Exporters forecast better growth prospects in 2015

CEBU, Philippines - Better chances for growth is seen in 2015 for the export sector with the improvement of the global market as well as the formal opening of the ASEAN integration.

"The year 2015 brings brighter prospects for the sector. However, we do need to be cautious," said Philexport-Cebu executive director Fred Escalona.

According to Escalona ASEAN member countries' trade representatives are finalizing several frameworks that will address the competition, security, intellectual property, trade and others.

"The Philippines is gearing up for the eventual integration of the ASEAN countries with the help of the government (Department of Trade and Industry ) in running road shows on how to trade with our ASEAN neighbors," Escalona said.

Although the industry is seen to speed up with favorable market environment, Escalona said players are advised to still adopt cautious approach for its main trading partners like Japan, the United States, and European Union and Japan are still showing fragile economic condition,

Japan’s  third quarter growth rate recorded negative movement at minus 1.9 percent. The US on the other hand, will be holding a presidential election in November of 2015 and the EU growth slows down with Greece requiring new rescue facility from the IMF.

On the plus side, Escalona said the price of crude oil crashing in the international markets, improving jobs numbers in the US and moderate growth in the EU. Cheaper oil and gasoline prices could spur growth in the economies too dependent on imported oil.

The current level of crude oil prices could hurt Russia which is already suffering from global sanctions and the collapse of the Ruble.

"We must also consider regional tensions, especially in South China sea, as these could affect global trade next year. Under normal conditions though some export sectors in the Philippines will do well while some sectors will be hurt by outside influences. A 6.4 percent GDP growth is target compared to the 6.2 percent estimated to be posted for 2014," added Escalona.

The ASEAN integration, he added could help ease the recovering export market, despite the eventual threats of export condition for 2015.

The sustained strong domestic market will continue to cushion the fragile upward movement of the export sector, added Escalona. But, like any other businesses, exporters are called to apply innovative and strategic systems in marketing and entire operation in order to take advantage of the "blossoming" export trade.

In order to realize the positive outlook, the government is also asked to come up with more incentives for the export industry operators especially in trade promotion and shows, while the banks and other credit institutions should ease or liberalize their current lending requirements and practices.

Additionally, government should make sure that the benefits of low oil price are translated into cheaper goods and services for the Filipino people to enjoy. It should also expand our infrastructure such as international seaports and airports, Escalona said.

"The current congestion in our major ports (Manila and Cebu) could be a drag in our export performance," he added.

Industry clustering is also vital "to consolidate our strengths and drive logistics cost downwards."

Exporters are also pleading that the government will lower the tax rate for corporations and individuals to allow companies to re-engineer there cost structures to make us more competitive when trade barriers are eventually removed, especially in free trade zones and other trade blocs.

"Industry players should bond together to advocate for lower tax rates and fast track the constructions of additional capacity in our seaports or airports. If space is a constraint the industry should fight for the construction of these ports," he said.

The industry estimates a total exports of US$56.5 billion by end of this year, or a nine percent increase versus 2013.

Electronics, the country’s biggest merchandise export, contributed highly to the growth. Other key contributors are the services sector, classified under reverse exports that posted a 10.6 percent growth over the first three quarters; and strong domestic consumption.

According to Escalona, high spending was recorded in the second quarter this year with large purchases in calamity-stricken areas and increased consumer confidence in the country’s major markets.

Department of Trade and Industry (DTI-7) regional director Asteria Caberte said that sub-sectors like the creative industries like furniture, gifts, toys and housewares, as well as fashion accessories have slightly improved.

Domestically, Caberte said the good turnout in tourism aided the strong demand for export quality products here.

Cebu GTH (Gifts, Toys and Housewares) is seen to log flat growth in 2014.

Venus Genson incoming president of Cebu-GTH maintained that lack of financial support still haunting the players.

According to Genson, programs and support policies from the government should be communicated properly to industry players.

Outgoing Cebu-GTH  president Pete Delantar said the sector was being given life by the active domestic market.

“The export manufacturers who were quick to exploit the domestic market enjoyed high demand due to advance design and updated product trends. In the foreign market, design/quality and delivery (reliability) is the key to competitiveness. Although price comes into play but discriminating customers are willing to pay more money for unique and rare find pieces,” he said.

The furniture exporters in Cebu in the other hand, are crossing their fingers for the year 2015, while the industry is projecting a year that will open up the revival of more demand from the global market, specifically from  United States.

"Business should get better in 2015. The economic indicators are showing up, " said Cebu Furniture Industries Foundation Inc., (CFIF) president Robert A. Booth.

According to Booth, if the United States economic recovery will continue to go in the positive side, such as the easing of credit for property loans, it means the end of the difficult season.

Booth said exporters who are serious in the furniture business, understood the cycle of the market, and those who are wise enough to wait for the rebound are luckier.

This is for the reason that despite the unprofitable, difficult, and money draining years of market "drought", serious players never gave up on the business, although most have streamlined their operations over the last few years.

Except for the month of January Philippine exports registered positive growth rates until June 2014. The first semester growth of outbound goods registered an increase at an encouraging 21.4 percent pace.

Preliminary third quarter performance was also very good for the export sector, as merchandise exports rose by 15.7 percent. "So, we are optimistic but cautious that the 4th quarter performance, if not affected by the slowdown in retail sales in the US (at the start of December), and the current negative outlook on the Japanese economy, that exports will still show a robust growth for the year 2014 (between nine percent to 10 percent)."

"We will just wait for the full year results as there was a dip in export performance in October 2014 to 2.9 percent compared to the 10-month average of 9.2 percent," Escalona added.

Electronics contributed highly in the growth rate because they are the sector's biggest merchandise export. The other key contributor to growth is the services sector, classified under reverse exports, which posted a 10.6 percent growth over the first three quarters. Strong domestic consumption also contributed to the growth. (FREEMAN)