Philippine suffers $300 M loss from garments exports

MANILA, Philippines — The Philippines has lost about $300 million worth of garments exports to its regional rivals over the past two years due to local factories’ failure to comply with certain social and ethical requirements.

Foreign Buyers Association of the Philippines (FOBAP) chair Robert Young told The STAR that about $150 million worth of exports annually have slipped the country in the last two years as major foreign buyers shun away from their orders because Filipino factories were not compliant.

“H&M, Uniqlo, their auditors went here and saw that the factories’ compliance failed. As a result, the orders did not push through,” Young said.

“The big buyers that backed out said sorry but the Philippines is not yet ready,” he said.

Young said these international firms instead turned to other markets such as Vietnam, Cambodia, Myanmar, Laos, and Bangladesh.

The FOBAP official estimates that about half of the exporting garments factories in the Philippines at present are non-compliant with the stringent requirements of foreign buyers.

“They are very strict when it comes to cleanliness in garments, especially now that the competition is really very stiff. They are also very strict when it comes to the dyeing process, waste management, fire exit, and even when it comes to clinic and canteen,” Young said.

“That is why FOBAP started a roadshow, we asked the help of Philexport and we went to six provinces nationwide urged the factories to make their operations socially compliant,” he said.

Young said it is now a must among foreign buyers that they buy only from compliant factories.

He said factories in the country have become complacent with the practice in the local market wherein buyers are not as strict as the foreign buyers.

“It’s the culture in our local scenario. We are not that strict, so they were spoiled by the local buyers. But we should start at home if we want to recover the lost orders. Everything begins at home,” he said.

Garments currently comprise 70 percent of the exports revenues of FOBAP members, while housewares, giftwares, footwear, and bags exports represent the remaining 30 percent.

According to Young, the country’s high power and labor costs are among the factors that led to downfall of a once mighty Philippine garments industry.

He said the Philippines was the biggest garments exporter globally some 10 to 15 years ago with shipments of about $1 billion annually.

Now, Young said the country has fallen to the sixth or seventh spot  in Asia, with annual garments exports of about $300 million.

“Our power cost has been very high. Our labor cost is also higher than others. All these factors if you put it in made us 20 to 25 percent more expensive than the rest,” he said.