Government dangles export quotas as incentives for garment makers

Government plans to use export quota allocations as incentives for local garments and textile manufacturers as the country braces itself for the lifting of all garments export quotas.

The Department of Trade and Industry said government has no intentions of entertaining any more delays to its garments quota allocation system, warning local garments manufacturers to prepare for the end of the quota system in 2005.

According to the DTI, its efforts would now focus on ensuring the competitiveness of garments and textile exporters in the post-quota scenario when they will be forced to compete without the benefit of special treatment from overseas markets.

Trade and Industry Secretary Manuel Roxas II explained that the bulk of the quota from various garments and textile-importing countries has already been permanently allocated to garments companies.

The allocation of the left-over free quota, Roxas said, would be used as an incentive for industry players to become competitive and to lay the foundations for continued existence without the benefit of quota allocation.

"This means that free quotas will be allocated based on parameters and performance benchmarks that reflect the thrusts of the industry as well as the imperatives of the times," Roxas said.

According to him, these parameters would be drawn up in consultation with industry groups and serve as the basis for evaluating efficiency and qualification.

Roxas said the DTI had met with industry groups this week in which the concerned sectors agreed to finalize these parameters not later than September 2001 for implementation starting 2001.

Roxas said the industry had agreed on the principle of using free quotas as incentives. He said the groups have agreed to work with the Garments and Textiles Export Board (GTEB) in drawing up the incentive scheme.

According to Roxas, the industry had also agreed to defer using the industry average values as a benchmark requirement, given the current soft market environment.

He said garments and textiles export markets have softened further this year, especially the US where price of orders have gone down compared to 2000 prices. This did not augur well for the industry since the US market accounts for 80 percent of Philippine exports.