Exports are likely to fall short of PEDP targets in 2024

By means of Justine Irish D. Table, News reporter

PHILIPPINE EXPORTS is likely to miss this year’s target under the Philippine Export Development Plan (PEDP), the exporters association and the Department of Trade and Industry (DTI) said.

Bianca Pearl R. Sykimte, director of the DTI-Export Marketing Bureau, said the department remains optimistic about export growth even if it falls short of the $143.4 billion target set in the PEDP.

“We are optimistic that we will exceed the Philippine Development Plan (PDP) target of $107 billion this year, but it will be extremely difficult to achieve the PEDP target of more than $140 billion. We will have to recalibrate,” Ms. Sykimte said Business in a Viber message.

Total exports under the PDP are expected to reach $107 billion this year, comprising $61.58 billion in goods exports and $45.42 billion in services exports.

Last year, Philippine exports amounted to only $103.6 billion, well below the target of $126.8 billion under the PEDP. The country also failed to meet the DTI’s 5% growth target last year.

In a separate interview, Sergio R. Ortiz-Luis, Jr., chairman of the Philippine Exporters Confederation, Inc., said the PEDP is constantly being recalibrated.

“What we do now is we look at the trend every year to see if it is going up. But we believe the target of nearly $145 billion could be achieved within three years,” he said in a mix of English and Filipino.

“Well, maybe we can do that in two years, but it’s impossible to do it in one year. Because, as has been said before, to beat that, we will have to grow 40%,” he added.

Earlier this year, Philexport and the DTI said they are targeting a 10% increase in exports by 2024. If achieved, this would exceed the target of $107 billion in export value under the PDP.

Asked about the growth drivers, Ms Sykimte said: “We expect recovery in semiconductor exports, lower global inflation, continued recovery in tourism and continued demand for IT-BPM (information technology and business process management) to drive exports this year. ”

“This would be higher than last year’s increase of 4.8% and could again be driven by services, especially tourism, as well as improvements in mining regulations and exports of some agricultural products, which increased last year,” said Mr Ortiz-Luis. said.

Preliminary data from the Bangko Sentral ng Pilipinas (BSP) shows that services exports increased 17.4% to $48.29 billion in 2023.

Broken down, exports of travel services have more than doubled to $9.11 billion in 2023, while exports of telecommunications, computer and information services have increased by 6.4% to $7.1 billion.

BSP data also shows that fruit and vegetable exports grew by 3.4% to $2.27 billion, making it the only commodity group to record export growth in 2023.

Ms Sykimte said the decline in goods exports was due to the decline in electronics and coconut exports, which reflects global trends.

On potential risks to the outlook, Mr. Ortiz-Luis cited geopolitical issues affecting shipping, prices and the supply chain.

“Apart from this, there are also issues between China and the US, especially the trade war, so that may affect our expectations for our trade with China,” he added.

The DTI and Philexport say free trade agreements (FTAs) will help drive more trade and increase exports.

“We are also optimistic that the upcoming implementation of the Philippines-Korea Free Trade Agreement will have a positive impact on our exports this year as Korea is among our top 10 export markets,” Ms. Sykimte said.

Data from the Philippine Statistics Authority shows that South Korea will be the country’s fifth largest export market in 2023, accounting for US$3.53 billion or 4.8% of total exports.

Last month, the DTI said the Philippine Senate is expected to ratify the FTA with South Korea by mid-year.

“These agreements help. Because, as you will see, we only have a small number of similarities compared to other countries such as Thailand, which has thirteen or fourteen. How can we compete with that?,” Mr. Ortiz-Luis said.

However, he said the Philippines must do something to ensure that exporters can take advantage of these FTAs ​​and avail tax exemptions.

“For example, our exports of clothing and wearables cannot benefit from the benefits of GSP+ (Generalized System of Preferences Plus) because there are problems with rules of origin,” he said.

“We don’t have a textile industry, so what we do is import all the textiles we use, mainly from China, and so our products cannot come in because they have problems with China,” he added.

Under the GSP+, Philippine garments entering the European Union (EU) are duty-free, but due to the EU’s strict rules of origin, Philippine garments that use imported fabrics are not eligible for zero duties.

The country participates in the EU’s GSP+, a special incentive scheme for low- and lower-middle-income countries. It charges zero tariffs on 6,274 Philippine products.

Last month, the EU and the Philippines formally resumed negotiations on a free trade deal, seven years after they stalled over concerns over then-President Rodrigo R. Duterte’s human rights record.