to give the industry a fighting chance to compete.