Proposed Philippine Export

1PROPOSED PEDP 2008-2010

Proposed Philippine Export Development Plan (PEDP)

2008-2010(Revised as of 22 July 2008)

Presentation toPHILEXPORT GMM, HOTEL SOFITEL

July 23, 2008


1. Framework and Planning Process

2. 2005-2007 Scorecards

3. Global Outlook

a. Key Challenges

b. Opportunities

4. 2008-2010 Export Targets

5. Strategies

6. Policy and Financial Requirements

7. Implementation

Contents of the Plan


Part 1. Framework and Planning Process

A. Framework

• Medium Term Philippine Development Plan (MTPDP) 2004-2010 as updated for 2008-2010

• Philippine Export Development Plan (PEDP) 2005-2007

B. Planning Process

• Workshops on Global Trends and Strategy Formulation • Visioning Session • Sectoral Value Chain Analysis• Regional Consultations• Focus Group Discussions


Part 2: PEDP 2005-2007 Scorecards

Philippine Export Performance vs Targets

43.8249.13

53.37

3.63

4.17

4.83

Services (T)

Goods (T)

39.68 41.2647.41 50.3

4.044.52

6.448.45

0

10

20

30

40

50

60

70

2004 2005 2006 2007

Services (A)

Goods (A)

US$B

Sources: NSO, BSP, EDC

43.7247.45 46.07

53.33 53.8558.2 58.75


Philippine Export Growth Rates vs Targets

Sources: MTPDP 2004-2010,BSP,NSO as processed through BETP-managed TRADELINE

0

5

10

15

20

25

30

35

40

45

2005 2006 2007

Target Goods

Actual Goods

Target Services

Actual Services

Part 2: PEDP 2005-2007 Scorecards… cont.

%


61

105

36

80

20

64

127

40

96

26

86

141

41

110

32

101

161

47

131

41

0

20

40

60

80

100

120

140

160

180

Indonesia Malaysia Philippines Thailand Vietnam

2003

2004

2005

2006

Selected ASEAN Export Performance 2003-2006 (in US $B)


Source: Trademap; ASEAN Secretariat


•Export growth remained positive •2006 surge in intra-regional trade with China and the rest of Asia •Peso reduced export revenues the following year

2005 2006 2007

RP 4 14 6

ASEAN 5* 19 16 35

Global 14 16 15

Sources: MTPDP 2004 – 2010,National Statistics Office, Trademap; WTO ; ASEAN Secretariat

* Indonesia, Malaysia, Singapore, Thailand & Vietnam

Comparative Merchandise Exports Growth (%)



2005 2006 2007

RP 12 42 31

Global Commercial Services 12 12 18

Comparative Services Exports Growth (%)

•Growing contribution of commercial services exports to total trade. •Booming BPO services continue to lead growth.


Sources: Bangko Sentral ng Pilipinas

WTO


Rest of the World 13.0%

China 22.9%

Japan14.5%

USA17.0%

ASEAN15.9%

EU17.0%

Overall balance in market shares

Major Markets of RP Merchandise Exports %2007

US$ 50.3B

Part 2: PEDP Scorecards, cont.


Product Group

2007

Value US$M

Growth %

Share%

Electronics 31,023 16 63

Garments & Wearables 2664 -9 5

Machinery and Transport 2,748 9 5

Food 1,476 13 3

Home Furnishing 1,215 7 2

Marine Prods 584 25 1

Mineral Products 2,548 21 5

Petroleum 1,108 21 2

Metal components 481 20 1

Coconut 944 25 2

Others 5,479 6 11

RP Merchandise Exports to the World

Source: National Statistics Office



Policy Measures

Milestones/Updates

Streamlined and Automated Procedures

Export clearance fees eliminated

(17 agencies compliant. Others are not due to their charter provisions)

ASYCUDA World e-Customs Project is delayed

Export Clearance procedures not yet fully computerized

Infrastructure Improvements

Supported moves for completion of priority infrastructure projects

GenSan Fishport improved and compliant to EU standards

Export wharfage fees reduced on April 20, 2007 - December 31, 2007. Request for extension ignored


Policy Measures put in place for

better business environment

Legend: Accomplished On-going; need to accelerate No action so far


Policy Measures

Milestones/Updates

Export Training &

Skills Enhancement

DepEd:Teachers retraining on going in English, Math and Science in basic education

DOST, TESDA, CITC: Trainings for revenue streams conducted (additional training needed)

CHED and TESDA and universities: Ladderization program being implemented

Legislative Amendments

R.A. 9501 - Amendment of Magna Carta for MSMEs approved (IRR being drafted)

Amendment of Customs Brokers Act (3rd Reading, HOR)

Anti Smuggling Bill (1st Reading, HOR & Senate)

Funding Sources for Export Promotion

Php 10.5 M grant from BSP for export promotion(90.5% utilized)

Export Promotion Fund P280 M, from DTI, BSP, DBM, NEDA and PHILEXPORT. (Will be fully obligated by 3rd Qtr, 2008)

Access of SMEs of GFI financing facilities increased


Legend: Accomplished On-going; need to accelerate No action so far


Part 3. Global Outlook, 2008-2010

• Historic credit crisis• Record-high oil prices• Heightened inflation fears

• Perhaps even the beginning of a recession…???


Part 3. Global Outlook, 2008-2010

Sources: Global Economic Prospects 2008

International Monetary Fund, 2008

Asian Development Bank, Development Outlook, 2008

World Bank, July 2008

• Moderate global growth expected at best

• Contraction imminent due to surging oil and food prices

• Slower growth in high-income countries

• Developing-country imports now driving global growth.

• Asia’s growth track is more stable than the rest of the world


Part 3. Global Outlook…cont.

A. Key Challenges

1. Market Access • ASEAN integration• EU expansion• Emerging markets

2. High Cost of Inputs to Exports

3. Rising Cost of Crude Oil

4. Uncertainties in the Peso-US Dollar Rate

5. High Cost of Doing Business

6. Inadequate training opportunities to respond to growing demand for RP human resources


B. Key Opportunities

1. Deepening economic integration of ASEAN region

2. Additional market access arising from ASEAN plus partners (i.e. China, Korea, Australia, New Zealand, and Japan)

3. Emerging markets like India, South Africa, and Eastern Europe including Russia, Turkey and Ukraine, among others.

4. Increased oil revenue-driven spending in the Middle East

Part 3. Global Outlook…cont.


2008 Export Industry ProjectionsSector Growth

in %

Electronics 0

Garments & Textile 2

Fashion Accessories 11

Machinery & Transport 18-24

Mineral Products 5

Processed Food & Beverages 2

Fresh Fruits & Vegetables 5

Marine Products 10

Home Furnishings 15

Giftwares & decors 2

Metal Components 20

Petroleum Products 12

ICT Services 39

Part 4. 2008-2010 Exports Targets… cont.


Part 4. 2008-2010 Export Targets

Growth in services exports to outpace merchandise exports

84.41573.21464.28 - 958.8TOTAL

23.440 16.740 11.935 – 40 8.5Services

61.08 56.56 53.34 - 6 50.3Goods

Value US$B

Growth %

Value US$B

Growth %

Value US$B

Growth %

Value US$B

2010200920082007

(Actual)


Growth in services exports to outpace that of merchandise…

Part 4. 2008-2010 Exports Targets

64.273.2

84.4


Part 4. 2008-2010 Exports Targets… cont.

Revenue Streams as Sources of Growth

Goods

1. Automotive Parts

2. Electronics*

3. Food*

4. Homestyle Products

5. Minerals*

6. Natural & Organic Products (non-food)

7. Textile, Apparel, Footwear, Travelgoods

Services

1. ICT

2. Construction*

3. Emerging Services*

• Health & Wellness

Medical Tourism

Wellness/ Spa

Retirement

• Logistics

• Entertainment

• Education* Focus of more resources


1. Market Strategiesa. Geographical Marketsb. Culture-based Markets

2. Product Strategiesa. Build up competitor intelligence to enhance product

differentiationb. Initiate “export branding” consciousness among exporters

3. Enterprise Strategies a. Enhance export capacity of enterprises

b. Expand business towards more aggressive export promotion

4. Policy and Legislative Agenda to empower exporters

Part 5. Strategies


5. Policy and Legislative Strategies

a. Trade Facilitation

• Seriously implement the streamlining and automation of trade procedures and government transactions

• Accede to the Revised Kyoto Convention

b. Strengthening of Resources

• Pursue Energy Self-Sufficiency

• Modernize the Agriculture Sector

• Involve Academic and Research Institutions

• Improve Statistical and Data Systems for Trade

• National Innovation Policy and IPR

Part 5. Strategies… cont.


c. Credit and Financial Support for Micro, Small & Medium

Exporters

• Reach out to more MSMEs to access Financing Programs of Government Financial

Institutions

•Increase the Export Promotion Fund



Export Promotion Fund


For every US$1 = US$ 40 increase exports (spent by TPOs)

According to ITC/World Bank economists:

PEDP Total Exports Target in 2008 is with incremental of US$5.27B in goods (net of electronics) and services

Following this standard, we actually need US$117M or around PhP 5.3B this year alone

EDC will be asking only PhP1B per year as Export Promotion under PEDP 2008-2010

* 1US$ = Php 45


Thank You


Market Access Issues

• Need to address constitutional and legal issues that could endanger full realization of benefits offered by FTAs and EPAs

• ASEAN FTA requires RP SMEs to adjust to demands of an open economy

• Developed country markets continue to impose stringent product standards as it is becoming more concerned with health, bio-terrorism and environment

• Intensified demand for more economic efficiency and productivity

initiatives as RP taps new markets and strengthens existing ones

• More sophisticated security requirements


High Cost of Inputs to Exports

• The spate of oil price hike has triggered high commodity prices.

• Insufficient supply of raw materials pushed prices up

• Logistical constraints, particularly transportation, also drove up costs of commodities

• Increasing salary rates of employees, especially in the services sector.


$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

Nominal

Inflation Adjusted 2007Rising Cost of Crude Oil

• High world oil prices put pressure on inflation adversely affecting production costs

• Hinders industries to expand

production while forces some to close shops

• RP ranks 2nd most expensive electricity rates in ASEAN

US$/bbl.

Source: Illinois Oil and Gas Association IOGA


Uncertainties in the Peso-US$ Rate

• Peso had the most rapid appreciation in 2003-2007 among Asian currencies

• Export sector significantly affected by a stronger local currency • Peso started depreciating March 2008 amid lofty oil prices and high local prices • But RP exports seen to remain weak despite rise in peso-dollar rate due to lower global demand


High Cost of Doing Business

• RP ranked 133 out of 178 economies in Doing Business 2008, involving number of steps and documentation requirements, processing time and fees

• Slow automation of BOC and export clearance functions of agencies

• Inconsistencies in the implementation of procedures and policies in the Regions


Inadequate training to respond to growing demand for RP human resources

• Domestic demand for human resources needs a sustainable pool of manpower

• World expects larger movement of professionals and highly skilled labor in ICT, medicine, education, navigation, engineering, communication and entertainment fields

Proposed Philippine Export

Business

pedp scorecards

export revenues

b sources

global141615 sources

planning process workshops

trademap asean secretariat

global trends

world source