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A STUDY OF THE EXPORT FINANCING SYSTEM N THE PHILIPPINES

Mario B. Lamberte, Rosario G. Manasan Erlinda M. Medalla, Josef T. Yap and Teodoro S. Untalan WORKING PAPER SERIES NO. 89-12

June 1989

Philippine Institute for Development Studies


TABLEOFCONTENTS

I.

Introduction A. B. C. D.

II.

V.

7

20

Analysis of Fiscal Incentives to Exports Access to Intermediate Inputs at World Market Prices ................................ Export

Incentives

The 1.0 2.0 3.0

B.

The

Export

under

Export Structure and Pre- and Post-Shipment

The Philippine Forecasts of Post-Shipment

A.

B.

.............................

2.0 2.1

Institutional

A.

Policies

7 16 18

Philippine Demand for A. B.

iV.

Promotion

1 3 6 6

Trade Policy Environment .......................... Fiscal Incentives for Exports ..................... i.0 Theoretical Framework ................... _ .....

2.2 III.

1

Rationale and Ob3ectives of the Study ............. Sources of Data .... , .............................. Existing Literature on Export Finance ............. Organization of the Study .........................

Export A. B.

..........................................

BOI

and

EPZA

Forecast of Financing

.....

......... Exports and ...........

Export Structure ................... Exports and Demand for Pre- and Financing ...........................

Support

for

the

Export

Sector

...........

Government's Export Development Program ....... The Present Export Development Program ....... Service Coverage ............................. Effectiveness of Export Development Program ...................................... Private Sector and Exports .................... Financing

System

in

the

Philippines

............

21 34

47 47 89 95 102 103 117 118 122 131

The Export Financing System in the Philippines .... 1.0 Export Refinancing Scheme of the Central Bane 2.0 The Commercial Banking System ................ 3.0 Special Credit Programs ...................... 4.0 Export Credit Guarantee System ............... Experlence with Export Financing .................. 1.0 Banks ........................................

131 131 140 143 163 186 i_6

2.0

197

Exporters

............

. .......................


VI.

Overall Evaluation of the Export Financing System the Philippines ....................................... A. B.

VII.

Theoretical Export Financing System ............... Evaluation of the Export Financing System ......... i._ Refinancing Scheme of the Central Bank ....... 2._ Financing Scheme .............................

Conclusions and Agenda for Policy and Institutional Reforms ................................................ A. B. C.

References Annexes

in

Reforms for Achieving a Free Trade Status on the Export Sector ..................................... Reforms for Assuring Automatic Access to Export Financing ........................... .............. Scope for ADB Assistance .......................... ........................

_. ........................

.....................................................

217 217 220 220 222

230

232 233 239 243 245


LIST OF TABLES,

FIGURES

AND ANNEXES

I.l II.l II.2

Profile of Sample Respondents ... ............. . ..... Real Effective Exchange Rate ........................ Average EPRs .......................................

II.3

Number of Items Regulated, Liberalized and Newly Regulated by ..' Year ,. 1977-88 --ooeo.o.eoooooooe,a._... Report on Nominal Protection for the Philippines Customs Tariff ooee_eooeoa_o.oeaoaoooe, eeoeeoooe._.o. Nominal Exchange Rate and Real Exchange Rate Index(: Philippines vs. Korea, Singapore, Thailand, Taiwan, and Hongkong 1973 i. 1989 _---o*ooeo.i_eo.eoooaae_.eo. Documentary and Other Requirements for Establishment of BMWs -oa*-oeQeoooeo-aeoeeooono_eo.o_.oo.oe..ooo=. Documentary Requirements in Application for Duty Exemption Under CAO 3 -- 78 ---oo-_*eooeoeeo..o.oo_eooe Procedures for the Release of Importation Under CAO 3-78 ............................................ Requirements for BOC Drawback Claims ............... Requirements and Procedures For Fixed Drawback Scheme .............................................. Comparison of Incentives Under B P391 and E0226 ..... Change in the Internal Rate of Return Of Hypothetical BOI Registered Firms Under BP391 ...... Change in the Internal Rate of Return of Hypothetical BOI Registered Firms Under EO 226 ..... Project Cost of BOI Approved Projects, 1981-87 ..... Internal Rate of Return of A Hypothetical Firm Under Selected Incentive Schemes In ASEAN Countries, 1988.. Special Incentives Given by the Government ......... Summary of Selected Trade and Fiscal Problems, Recommendations and Prospects .. .................... Importance of Natural Resource-Based Exports in Philippine Trade ...................................

!I.4 II.5

II.6 II.7 II.8 II.9 II.10 II.ll II.12 II.13 II.14 II.15 II.16 II.17 III.l III.2 III.3a III.3b III.4a III.4b III.4c III.5 III.6a III.6b III.6c III.7a III.7b

Philippine World Exports By 1-Digit PSCC Category .. Distribution of Philippine Merchandise Exports ..... Percentage Distribution of Philippine Merchandise Exports ............................................. Value of Exports by Major Commodity Group, 1970-1987 Growth Rate of Philippine Exports, 197_-1987 ....... Structure of Philippine Exports ................... . Percentage Distribution of Total Exports, Traditional/Non-traditional 61971-1987) ............ Merchandise Trade (F.O.B. Value) ................... Annual Growth Rate of World Trade - D MCs, EEC, US, Japan and ASEAN • _ • • "''e_-eeoo--oee..egloooeeeo....o..... • Percentage Share of Imports/Exports to Total Tra_e, by Country of Destinatlon - 1965-1988 .............. Average Percentage Distribution of Export Products to Total Exports: ASEAN, DMCs and WOrld ............ Average Growth Rate of Philippine Exports to DMCs and World Exports -.--.-eoaQee..eo.oe,e.o..eeeo.eoea

5 12 12 14 15

17 23 26 28 3_ 31 36 38 39 42 43 46 48 62 64 65 66 68 72 76 78 79 80 81 83 85


III.7c III.8a III.Sb III.9 III.10 III.lla III.llb III.llc III.lld III.12a III.12D III.12c III.12d IV.I IV.2 IV.3 IV 4 IV.5 V.I V.2

V.3 V.4 V.5 V.6 V.7 V._ V.9 V.10 V.II V.12 V.13 V.14 V.15 V.16 V.17

Traditional and Non-traditional Exports to DMCs and World Exports .................................. Percentage DistriDution of Philippine Merchandise Exports by Destination (1987-2000) ................. Distribution of Philippine Merchandise Exports by e_u_eaoo_taoooeQooeooo_eo_o Destination (•1987 i 2000) Total Merchandise Exports, 1977-2000 ........... ,... Comparlson of Central Bank and PIDS Forecasts, 1989-1994 .......................................... Pre-snipment Financing Requirements By 1-Digit PSCC Category (1989-2000) ............................... Post-shipment Financing Requirements by 1-Digit PSCC Category (1989-2000) ............................... Percentage Distribution of Philippine Merchandise Exports By 1-Digit PSCC Category (1987-2000) ....... Distribution of Philippine Merchandise Exports by 1-Digit PSCC Category (1987-2000) .................. Percentage Distribution of Philippine Merchandise Exports Classified as Traditional/Non-traditional .. DistriDution of Philippine Merchandise Exports as Traditional/Non-traditional ........................ Pre-shipment Financing Requirements Classified as Traditional/Non-traditional ........................ Post-shipment Financing Requirements Classified as Traditional/Non-traditional ........................ One-Stop Export Documentation Center: Participating Agencies ........................................... Government Funding and Support, 1989 (DTI Agencies)..ll6 Services of Government Agencies Availed of _oooomeooeo*oo_ooooooooomoo*ooaeooQ_g*o by Exporters iooeeooooeo_oetoQol •Trade Associations of Exporters • The PCHI-TLRC Financing Programs ................... Central Bank Rediscounting Policy, Inflation Rate toeo_o_ooeem_eee_e_aoo and Various Interest Rates • Outstanding Rediscounts of the Central Bank, Loans Outstanding of Commercial BanKs, and Commodity Exports ............................................ Loans Granted by the Central Bank to Commercial Banks ................................................ Total Resources of the Philippine Financial System •Loans Outstanding: Commercial Banks ................ Some Features of the Special Lending Progralns ...... ALF And IGLF Availments by Investment Area ......... IGLF Sources of Funds .............................. Interest Rates on •IGLF Availments of Participating Financial Institutions ............................. Operating HighligHts, GFSME ........................ GFSMZ Loan Availments by Investment Area ........... Past Due Accounts, GFSME ........................... Income Statement, GFSME ............................ Annual Performance Highlights, ECGP-SMI ............ Actual NumDer of Participating Banks ............. .. Annual Guarantee Issuances, by Type ................ Annual Guarantee Issuances, by Product .............

87 90 90 92 94 96 97 98 99 100 100 101 101 113

121 125 129 134

138 139 141 142 145 148 150 152 168 169 170 171 178 180 181 182


V.18 V.19 V.20 V.21 V.22 V.23 V.24 V.25 V.26 V.27 V.28 V.29

V.38 V.39 V.40

VI.2

VII.I Figure Annex

Amount of Export Loans Granted in 1988 ............. Export Loans ....................................... Types of Collateral for Loans ...................... Difficulties in Extending Financing to Local Exporters .......... ................................ Banks' Availment of Guarantee Facilities ...........

191 191 192

Ratio of Credit Terms to Total Exports ............. Sources of Financing Export Production, 1988 ....... Percentage of Exports in 1988 Which Were Prefinanced and Received Post-s_ipment Financing ...... Export Financing from Local Banks .............. .... Cancellation of Orders by Buyers ................... Export Prospects for the Next Three Years and Prospective Markets ......... .......................

V.41 V.42 V.43

VI.I

183 185 188

Ratio of Guaranteed Loans to Export Loans Granted in 1988 ............................................ Claims Made Under the Guarantee Programs ........... Problems With Export Guarantee Facilities .......... Ma3or Product Lines ................................ Form of Products/Services Exported/Sold in 1988 .... Countries Where Firm Exported to in 1988 ........... Annual Sales and Export Sales ...................... Average Size of Transactions in 1988 ............... Percentage Change of Export Sales in the Last Three Years ...... . .................................

V.30 V.31 V.32 V.33 V.34 V.35 V.36 V.37

V.44 V.45

Guarantee Defaults Trend ..... , ..................... Profit and Loss Statement, ECGP-SME ................ Number Of Export Customers, 1988 ................... Size of Individual Transactions, 1988: Banks' Responses ............................... ........... Terms of Export Transactions ....................... Letters of Credit ..................................

188 189 189

192 195 195 196 196 198 199 200 201 203 204 2_5 2_6 208 210 212 213

New Export Products ................................. Summary of Selected Finance-Related Problems, Recommendations and Prospects .... .................. Commercial Banks' Approval Rates for Every i_0 Loan Applications Received in 1986 ...................... Ratio of Agricultural Loans to Total Loans and Ratio of Agricultural Loans Guaranteed to Total Agricultural Loans Granted, Commercial Banks, 1981-1986 .......................................... Pro]ected BanKs' Loans and Discount, and Pre- and Post-Export Financing ............. . ................ I Total Exports, FOB Smillion ........................ II ....................................................

214

A B C D E

245 247 248 249

F G

List of PersonsInstitutions Visited ............... Organizational Chart (DTI) ......................... 1987 Positional Organization Chart (GFSME) ......... Philguarantee Organizational Chart ................. _hilippine Export and Foreign Loan Guarantee Corporation ................. . ...................... Export Credit Guarantee Program for Small and Medium Industries .................................. Proposed Guarantee Assistance Program for Overseas Contractors ...............................

215 223

227 240 61 219

250 253 255


A STUDY OF THE EXPORT

FINANCING

SYST_4

IN THE PHILIPPINES*

Mario

I.

B. Lamberte, Rosario G. Manasan, Erlinda Josef T. Yap, Teodoro S. Untalan**

M. Medalla

INTRODUCTION

A.

The

Rationale

and Objectives

Philippines

went through

Inappropriate

economic

nighest

and unfavorable

crisis. faster

level,

hefty

a recession political

external

reforms.

industry

sector

In

for two

consecutive

instability,

at

the

enyirormlent all contributed

to

the

has rebounded

which immediately

the pack.

Merchandise

at a relatively

instituted

1988, GNP grew by 6.7 percent

leading

years.

corruption

the economy

under a new government

and economic the

policies,

In the last three years, pace

of tne Study

political

in real terms

exports

increased

with by

a

27 percent.

*This study is inade possible Asian Develo_ment Ban_ (ADB).

through

_le financial

support

of

t21e

**The authors are Vice-President, Research Fellows (Manasan, Medalla and Yap) and •Research Associate, respectively, of the Philippine Institute for Development Studies (PIDS). The views express_ necessarily

reflect

in this study

are those of the authors

those of the Institute.

and do

not


2

Despite

the

instituted

remarkable

by the gover_aent,

to the attainment solution getting more

seam,s

problem,

perhaps

proposal

along

The

huge

potentials

t_he Philippines

In

administration been

that has been time,

the

Balassa economic

overwhelming 1986).

In

debt

no

that

is

piles

up

into

serious

The debt

reduction

The reluctance

of Bhagwati

countries

and exports. has

on

the

is

the

tnis context,

the

(1978),

data

exports

and

where

and

this interest

has

dragons;

Michaeley

in the

is perceived

by many

(Power and Sicat

as

fifties over

exhibiting

i_oerative

of

exports.

1971; Tan 1979;

becomes

(1977),

balance

nurture

pursued

same

link between

recurring to

success

At the

that has been carried

promotion

past,

design

the positive

need

strategy

trade regime

export

in the

worldwide,

In the Philippines,

and early eighties bias against

concern

export performance.

country

its

its growth momentum.

(1978), Krueger

the import suDstituting

examine

this is one area

of the Fast Asian

to their

highlighted

and

in the recent

Perhaps,

policies,

with cross

inward

well

to sustain

stories

largely attributed

and the concomitant

seventies

look

there has been a renewed

(1978) doc_nted

Furthermore,

external

of more developed

untapped.

develop

by the success

problems

in which

burden

put the economy

remarkably

of export promotion

growth

constraints

debt

is a long shot.

therefore

have performed

years,

works

payments

sixties

should

still r_mained

stimulated

to service

already

to such solution.

can further

recent

serious

the 1984 - 1985 crisis.

banks and governments

Exports

faces

reforms

One such constraint

shock could easily

the Brady proposal

block

and ma3or

is the external

Borrowing

far worse than

Philippines

strengths.

the

each year.

of creditor

key stumbling

growth.

to be near in sight

heavier

recovery

still the economy

of a sustainable

debt, and an external

part

economic

and into an

Medalla not

only


3 because

exports

are by themselves

desirable

they

bring and the favorable •growth

also

because

promotion

of

the need

would

imply

implicit penalties as

programs

study

to counteract

with

review

2.

analyze

the Philippine

3.

provide

forecasts

B.

export

agencies

providing

and evaluate

key

agencies

environment

as well

•activity over and

above

promotion

policies

financing

and

system.

of the Philippines;

and demand

for post-

and pre-shipment

of

non-financial

assistance export

government

to exporters; financing

system

in

the

and policy

strengthen

the export

and

institutional

reforms

that

can

further

sector.

of Data

from three groups

officers

for •the

structure;

the existing

The study uses both primary obtained

Export

compensate

focus on export

the •contribution

recommend

Sources

•bias.

but

from 1989 to 20_0;

Philippines; 6.

export

policies

of exports

and assess

describe

that

exports

to:•

the export promotion

and private 5.

special

it attempts

i.

descriDe

anti-export

exchange

strategy.

•examines the

of the Philippines

More specifically,•

4.

of increased

to the exporting

in a neutral

therefore

financing

the

of the foreign

exports •in the macroeconc_ic

incentives

that which would prevail

This

implications

the use of instruments

against

those that provide

because

of

providing

and secondary

of data

export-oriented financial

sources. private

data.

The primary

The first group institutions

and non-financial

services

data were

consists

and to

of

goverr_nent exporters.


4 Interviews The

were

conducted

information

unpublished

gathered

reports

The second

group consists

medium'size

banks

as

total

assets

used

bank; and one small

in choosing

The

third

traditional

these

six

sample

exporters.

For

sent

Metro

Metro Manila

the National i Industry

provided

was used

Lconomic helped

hand-outs agencies.

generally

with

system.

gover_nent-

large domestic

The aggregate

assets

48

banks;

of

percent

Non-random

A structured

of 23 Five

these of

the

sanloling

was

questionnaire

firms are

which

purely

summariz_ in

based

in

in

are

was utilized

gathering

regarding

personal

in Choosing

identifying

I.l.

the

respondents. Au_]ority

indirect

A

the

sample

questionnaires answers

given

while

were in

for

were conducted.

The regional

using

the

of

structured

the nonNon-

offices

a,_ the Deparhnent

respondents

non-

profile

from

the telephone,

interviews

or

The

data

some of the

through

producing

producers

Table

respondents,

and Development

by the research

The secondarydata

three

to _156B comprising

were done

based respondents,

sanpling

bank.

utilized

questionnaires

Manila

random

and

was

is

to them and clarifications

returned

bank;

one

traders; and 12 producers-traders.

respondents

schedule

supplemented

co,_oercial banks:

banking

consists

products.

pure

interview

were

schedule.

data from these banks.

group

export

exporters;

1988 amount

the sample banks.

primary

interview

agencies.

of seven

of the commercial

structured

interviews

of a multinational

of December

in collecting

from these

of concerned

owned bank; one branch one

using open-ended

of

of Trade

guidelines

team.

were obtained available

fr_npublished

to the public

reports,

from government

brochuresand and

private


5

Table [ 1 PROFILE OFSAMPLE RESPONu_Nmb

Assets

A

B

C

Exporter Buszness No of Typeof No Address EmployeesBusiness

Typeof Ownershlp

Year BeganNumber of Years Operation Exporting

Small Scale 1 I 1 I I 1 i I i I I I

1 6 7 R 9 lg II 12 14 17 2g 21

2 3 3 3 3 3 3 3 4 i 5 6

8 It 13 9 3g 7g 15 28 25 48 41 25

x trader x trader both both both both x producer both both x producer both both

corporation single proprietorship single proprietorship singleproprietorship singleproprietorship single proprietorship singleproprietorship s_ngleproprietorship slngleproprietorship corporation corporatlon slngleproprletorsh_p

1988 1982 1983 1985 1982 1981 19B3 198B 1979 1984 1988 198g

3 4 8 nap I 9 nap Ig 5

MediumScale 2 2 2 I 2 I

2 3 4 13 15 22

2 2 2 3 4 I

IBB 2g 3gg 8g 45 42

x trader x producer both x producer x producer both

corporation corporation corporation corporation partnershzp corporation

1973 1981 1987 19Rfl 1983 1974

15 nap 2 nap nap 9

LargeScale 2 2 2 I 3

5 lb 18 19 23

2 1 I i

7gO 4 na 8 lg55

x trader x trader x trader both both

corporation corporation corporation corporatzon corporation

1985 19B6 1953 1983 1974

6 2 3b 5 15

1

NOTE Assets I lessthanP5 m_lhon 2 P5 m_lllonto P20m1111on 3 morethanP_glilhon BusinessAddress 1 2 3 4 5 6 na nap

no answer notapphcable

Metro Manila CebuCity DavaoCity Tagbzlaran City,Bohol BaguloCzty Oagupan City

1 7


6 C.

Existing

Literature

This study has greatly in the Philippines. are

reiterated

mention

In fact, many

in this study.

Action Center

3.

4.

"Export Credit

The

The

Bank, "The Philippines:

August

1988) ;

Ifzal

All,

described

an

Exports

Agenda

for

Staff Paper NO. 4 (September

First Washington

Associates,

Structure,"

report

prepared

for

Asia Region,

the World

Bank

Organization

next

financing agencies and

discusses

policy

Chapter

presents

"Report

of

to

the

to Export

1981);

Sector

Study"

A

(23

Sector

Development

Bank

and

on Philippine the

Export

Industry

(September

Finance

and

Energy

1988).

of the Study

chapter Trade

Office

Approach

Asian 1988);

studies

at this point

from the Philippines:

Reform,"

finance

in earlier

Financial

Economic

A

on export

important

(15 September

and

given emphasis.

private

"Manufactured

raised

A Dynamic

Profile

Philippines.

and

Insurance:

in the Philippines"

World

studies

for Trade Facilitation,

Development

Operations

D.

from recent

It is therefore

Presidential

2.

Finance

of the points

major studies:

President,

shipment

benefited

the following

i.

1970

on Export

the export promotion

environment

III analyzes

forecasts

the Philippine

of exports

from 1989 to 2000. providing

assessed

and fiscal

IV.

incentives export for

THe contribution

non-financial

in Chapter

and demand

assistance Chapter

V

policies

in are

being

structure

since

pre-

and

post-

of government to

the

exporters

discusses

the

and is

export


7 financing and

system

in the Philippines

exporters.

Chapter

export

financing

sions

of

tional

reforms.

II.

system.

PROMOTION

This •• chapter Philippines

all

controls from

a

imported consumer

in response

of the

together

the major

for policy

promotion•

banks

existing

and

concluinstitu-

policies

The trade policy

of fiscal

incentives

during

of

the

environment

is

for exports.•

goods.

This

imposed

assistance. Virtually

exchange

could hardly

favors

and

effectively

proved

dependence

rate and lopsided

Foreign

exchange

penalizing

the

backward

to be an expensive

of primary incentive

exports

structure

exchange

was

feature

could

for the

policy,

linkages

means

rationed

rest

which,

as

stages

of

and exports.

of saving

increased

be

"non-essential"

finishing

towards

resulting

goods

be obtained •for

rewards

nature,

foreign

only producer

over-

inadvertently

difficulty

an import substitution highly

the in

was

strict

became a permanent• policy

fully entrenching

Import substitution while

protectionist

to a severe balance-of-payments

The system

while

up to the present,

the period.

the Philippines

"essentiality."

as foreign

continuing

has been generally

in U.S. economic

to

manufacturing

exchange

evaluation

pulls

export

by a review

degrees

when

necessarily

exchange

the

trade policy

varying

the decade,

such,

discusses

t/_an three decades,

1950,

drop

according

of

more

in

of

Policy Environment

Philippine

began • in

The last chapter

experience

POLICIES

followed

Trade

although

an overall

from 1950 up to the present.

first analyzed

For

VI• presents

finance

the study and •presents a set of agenda

EXPORT

A.

and export

as

iluport

the

foreign pegged

substitution


8

effectively decade,

penalized

even

exports

and discouraged

the strict exchange

balance-of-payments

pressure.

system

the

which

protection, the

was

1950s control

foreign

exchange

achieve. problem.

In Bank

became

preserving

rewarded

remained

while

the

started

1970s,

r_mained

Unclassified

Essential

Consumer

Constm_r

to

be covered.

was

protection

restrictions,

structure.

Escalation

on

were

the

of

of protection

of

linkages

primary

structure,

difficult

to

The

Central

CB

Circular

of c(mmodities Consumer

the motive

a_rding

while

balance-of-payments

adding more for import The

the effect to

classified

(SUC), and

in the domestic market.

tariffs

exports

exports

and

of

restored.

followed,

buttressed

stages

and

protection

to

tariff tool

widespread.

for imports

of cases,

in general, of

effective

by type of product.

More CB Circulars

of local industry

quantitative

in the

(UC), Semi-Unclassified

In the majoritY

the

in the finishing

becamemore

CB approval

(NBC).

the

vulnerable

of classification

requiring

1962,

became more costly

import controls

the system

in

backward

dependent

increasingly

the country

a

the recurring

had to devalue

the structure

In the late 1960s, inloort controls

289 was issued as

saving

Thus,

1957

With the same biases

earnings

not hold down

program

Import substitution

highly

still penalized. exchange

in

but largely

remained

foreign

of the decontrol

system.

Thus, after

of import controls.

promulgated

replacing

manufacturing were

completion

could

By 1960, the government

peso and opted for a relaxation

With

controls

export growth.

stage

imports licensing

system

of the of

Non-

of

tariff

processing

remained.

By bias

the late 1960s, government

against

exports.

Instead

planners

have become more

of reforming

the

protection

aware of

the

structure,


9 however,

export

promotion

adopted in the 1970s.

measures, mainly through BOI,

started

to

be

Clearly, however, such an offset approach could only

reach

a

limited number of sectors.

While

nontraditional

exports

grew,

these

were mostly concentrated in semi-conductors and garments (which

has

low value-added).

The exchange rate policy during these periods did not help reverse the bias

against

received the

exports.

On the contrary, it added to the

penalty

by exports by fixing the rate at unrealistically low levels.

50s and the 60s, this was made possible, by import controls

tariffs.

In

the

(which• cannot underlying

late 1970s up to early 1980s,

the

huge

In

and

foreign

high

borrowing

indefinitely be •sustained)propped up the •peso, hiding

BOP

disequilibrium.

Table II.l shows

nominal and real exchange rate from 1973 to 1987. is

already

the

an

mov_n_ent in

The real exchange

nominal exchange rate deflated by the •ratio between

the

the rate

domestic

price index and the foreign/world price index.

The

Philippines has a history of trying to maintain a

fixed

nominal

exchange rate, until extr_ae BOP •difficultiesmade it impossible to do with

higher

constant

domestic

nominal

Eventually,

rate

inflation relative to has

meant

real

world,

appreciation

the of

relatively the

peso.

the Philippines had to devalue drastically (e.g., 1969,

1983-

-

84). With

an . unrealistically

effectively penalized. or

a

the

so.

services

which

low

(real)

exchange

rate,

exports

Non-tradeables, on the other hand (these are

can neither be imported -- •naturally or

were goods

because

of

government policy -- nor exported) were rewarded, especially non-tradeables dependent on imports •for•their inputs.

Ranking different commodity

groups


REAL

TaDle EFFECTIVE (1973

II.l EXCHANGE = 100)

RATE

Real Year

Exchange

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

International Key Indicators

aewaau_u

Index

exported

heading

-- composed

of high

mainly

tariff

The next group, which would substitutes

this would belong

readily

reasons

be imported.

penalized,

intermediate

which

The

can other

rewarded is

nor

composed

and capital most

In

which

as bulk and

These are neither

at low duties.

agriculture

the

substitutes

-- i.e., goods

be slightly

(e.g., some

of which are allowed

of import

be

items but are importable.

nor imported due to natural costs prohibitive.

(IFS)

the list would

inputs could

be the ',true" non-tradeables

transport

import

Statistics & DMCs

group,

import ban but whose

local production would

Financial of ADB

uo most penalized

"non-tradeables"

binding

making

Rate

100 83.69 92.17 95.64 98.04 105.32 93.72 88.10 85.91 83.13 102.36 100.03 88.37 112.03 111.10

Source:

import-dependent

Effective

goods)

penalized

is a large net exporter.

is


11

It

is

thus not difficult

to see how the policies

. import

promoted

import-dependent

achieved,

but given the resulting

production

for

substitution. incentive

the small dcmestic

market

There

structure and

in

the

was

which

past some

highly

penalized

have growth

rewarded

exports,

growth

could not be sustained.

Perhaps, incentives penalty

recognizing

were

arising

By

the

structure various

granted,

end

of

incentives

the 1970s,

more

launched

First,

the Tariff

schedule

of import licensing

uniform

additional

import

as planned.

with the 1983-1984

TRP

structure

remained to exports

Achievements

while

efforts

the

surcharge

Of

the

huge

approach

Thus,

reform

protection

of

in the

was formulated.

which

was eventually

liberalization

through

1981,

Second,

Except

removed,

had to be

the

protection

(TRP) was impl_amented.

liberalization

rates

reduced

shelved,

not only nominal

(EPRs) as well

the same but at lower

(see Table

levels.

has been

reduced

derived

from the TRP would

were done

import barriers

protection

and more apparent.

Reform Program

Import

biases

of an offset

the first major

has substantially

protection

similar

offset

export

a

for the the

TRP

however,

BOP crisis.

effective

penalty

the inherent

and the inadequacy

system.

The

in the 1970,

but these were not enough• to

became

finally

proceeded

starting

from the exchange •rate policy.

was recognized

gover_nent

these constraints,

structure

in import

II.2).

Consequently,

but

the

The

EPR

relative

after TRP.

be totally

liberalization.

are being maintained

but also shift

tariffs

nullified

Reduction

in

would not only retain

the foregone

tariff

revenue

to

if

no

tariffs the

old

private


12

AVERAGE

Table EPRs

II.2 (in percent)

Pre-TRP

All

Sectors

24

i_

Exportables Importables

-3 44

-: 25

1

-i

40

23

1 50

1 33

Primary

and

Agriculture

Manufacturing Exportables Importables

Source:

rents.

Tariff

Thus,

simultaneously

In

a

610

banned

crisis, and

more

CB Circular

items were

liberalization

of import liberalization

was

planned

liberalized.

However,

were

in 1983, 48 items were removed

from

exchange

grain

imports

products.

Lesser priority and pre-paid

to

through

to

exchange

payments

for exports

items were allowed import L/Cs.

response

all foreign

allocation

and raw materials

in

CB

items.

circulars

970 was issued pooling

foreign

was implemented.

263 items from the list of banned

In the second half of 1983,

essential

importations

import

more importations,

list.

limiting

of

in 1981, removed

issued to regulate the

schedule

in 1981, a schedule

stage,

1982,

Commisslon

with the TRP.

Starting The first

Post-T

and

for

the

receipts

crude

vital

BOP

oil,

domestic

a scheme of no-dollar

The con_nitment to liberalize

stayed

i_/ The EPR for a certain industry measures how much increase, in percentage, in the value-added brought about by protection. For example if DVA is the value-added given tariffs and import controls and FTVA the value added without tariffs and import controls, then EPR = DVA/FTVA - i.


13 through,

albeit

Revolution.•

not. without

controversy,

The new government

after

liberalized

more

the

February

items between

1986.

March

1986

L.

and

April

1987,

1988.

and

around

129

80

These

Some 951 items were

items in •1988.• The number

percent

of the total number

are summarized

remain

liberalized

regulated

in Table

representing

II.3.

so

in 1986, •171

far

regulated

liberalized

based

As of December

less• than 12 percent

on

items

in

comprises

CB

circulars.

1988, some 673

of the total

items

number

of

the impact

of

items.

Some tariff the recent appear

import

to

tariff •

liberalization

be minimal

average

As

adjust_aents have been made

shown

•to efficient

even

indicated Table

be

growth,

neutral,

On the whole,

by the almost

however, • these

unchanged

(unweighted)

iI.4.

the exchange

not protection,

but neglected

export-led

least

in

experience.

already •mentioned above,

been one of penalty,

an

as

to help smoothen

rate policy

in the past

to not only the export

import substitutes.

With

if not actually

according

sector but also

the current

it is imperative •that the exchange

rate

"protection"

has

thrust

of

should

at

to

exports

and

the

1983-84

BOP

import substitutes.

After

a

series

of de facto devaluations

following

2_/ crisis,

a real depreciation

up slightly real

price

in 1985 but with of the peso

of the peso could the world

be noted.

currency

(weighted by trade with

The

realignment, major

peso

went

the

composite

trading

partners)

2_/ What is more important than the trend in nominal exchange rate is what happens to the real exchange rate, that is, the nominal exchange rate including effects of"domestic and foreign inflation. (Specifically RER = NER x FPI/DPI where RER is the real exchange rate, NER the nominal exchange rate, FPI the foreign/world price index and DPI the domestic price index) .


14

NUMBER

Total Number Regulated

1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 i988

1892 1926 2031 2032 1771 1438 1988 1994 1924 973 802 673

OF AND

ITEMS NEWLY

Newly

47 34 104 1 2 277 59_ 6 -

Table II.3 REGULATED, LIBERALIZED REGULATED BY YEAR 1977 TO 1988

Liberalized

263 610 48 70 951 171 129

No. of Regulated Items or Percent of PSCC lines

33.5 34.2 36.0 36.0 31.4 25.5 35'.3 35.4 34.1 17.3 14.2 11.9


wN ..__,--,

I-I-I

-'

.

_

_ -

o

.

_

.

..-__

_

.

.

.

i o iii }'i I .,,,,-I

-

- .......

! N

'00 : i;

15


16

again

went down

gain

in 1986 and rising

in the competitiveness

slightly

in 1987. This

of the peso at least

indicates

some

in the recent years

(cf.

Table If.l).

The how

more

revealing

has

fared

it

with

specifically,

Thailand,

the

in

movement

currencies peso/won 1986.

of

from

estimate

again

of

S. Korea, rate

presented

rate index rises

competitiveness

in Table

against

cheaper the

The peso/HK$

peso/baht

the

index

against

real exchange

rose

the baht thereafter

1988.

Taiwan,

B.

rate

Fiscal

of

Authority administered

reviews

by

and

the

in 1985-

only in

to

lose

1985-1986. again

of

in the past three

years.

from 1973 to 1982,

again

some

Thus,

but

competitiveness that of BOP

1973

in

surplus

the peso/Taiwan

has

dollar

substantially.

and analyzes focusing

Board of Investment

(EPZA),

shown,

for Expor_ts

specifically, the

the

rate index has fallen

its long-running

its currency.

index has risen

Incentives

This section Philippines,

to revalue

by

and

a real depreciation

and the index is still below

on the other hand, with

been under pressure real exchange

lost

peso As

won

real exchange

The peso

the

in 1983-84

Korean

is

is shown

but falls again

rate index was falling

in 1983-84.

peso,

competitors,

This

II.5.

in 1983-84

relatively

major

index between

for 1988 shows however

the won.

our

of the

and Hongkong.

1973 index but at least has been maintained

The

aegis

currencies

Taiwan,

the peso became

the peso against

of the competitiveness

the real exchange

real exchange

Preliminary

the

these countries

Hence,

sane

indicator

the

the Bureau

tax

•

fiscal incentives on the incentives

(BOI) and the and

of Customs

duty

for exports provided

Export

under

Processing

exemption/drawback

and the BOI.

in the

It presents

the Zone

schemes first

a


17

TableH.5 " NOMINAL EXCHANGE RATE AND-REAL EXCHANGE RATE INDEX: PHILIPPINES: KOREA, SINGAPORE, THAILAND, TAIWAN ANDHONGKONG 1973-1988 ...................................................................................

YEAR

_-...........................................

Korea Nominal

Sin9apore

Real •

Thailand

Nominal Real..Nominal -- Real

Taiwan.

HongKong

Nominal.... Real. • Nominal Real

__ ................................................................................................................................

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 i985 1986 1987 1988 p/

0.017000 0,016800 0,015000 0.015400 0,015300 0.015219 0,015243 0.012365 0,011600 0.011681 0,0142"70 0.020719 0:021387 0.023128 0,025180 0,029000

100,00% 2.764900 100.00% 0.327700 90.24% 2.785500 89,47%0.333200 95.88% 3,056500 93,22%0.355700 107,27%3.011300 84.30%0,364700 ,I08.91_ 3,034700 80.99_0,362900 115.85%3.239100 84,16%0,362200 I15.39_3,392800 7574_ 0,361300 105,72%3,507800 "'70,92%0.366800 107.85%3.739300 72,20%0_362100 105,46% .. 3,990700 72,45%0,371300 121,82%5,259100 8'9,ii% 0.483200 118.28%7.828500 90.08%0,706400 97.71%8.45/000 76,90%0.685100 107,17%9,372067 _3.63%0.779250 Ii6.37%9.776900 84,74%0,800908 132.65% I0.490400 85.06%0.834200

p/ AsofAuust1988 only

Source: International Financial Statistics (IFS) KeyIndicators ofDMCs ofADB

100.00% 0.176600 100.00% 1.311800 100.00% 92.55% 0,178600 115.30% 1,337000 82,.88% 95.98%0.190700 119.60% 1.467500 86.35% 96.73% 0.195800 118.51%1,517100 87,04% 95.75%0,194800 116.91% 1,58790089114% 95.95% 0,198800117.22% i.57220086.83% 87.12% 0.)04_700 " It0.07% 1.41470075.29% 89.81_ "t0.208600 I13.05%1,509400. 74.97% 88,30% 0,214400119.81% 1.41250070.93% 86.19% 0.218300 .113.42% 1,406500 70,88% 106.71% 0.277400134.26% 1.52800076,91% I03,17_ 0.421700136.43% 2,13600075.03% 78.74% 0..468900 119,33% 2.88300086.32% 90,42% 0.539967137.93% 2.61360080.04% 91.68% 0,651375 162.34% 2.66940081.42% 90,92% 0.740100172.67% 2.702000 --


18 theoretical

framework for the design of an optimal incentive

package

for

exports, and then describes and evaluates the existing fiscal incentives to exports.

1'0

The

Theoretical Framework

rationale

for

the

provision of

export _ incentives

is

better

understood by taking a closer look at the bias against the export

activity

relative

exports,

B, from

to the import substituting activity.

This bias against

is defined as the proportional difference in the domestic i_port

substitution

(Balassa 1971).

and the domestic

value

added

value

from

added

exporting

Thus, is V

d B

=

1

(i)

X v

d or

is (I+T ) -

a T ii

i

B

=

- i

(2)

X

(I+T)

-

a T ii

is where

v :d

is

domestic

value

added

in

import

substitution

industry, X

v

is domestic value added in the exporting industry, d

is T

is

implicit

tariff

rate on

the

substituting activity in industry j,

output

of

the


19 x T

is

the implicit

exporting a

is

the

tariff

activity an%ount

rate on the output

in industry

of

of

the

j,

intermediate

input

i

used

to

i produce

one unit of output

and

3__/ T

is the implicit

tariff on input i.

i

B

is

implicit

positive.

tariff

is negative

on output

This measure

substitution,

zero.

The

reduces trade

first

removal

of tariffs

added.

It

exports

the

on exports

(it

tariff on

structure

perpetuates.

the

on all imports.

of the first term

implies

this

that EPR

is

inputs

relative

to

This anti-

expression

way of achieving

and restrictions

also

is a subsidy

the implicit

reducing

and denominator

for

on exports,

best and most direct

both numerator value

by

that

the penalty

that the protection

bias can be eliminated

there

tax) while

represents

export

outright

from the fact

is zero unless

if there is an export

are positive. import

This results

in

(2)

is

by

Doing

to the

this

in (2) to the free zero

for

all

is.

J Alternatively, results

of

low and uniform the first option.

timing/sequencing considerations the then

issues,

indicate

short run or even compensate

on output

tariffs

etc.)

on all imports will approximate

However,

both economic

as well as noneconomic

(adjustment (political,

the costs, etc. )

that the first best approach may not be feasible in the medium

for the bias against

term.

The second best solution

exports

and exemption/credit/drawback

via a combination

of

in

would subsidy

on taxes on inputs.

3_/ The implicit tariff is the ratio of any given commodity less one.

of domestic

price

to border

price


2O The

appropriate

combination

of

instruments

in

this

second

best

scenario suggests itself if we take equation (2) and ask ourselves what can

do

to

domestic

value added in the

exporting

activity

we

(i.e.,

the

the denominator of the first term) to make it equal to domestic value added in

the

term)

import substituting activity so as

to

(i.e., the numerator

remove the bias against exports.

And

of the

the

first

answer

is:

X

si_itaneously

and all T s in the i and augment the resulting value added by an In

other

reduce T

words,

structure

the bias against exports

activity

to

amount equal to arising

fr_n

the

exporters

and

capital)

at

world market

prices

and

protection

by

inputs

providing

the same protection or incentives accorded to producers

import substituting industry.

zero

EPR (vj).

nay be counteracted by giving export producers access to

(intermediate

added

exporting

in

the

The first adjustment equates domestic value

in exports to free trade value added while the second one

makes

up

for the disincentive against exports relative to import substitutes.

2.0

Analysis of Fiscal Incentives to Exports

Given the perspective outlined above, we are now ready to evaluate the existing employs

package a

of incentives to exports.

At present,

the

number of schemes all aimed at providing free trade

Philippines status

to

4/ "Providing access to inputs at world market prices" entail the following: (i) tax and duty free importation of intermediate inputs and capital equipment for use in export production, (2) a rebate to exporters equal to the implicit tariff times the free trade value of locally sourced importable inputs and (3) a rebate to exporters equal to the implicit tariff times the free trade value of the traded goods content of non-traded intermediate inputs, in addition to the elimination of import and foreign exchange restrictions on imported inputs. The second and third adjustments are necessary once one recognizes that tariffs drive the domestic price by the proportion T relative to the border price. An alternative to ita_s (2) and (3) would be the provision to indirect exporters of access to inputs at world market prices.


21

exports

in terms of •their• intermediate

detail export

in

Section

producers.

2.1

To

to Intermediate

ensure

government

that

as• far

on

following:

importing

Exporters

export

•intermediate

manufacturing

production drawback

scheme

EPZ

are

enterprises

restrictions

that

Furthermore,

administrative

For

procedural

from

otherwise

of tax and

duty

via

any

instance,

The processing

wishing

Also,

3-78

tariffs,

taxes

non-CIF

and

by EPZA on each

(i) (2)

other imports.

of

these

to • non-EPZ a five

when they

consignment

cost of imports

the •

and

importation

by three doc_,ents

On

•their

with

(3)

modes:

apPlicable

comply

(2)

inputs used

(BOC);

on

the

and

(CAO 3-78).

of Customs

imposed

of

(EPZ) ;•

the following

to import under

fee charged

zone

intermediate

to those

enterprises

supported

exporters

documents.

EPz

be

one

_acilities;

•procedures covering

simplified •• relative

requirement

other •13

might

exempt

the

themselves

Order

of the Bureau

concerned,•

duty

on imported

scheme of the •BOI.

are highly

is

foreign

as tax and

(B_)

may be obtainedunder

their

as well

inputs

warehouse

fixed drawback

low.

in Section 2.2.

with

•locating in an export processing

tax and duty drawback

individual

least

•incentives

Prices

input cost

may avail

•under Customs •Administrative

other hand,

while

to

Market

•tax and duty exemption

imported (i)

bonded

firms.

various

are competitive

as intermediate

mechanisms.

exemption

firms

in

and analyzed

Inputs at World

exporters

administers

drawback

in

are reviewed

These are discussed

Description

•counterparts

using

BOI •and EPZA also •grant

•In turn, these

Access

2. i.1

2.1.

•input use.

of EPZ

shipment

step import

r:cd

at

firms

is

is no

more


22

than

_200

ranked

(DTI 1988).

second

In terms of value of

amongst

exemption/drawback

firms

systems

materials

from

establishnent are:

(i)

least

of

BOC.

a _

facilitates

The

number

BOI registration,

70 percent

of

system allows exporters

It also

the

availed

EPZ

enterprises the

various

(WB 1987).

The bonded manufacturing free of tax and duty.

that

exports,

the release

documentary at least

to import inputs

requirements

15.

and the firm's

of imported

Foremost

of its output with a minimum

for

amongst

commitment

raw

to

the these

export

value of US$1

at

million;

5/ (2) B_

"formula operations.

regarding are

_200,000

to

affecting

guarantee and

all

certificate

While

access

(3)

re-export

warehouses

of B_s

and medium

requir_nents

of the BMW

compliance

to B_s

by making

copy of feasibility

(see Table

payments

fee of Iz45,000;

of non-availability

small free

imports

(3)

The following

taxes and other charges

Finally,

firms,

condition

supervision

Bt6Ns;

;

are also specific

to operate.

annual

duties,

There

the physical

costly

fixed

duty

of manufacture"--

with

a performance

the

laws

are required

met B_s

(i) bond

a of

regulations

to the amount

have been

due

to be covered

of

otherwise. by

a

BOI

substitutes.

tend to be effectively

l_mited

to

may import raw materials

use of the facilities

(CCBWs) operated

and

of

be

II.6).

(2)

that would

exporters

to

are required:

bond equivalent

of local

study

of customs

by the Philippine

common

International

large

tax

and

Donded Trading

s_/ The "formula of manufacture" consists of physical input coefficients endorsed by the National Institute of Science and Technology (NIST) and differentiating between domestically produced and imported inputs.


23

DOCUMENTARY

WITHOUT

AND

Table II.6 REQUIREMENTS FOR

OTHER

ESTABLISHMENT

OF

BMWs

SUBCONTRACTING

i.

Instruments evidencing covering the proposed

2.

Plant location property;

3.

Plant layout showing and describing the size and construction of the proposed warehouse together with the intended use of each room, Section or compartment as well as the surrounding premises;

4.

Flowchart processing;

5.

Certified the SEC By-Laws

6,

Certified the BTRCP of

absolute warehouse;

showing

showing

means

the

ownership

of

nature

access

of

the

true copy of Registration together with the Articles of Co-Partnership, as the truecopy and BIR;

of

to

work

Registration

8.

Certlfied the BOI;

9.

BOI Indorsement of issues the license

the application (for to operate a BMW);

10.

Copy

of

Inspection

Permit

II.

List

of

articles

12.

List

of

all

13.

Formula of Manufacture, to be exported;

14.

Building

15.

Copy

raw

project

of

manufacture/

with

equipment;

copy

of

to

be

Certificate

from

of

the

Registration

with

garments,

Electrical

GTE_

Department;

manufactured;

materials

(Mayor's)

contract

the

Certificate

List

true

lease

Certificate with of Incorporation and case may be;

7.

of

machineryand

or

to

be

patterns

Permit; feasibility

imported; or

sketches

of

articles

and study

of

BMW

operation.


24 WITH

SUBCONTRACTING i.

Name

2.

Copy•of

3.

Certificate of accreditation of the subcontractor, if already accredited by BOC; if the subcontractor selected is not yet accredited, •a letter of application of the subcontractor together with other documents required for the application;

4.

Flowchart showing the subcontracted; and

5.

List

PHYSICAL

of

subcontractor; contract

of

with

materials

_o

the

subcontractor;•

specific

De

processing

stage

subcontracted.

to

be

_

CONDITIONS

i.

Plant Location an accessible officials.

2.

Compartments a.

b. c.

d.

The place to

for

proposed BMW snail be ensure easy inspection ••

located in by Customs

Materials/Articles

Every BMW shall nave permanent compartments separated from the premises to be used exclusively for the storage and safekeeping of all imported materials, finished articles ready for export, and by products/wastages; The compartment shall be properly secured to prevent any unauthorized person from having access thereto; Such compartments shall each nave two locks: thekey of one lock shall be kept by the Customs bonded warehouse officer at all times and the key to the other lock shall be kept by the operator; The contents therein shall be properly arranged to give all practicable convenience to authorized Customs official making the required examination, inspection or inventory.

3.

Office Space for Customs Personnel adequate office space shall be provided personnel to be assigned at the BMW.

i.

Supervision

2.

Performance

Accessible for the

and Customs

FEES fee Bond

compliance 3.

Source:

Re-export and other

DTI,

with

equal in laws

to the and

P45,0_ amount

of

regulations

bond equivalent to charges that would

(1988).

per

annum.

P200,000

to

affecting

the amount otherwise

guarantee BMWs.

of duties, be due.

taxes


2B Corporation

(PITC),

Mindanao

Textile

(Manufacturers) Royal

essentially

Exporters,

Inc.

are generally

to

comply

certification of

duty

chunk

CA03-78

(i)

Tariff under

and Customs

to

have to subnit follow

importation

calls

posting

of a re-export

BOC, etc.

the

BOI

They also

and

the

BOI

and the posting

account with

for

the

access

to

and taxes

on

importing imports.

have to satisfy

the

to Drawback

and Warehousing

Firms wishing

II.8).

However,

for

and

producer, of the

incentives

benefits

under

requirements

the

Like the

release B_N

of manufacture

the necessary

be

following:

the

to avail of

for the suL_nission of a formula bond.

To

schemes

(TCCP) or

procedure

iI.7 and Table

raw

i;500,000 and _5 million;

nu_aerous (exactl_ 19).doc_r_ntary

Table

CAO3-78

with either

with the BOI as an export

a rather c_nplicated

(see

imports.

exporters

Code of the Philippines Law.

The

and CCBWs

medium

exporters

not be registered

the _abroidery

CAO3-78

and

must be between

they have access

of

manufacture"

B_s

CBWs fee

of local substitutes

frQn duties

to this privilege,

nor should

operate

and

1987).

small

consignment

they must

of

Inc.

for a service

(in terms of export value)

(WB Report

their total assets

(2)

"formula

of exports

exempts

on

eligible

by the BOI, NACIDA,

bond requirements.

free imports

materials

the

that

of CIF value

to be registered

of non-availability

the re-export

biggest

and

with

Entities

Integrated

Garments,

of small exports

percent

required

or NACIDA or to be accredited have

(RUC).

(Philexport),

Philippine

(PIE), Red Flower

Corporation

from one to five

Foundation

(Mintex),

serve as import agents

ranges

exporters

Exporters

Corporation

Undergarments

that

Philippine

of

scha_, and

re-export

the bond


26

Table II.7 REQUIREMENTS IN APPLICATION UNDER CAO 3-78

DOCUMENTARY

i. CB

IMPORT

AUTHORITY

Requirements

for

FOR

DUTY

EXEMPTION

(IA)

issuance

of

IA:

i.i

Copy of the Certificate of Registration with the concerned government agency, such as the BOI, GTEB, PITC, or CB; in the absence thereof, a Certificate of Qualification from the BOC;

1.2

Copy of the processing agreement between consignee and foreignprincipal or supplier, or the confirmed purchase order or export L/C;

1.3

For regulated items, commodity clearance appropriate government agency;

1.4

Proforma

1.5

Mark-up Computation Report approved by the Department (this requirement can be waived shipment).

Invoice;

RequiretRents

for

from

the

and CB Export for the first

MCR

1.5,1

Copy of Processing Order (PO);

1.5.2

Copy of Certificate of Registration as export producer with the BOI, CB, GTEB, EPZA or other government agencies (for new applications); or Copy with

1.5.3

of Certificate any government

If the on the source

Agreement

of Confirmed

of Qualification agency);

Purchase

(if not

registered

product's quantity and/or fee/billing is based PO, Agreement or other documents - copy of document; or

If the product's quantity and/or fee/billing is estimated explanation on how the estimated'were derived, i.e., assumptions used, basis of assumptions and supporting documents/computations, if any;

-


27 1.5.4

If the quantity/cost the invoice or other

of the consigned documents -copy

materials of source

is based document;

on or

If the quantity/cosÂŁ of consigned materials is estimated explanation on how the estimates were derived i.e., assumptio_ used, basis of assumptions and supporting documents/ computations, if any; and 1.5.5 2.

BOI

3.

Re-export taxes and

4.

Certificate

Formula

certificate

ofManufacturesubmitted of

Requirements

one

and

Qualification

for

the

Bureau

of

Customs.

non-availability

bond equal to other charges. of

to

one

half

times

the

ascertained

duties,

(CQ)

CQ

4.1

Authentic copy of importer's Certificate of Registration with the SEC, and the copy of the Articles of Incorporation or Articles of Co-Partnership, for corporations or partnerships; and Certificat_ of Registration with the BTRCP (formerly BDT) for sole proprietorships;

4.2

Financial

4.3

Certified importer

4.4

Formula of Technology

4.5

Plant's

4.6

Sworn i.

Source:

Statement

certified

copy of a and foreign

by

the

BIR;

valid and subsisting supplier/buyer;

Conversion certified by the or any appropriate government

location Statelnent

map; stating

Department agency;

between

of

the

Science

and

and the

That the materials are and are solely intended purposes, based on the supplier/foreign buyer.

following: to be imported for commercial design/pattern

Procedures materials;

iii.

That the applicant does not have the financial capacity to make prior payment of the Customs duties, taxes and other charges, or doe.s not have the necessary resources to establis and operate a bonded manufacturing warehouse.

(1988).

followed

in

the

on consignment basis, export or sample prescribed by the

ii.

DTI,

to be and

contract

production

of

imported


28

PROCEDURES

The i.

following

are

The

importer

a.

Import

b.

Copy

the

of

the

Table II.8 THE RELEASE OF UNDER CAO 3-78

procedures

submits Entry

FOR

to

and

the

its

in

the

Entry

IMPORTATION

release

of

Processing

supporting

the

importation:

Division

documents;

the

following:

and

CQ.

2.

The Entry Processing Division processes the entry and stamps the name "SMALL SCALE INDUSTRIES" and forwards the entry to the Special Assessment Unit, Bonded Warehouse Division, Port of Manila (POM), or the Warehousing Unit, Assessment Division, Ninoy Aquino International Airport (NAIA).

3.

The a.

4.

5.

Special

Assessment

Undertakes to existing

of

Warehousing

Unit:

an examination and appraisal rules and regulations;

b.

Verifies are the

c.

Adds the quantity of raw materials imported the quantity specified in the contract was

d.

Transmits

The

entry

to

the

Bonds

as

on

the

basis

a.

Checks if there importations;

are

due

and

demandable

b.

Checks

ordinary

re-export

c.

Transmits entry Unit, Collection Cash

and

approves

Division

of

Liquidation

Receives entry and or Gatepass (NAIA);

b.

Forwards the same the Office of the house, NAIA; and

to the Bonded

c.

Returns Division,

to the Special the Warehousing

DTI,

the entry POM, or

(1988).

issues

declared

shipment

in

to not

the

pursuant

entry

date and exceeded;

documents

checks and

if

documents

presented:

bonds

from

bonds; POM,

previous

and

or

the

Liquidation

Unit:

a.

Source:

the

to the Cash Division, Division, NAIA. or

the

Division.

Division,

The

Bonds

if the imported materials ones specified in the CQ;

of

Permit

to

Piers and Warehouse

Deliver

Inspection Supervisor,

Imported

Goods

(POM)

Division, POM, or or the PAL Ware-

Assessment Unit, Unit, Assessment

Bonded WarehoUse Division, NAIA.


29

under

CA03-78

is one and a half times

that required

under

the

B_

scheme.

The

requirements

presented

in

requirements

Table

is available

paid

the

are

based

requirements

drawback while

registered

limited

in place, enterprise

under

following

inputs,

days

under

this

of

system

documents.

of duties

sch_ne

and

the number

added

taxes

added

based

the

drawback The

for firms to benefit

from

to

by

(see

both

II.10).

and

non-B01

items

(WB Report

(VAT) system

This implies

Table

BOI

of export

covered

that is currently

that a VAT

output

from the date

The tax

of filing of claim

the end of each quarter.

is

1987).

registered

but it can

tax paid on imported and locally

in export manufacture.

on

BOI.

in 1987)

tax

are

the fixed

set

simple

is available

225 items

under

rates

to be followed

are zero rated.

used

are

certification

drawback

tax credits

predetermined

under the Value

materials 60

the individual

producers,

for value

are

schemes

of necessary

99 percent

will have no taxes on its exported

a tax credit

within

and BOI

sch_ne

may be refunded.

(e.g., only

exports

other

Tax credits

system are relatively

this

export

Finally,

raw

on

the BGC

the

of manufacture

and procedures

fixed

rather

refunds

usage of imported

However,

with

out that at most

on imported materials

scheme

Common

of local substitutes.

should be pointed

actual

claims under

from 7 to 30 days upon submission

While

the

II. 9.

on the formula

non-availability

It

for drawback

refund

which

is

claim sourced is

20

due days


30

Table REQUIREMENTS

i.

Import

documents;

2.

Export

documents;

3.

Bank

credit

export

or

similar

BOC

DRAWBACK

document

CLAIMS

evidencing

remittance

of

proceeds;

4.

Abstract

5.

Certificate

of

imported 6.

memo

II. 9

FOR

Formula

record of

No.

i);

non-availability

materials of

(Form

for

manufacture

of

regulated or

competitive

commodities

conversion

substitutes under

issued

by

CB

DOST

for

Circular

or

other

the 1029;

related

agencies; 7.

Certificate

8.

Constructive

Source:

of

exportation

exportation

(Form documents

No.

ii), (for

if

required;

indirect

and/or

exporters);

a.

Purchase

b.

Sales

c.

Deliverl

d.

Certificate of Bonded Warehouse

sales and Division

delivery confirmed by a Chief of (Drawback Form No. I-A); and/or

e.

Certificate of Form No. 1,B).

sales

delivery

DTI,

Order; Invoive Receipt;

(1988).

and

confirmed

by

EPZA

the

(Drawback


31

Table REQUIREMENTS

Documentary

AND

II.10

PROCEDURES

FOR

Export

2.

Bill

of

3.

Bank

Credit

4.

A statement

DRAWBACK

invoice; Lading; Memo;

and

under

oath

and

stating

duties

have

that:

a.

Taxes

b'

Said and

raw

c.

Said from

raw materials/supplies were date of actual exportation.

Procedures

for

been

paid

materials/supplies

Availment

of

on

are

Standard

the

not

purchased

2.

If the documents with the Cashier. for completion.

30

Tax and

5.

6.

are c0mplete, Otherwise,

The Analyst Certificate the standard

(TCA) Analyst.

applicant docwaents

is

The deputized representative of sign, the TCC's in the following The representative credits against

b.

The representative signs tax credits

The TRC working

Source:

DTI,

preferential

within

one

year

to

the

industry

Report and issues a computed tax credit

the BOC manner:

of. the Customs tariff duties. of the against

the required documents Records Section of

and

the

BIR

Commissioner

Commissioner value-added

to

fees applicant

group

Tax Credit based on

the

signs

of Internal tax,

releases the TCC to the supplier/applicant within days from the time the application is officially

(1988).

rates;

(i)

pays the-application are returned to the

forwarded ..

prepares an Evaluation (TCC) amounting to the rate.

a.

materials/supplies;

Rebate

Importer/claimant files application including with the Tax Rebate Center (TRC) through the the BOI.

Credit Application evaluated by the

raw

enjoying

i.

4.

SCHEME

:

Requirements

I.

FIXED

Center

the

tax.

Revenue

two (2) accepted.


32 2. i. 2

Assess[nent

The of

fran_work

providing

above

free trade status

restrictions except

outlined

on

those

inputs.

located

suggests to exports

Contrary

of domestic

This

is over and above

imports

pending

The

complete

substitute

and duty

footnote

4)

is

different

exenlotion and drawback

It should

be emphasized

the

price

direct While

and B_;s

imported the by

free exporters

inputs,

no means BMWs

stringent not

since

than those

bond.

it minimizes system.

CCBWs have

also

by in

of the

place.

of small

Locating

costs

of

paying

the

to other

of CCBWs

in an EPZ distorts into

is

small

introduced

a

materials.

taxes

and

duties

on

with this

system

in

procedural

bonds

are

more

using BMWs are

and to post

coL_mendable

a

re-

development

inherent

laudable

are

requirements

these

exporters

exporters some

both

importing

schetnes but where

account

and re-export

of manufacture"

the bias against

1

values with the majority

fees and performance

The operation

(item

effectiveness

costs associated

a "formula

on

account

in other countries

to submit

of

all of these

frorc actually

relative

restrictions

that are currently

In the Philippines,

are simpler

required

export

&%tall.

of

(Medalla 1989).

least if one takes

the financial

exporters

schemes

(transactions)

form of supervision

for

B_

indirect

systems

(WB 1987).

inputs

import

raw material.

of raw materials

that in practice

excluded

of imported

general

degrees

of exports,

of

all

for the imported

free importation

for less than 50 percent

component

to get a BOI certification

the more

met with varying

effectively

precept,

import liberalization

tax

exporters

is the absence

to this

in an EPZ are asked

non-availability condition

that an important

in

the

innovations.


33 For instance,

Philexport

lieu of a re-export

CAO-3-78, exports,

appears

the issuance of a post-dated

is rendered

was instituted ineffective

in support

of small • and

by •the complicated

and •the •implied high transactions

to

check

in

bond.

which

requirements

allows

be no rationale

for the nigher

medium

administrative

Cost.

re-export

Also, bond

there required

under CAO 3-78.

The drawback

system under •the BOC and the BOI, on the other

entails

additional

working

capital

due

and

the

c_aplicated drawback

cost

in terms of the implied

used to pay

the duties

concomitant

system

While

is also •rather

the

these schemes

primarily

export.

over an

the drawback efficient

produce

both

exporters

Rhee input-output effective the

other

the

B_W_s

are better

the

refunds

are

arising

from

included

and

the

in the fixed

suited

CCBWs

cannot

to firms that

At • the same time, the edge of

the

Thus, one •cannot escape

exemption

system

if one hopes

for

domestic

and

for these type of exports

•in the medium

cost on

limited.

are obvious.

the

costs

The products

advantages . of

underestimated for

and taxes before

transactions

import administration.

interest

hand,

will become

produce exemption

the need

to encourage

export

markets,

be

firms and

increasingly

for that

marginal important

term.

(1984) asserts coefficients

that for

import administration hand,

notes

the regular exports

publication

is an

for exports.

that the determination

of

important

up-to-date element

in

World

Bank

(1987),

on

of

the

formula

of


S4 manufacture

appears

hoc basis

zero

•requisites

of

canponent

of

rating of exports

the implicit

is not taken

is also not accounted 4 met under

is interesting

to note

local

that is provided

Code,

set on

an

ad

content

the

indirect

tax

produced

involved

in the

traded advance

into consideration.

The

for in this adjustment.

the various

sch_aes

that the tax credit equal to exporters

(i.e., BP 391) may be viewed

addresses

the

domestically

cost of capital

of VAT on raw materials

item 3 of footnote

partially

4 as it rebates

tariff for

the holding

import duty portion is

under VAT

item 2 of footnote

although

payment

and is usually

in the Philippines.

The

inputs,

to De unsystematic

Nor

discussed.

to 10 percent

It

of

net

under

the old

Investment

as addressing,

albeit

partially,

6_/ the

duty

component

unfortunate

of item 2 and all of item 3.

that this provision

was dropped

with

Therefore,

it

the promulgation

is of

the new Code.

7_/ 2.2

Export

2.2.1

Incentives

BOI and EPZA

Description

Incentives inducements enactment

under

to

exports

have been in force of Republic

in

the form

of

investment

in the Philippines

Act 6135 or the Exports

since

and

1970 with

Incentives

Act.

other the Since

6_/ This adjustment is less than that which is required because 10 percent is less than the average tariff on intermediate inputs which stands at 25 percent in the eighties (Tariff C_rmission).

7_/ In addition to the special treatment of i_ported materials and equipment in EPZs that effectively establish a free trade regime for •exports, EPZA grants the sane incentives to exporters as the BOI so that in the discussion that follows when we talk of BOI incentives we also mean EPZA

incentives

to exporters.


35 then,

it has been amended

changes

introduced

under

truly

radical

since

been superseded

Investments

A is

and deserve

presented on

holiday

Batas

a

importation

II.ll.

duration

and non-exporting

(BP 391)

226

However, in

1983

the fact that

it

(EO 226) or the

granted

the were has

Omnibus

frcm 3 to 8

226

on

tax

by the

income

tax

years.

Duty

is made available

EO 226 while

and E0

the provisions

and net local content

that ranges

under

under BP 391

EO 226 replaces

equipment

firms

391

despite

Order

of the incentives

of capital

times over.

(OIC 1987).

net value earned

for

Pambansa

by Executive

in Table

three

some comment

Code of 1987

comparison

credit

and codified

to both

this privilege

free

exporting

was

granted

8_/ to exporting

EPZA the

registered

other

project so

firms only under

hand,

at

firms produce

BOI registration

is included

listed,

BP 391.

solely

may be obtained

in the Investment

least

for the export market.

50 percent

of

Priorities its

if

the

On

proposed

Plan or, if it is not

total

production

is

for

is waived

if

propose

to

9_/ export. they

The equity

propose

restrictions

to engage

on foreign

in a pioneer

project

investors or if

they

10__/ export

at least 70 percent

of total

output.

BP 391 allowed pioneer non-exporting firms to defer all duties and taxes on capital equipment while non-pioneer non-exporting firms are permitted to defer only 50 percent of these taxes for a period of 5 years.

9_/ The 50 percent

export

In general, foreign cannot exceed 40 percent.

criterion

was first

equity participation

introduced

in 1983.

in any particular

project


.36

Table II,ll COflPAR_SON OFINCENTIVES UNDER BP391ANDE0226

BP391 Incentive

Domestic Export Domestic Export Producer Producer Producer Producer Pioneer Non-Pioneer Pioneer Non-Pioneer Pioneer Non-Pioneer Pioneer Non-Pioneer

1, ExempLion from duties and taxes on imported capital equipment 2, Defermentof duties and taxes on imported capital equipment5to be repaid within 5 years

EO226

IHZ

166Z

51_

3. Tax credit on domestic capital equipeenL equivalent to duties and taxes on similar

10eZ

1B0_

106_

IU_

N/A

N/A

N/A

N/A

N/A

166_

166%

166%

1BBZ

1B6Z

lUZ

N/A

IUZ

foreign equipment 4, Tax credit on domestic capital equipeentto ,be repaid Nithin 5 years

1N%

1NZ

N/A

N/A

N/A

N/A

N/A

N/A

5, Taxcredit on net value earned for _ive years

IBZ

5Z

lmZ

5_

N/A

N/A.

N/A

NTA

16Z

16_

N/A "

N/A

N/A

N/A

6, Tax credit on net local content for five years

'

a/

a/

a/

a/

7, Tax holiday

N/A

N/A

N/A

N/A

6-8 years

4-7years

6-8 years

4-7 years

8, Net operating loss carry over

Yes

Yes

Yes.

Yes

No

No

No

No

9. Deductionfrom taxable incomeof 56_ of incremental labor

No

No

No

No

b/ Yes

b/ Yes

b/ Yes

b/ .Yes

,

expensefor 5 years

a/ Theseare applicable to newprojects, Expandingfirms are entitled to 3 year tax holiday. Existing fires are not antitied to the tax holiday at all, bi Redundantfor firms enjoyinq tax holiday.


37 2.2.2

Assessment

A

cursory

provided

more

incentives

(1986,

benefits

to exporters

of producers.

II,ll

the

hypothetical incr_nent

more BOI

important

registered

under

differentiates

provisions firms.

Consequently, the

pioneer

the inducements benefits

From the Vantage

Table and

given

Incentives

point

to

the

anti-export

effectively prices. content

under item

under

EO 226.

access

out earlier

2 of footnote

intermediate

place.

tax credit

BP 391 partially 4.

these Manasan

of

return

EO

226 that

that

on the

EO

are reduced

compensating the

of 226

only. by

almost

half double

above,

EPZA/BOI

adjustments

prevailing

trade

importation

to capital

inputs

of

at

that the tax credit

capital

mechanism

at free trade prices

is no

capital

undistorted on net

the adjustment

This provision

to

regime.

for domestically-sourced

addresses

Nor is an efficient inputs

to

enterprises

presented

on the tax and duty free

It was pointed

under

to

bias of

grant exporters

the

shows

non-exporters

of the framework

counteract

as well as the

while

Code.

be viewed as providing

equipment

rate

If.13 indicates

to exporters

may

provisions

391

in

and

II.12

non-pioneer

incentives

EPZA/BOI

developed

of BP 391

Table

BP

is 3 to 4 times as large as that

made available

under the new Investment

that

with respect

the approach

BP 391 while

between

neutral

the impact on the internal

on the IRR of exporters

non-exporters

indicates

than to non-exporters

Following

1988) we estimated of

while

of Table

under EO 226 are perfectly

two groups

(IRR)

examination

longer

that extends

local

called

for

available the

access

to indirect exporters

in


38

0

r.r.1

izl ,-I <_

¢_1 ,--I t-_ I_I

v

_

0 .,-,t

_i

_

_il

,,

i.¢i

m

i.f'l

<_

_4

__ i.__ •

,-4

_.

L_

oo

I.¢i i_-

I

_il

r..-

i._ C_i

_

lpl

_

_ •

,--.I

.4

_-

r.,-

_

_

_0

.

I'_

_

&

_o_

,--I II

_

._

0

i,.l

u,.i

_ ._t

II

_ _ ,-,,-I

?_

..-I

i,-i


CHANGE

IN

THE

INTERNAL

BOI

Table II째13 RATE OF RETURN

REGISTERED FIRMS (IN PERCENTAGE

Non n=10

OF

UNDER EO POINTS)

Pioneer n=20

HYPOTHETICAL 226

_/

Pioneer n=10

n::20

i.

Tax holiday without extension

2.5

1.75

3.5

2.5

2.

Tax holiday with maximum extension

3.75

2.75

4.0

3.0

3.

Duty Exemption on Capital

3.5

2.5

3.5

2.5

4.

1+3

7.25

4.9

8.25

5.75

5.

2+3

8.75

6.0

9.0

6.5

b/

As

in

Table

II.12.

As

in

TaDle

II.12.


4O The

tax credit

partially

providing

framework

since

on net value the

earned

under BP 391 may be

second major

it augments

ad3ushnent

domestic

seen

outlined

value added

in

the

as

in

the

exporting

11__/ activity

by some proportion

incentive

like

exports"

this

one is "the ideal

(Rhee 1984).

This

t_e income" tax holiday

and line 1 in Table

value

earned to

exporters

internal

rate

overstated.

as

First,

estimated

our

life

span.

years near holiday

its inception

is in force.

the exporter tax

sparing

exporting

for

arrangements

their

II.13

on Table

II.13

Table on

impact

on

the

provided

by

the

is

likely

is

based

to

De incurring

losses

the period

and

benefits

the over

in

the

when the

tax

the value of the tax Second,

be

on

profitable

the Philippines

net

equivalent

is uniformly

with

by

holiday

the absence most

from the

to of

capital income

investors.

inputs the

roughly

the inducement

the potential

surm_arize, the combination

for

provide

considerably.

between

nullifies

to foreign

intermediate

compensate

that the tax credit

actually

In this case,

for

of line 2 in

coincides

be diminished

countries

tax holiday

To

would

which

incentive

A comparison

enterprise

The firm might

tax

based

has been replaced

in Table

analysis

asstmlption that the registered its

of

(at least in ter_s of However,

value-added

however,

II.13 suggests

of return.)

holiday

A

form

and the income tax holiday

benefits

tax

incentive,

under EO 226.

II.12

income

of value added.

of the

and BOI/EPZ_

anti-export

Dias

ex_nption/drawback

incentives of

the

is

not

protection

system

enough

to

systeJn.

11__/ The average EPR for import substitutes is 25 percent in 1985 (Medalla 1986). It is considerably higher than the 10 percent adjustment granted by the above mentioned provision.


41 Furthermore,

the

changes

introduced

under

EO

226

exacerbate

this

deficiency.

While declined

the export relative

Investments project

orientation

to

those

Code share

selection.

of the incentives

under BP

the same bias

Consequently,

in the share of exports

391,

under

both

in favor

E0 226

versions

of exports

of

projects

since

the

in terms

there has been an enormous

in BOI approved

has

of

increase

1984

(see Table

II.14).

The

'_asured

selection

was

including on

capacity"

a

feature

potential

(i)

It

potential

and

input

implied

costs

entry

as

criterion

investment

substance

not

might

implies only

when

by limited

output

limitation exports

Thus, on

entry

project

legislations

some

exporters

not be allowed

exporters

in

incentive

are not prohibited.

it will penalize

(2) existing

a

This concept

imports

exporters

overcrowding;

if the two

on

the

BOI

counts:

grounds

will have to bear the (via

are

measured

of

higher capacity

in the upstre_,n industries.

There

has

been some concern

incentives

with

of foreign

investment

(1988)

loses

but also when

it to regulate

concept)

of all

BO 226 except BP 391.

competition.

uses

concept

those offered

compared

countries competitive II.15). comparison,

and

the

EO

226

competitiveness

by the country's

that

each other

the

by other countries

investment

concluded

with Since

implied

about

ASEAN

granted

were

by

the

we can infer that BP 391 incentives

ones

Manasan

the

are

incentives used

BOI

importance

gap.

countries

before as after

incentives

the

financing

incentives the

given

of

ASEAN equally

(see

Table

in

this

are more generous

than


42

_

d

.

_

_

_

.

_ _

Mdd_

_

m

m

._o_

_

_

e,

m

6

"4

_.

..

m

_m

___

_

0


TableIf.15 INTERNAL RATEOFRETURN OFA HYPOTHETICAL FIPM UNDERSELECTED INCENTIVE SCHEMES INASEANCOUNTRIES, I_B8

Indonesia

n:lO

n:20

I, Regular TaxesII,0

13,0

(noincentive) I0,0

12.5

9.0

12,0

2, TaxHoliday

NA

MalaYsia

n:lO

n:20

Philippines

n:10

n:lO

n:20

n:!_

15,0

16.75 17.0

10.25 II.5

15_0

I6.5

ii.25 13,25

12,5

17,0

17.25 12,0

19,0

18,75

20.0

19.0

20,0

1Q,75

t3.5

14,1

15,0

(max, no.of yearsallowed) 4. DutyExemption 15,0 onCapital

5, (2 + 4)

16,5

12.25 12.25 13,75 14.0

NA

13,5

14,0

!5,0

15.0

16.5

16.5

17,0

19,0

IB.5

14.25 15.75 13.5

15,25

15

16,5

19.35

17.35

17,5

17,0

14.25 15,75

6, (3+ 4)

n:20

I0,25 ll.l

16.5

NA

Thailand

n=20

(min,no.of yearsallowed) 3, TaxHoliday

Singapnre

13.5

15,25

15

16,5

14,25

15.75

13,5

15,25

7. Investment Allowance Only (max,allowed)

NA

20.0

16,0

19.25 19.25 18,4

15.1

NA

17,0

17,25

19,0

18,75

20,0

19.0

20.0

19,75

IB.O

18.25

HA


Indonesia

n:lO

n:20

Malaysia

n:lO

n:20

8. (T + 4)

17.7

17,0

9, Export

16,5

16.0

Philippines

n:10

n:20 NA

Singapore

n:lO

n:20

18.0

18.25

ThaiTand

n:10

n:20 NA

11.5

13.5

Allowance Only 10,(2+ 4 + 9

NA

20.0

19.5

NA

17.0

17.5

11,(3+ 4 + 9

NA

20,0

20,0

NA

19.5

19,0

Remoitems' tm

.25

.12

.2

0

.2

u

.15/,25/.35

.40 + .05

.35

.33

.35

t

Th_assumed income stream usedinthesecalculations isthatwhichyields before LaxIReoF .20

a/ Foru : 15, 25, 35_, respectively

b/ special allowance fordepreciation inLaxholiday period,

c/ forI00_export.

Source: Manasan (1988).


45 those

of

other

ASEAN countries with respect

to

export

producers.

Thus, the shift to EO 226 might have reduced the attractiveness of the Philippines •to foot loose export industries. unlike

Also, the

Philippines,

Singapore and Malaysia, does not provide exporters

incentives

based on export promotion/overseas expansion expenditures,

The

sample exporter-respondents were asked whether they received

special incentives from the government.

any

It is noteworthy that half of them

admitted that they have not received or have no knowledge at all about incentives given by the government (see Table II.16).

any

Others mentioned BOI

incentives, exemption from export tax, and some programs of the DTI as most

important

incentives

they have received from

the

the

government.

regards the New Omnibus Investment Code (NOIC), five respondents said

As

the

incentives

contained •therein are better

than

the

previous

that ones.

However,• a great majority of the respondents do not have any knowledge all have

regarding the new incentives given•under the NOIC, hence they any

basis

for comparing them with the incentives

given

at

do

not

under

the

previous code.

•The respondents cited paper work involved in exporting, importation of raw

materials

materials

and machinery, regulations in gathering

locally

available

(e.g., rattan pools), quota allocation system (in favor• of

exporters), requirement

and to

foreign

exchange

proceeds

requirement

immediately surrender all foreign

big the

earnings)

as

exchange

(i'.e.,

major regulations that adversely affect exports.

The

Inter-Agency

Projections

Foreign

Study

Group

on

External

Operations Committee which met

Trade with

Statistics

and

exporters

last

December 1987 prepared a comprehensive summary of the problems

encountered


48

SPECIAL

Assets

A.

B.

Export

Small-Scale 1 1 1 1 1 1 1 1 1 1 1 1

NOTE:

GOVERNMENT

Incentives

NOIC

none regular trade exhibition product exposure none list of direct buyers nave not received any no knowledge BOI incentives, Kalakalan market encounter export sales - exempted no knowledge no knowledge

no

ng from

20

no no

- New

Omnibus

of

eqpt.

BOI under BP 391 none VAT & other tax exemptions no knowledge tax credit on NVE/NIC

i - less than 2 - P5 million 3 - more than

knowledge •better better knowledge knowledge knowledge knowledge knowledge better better knowledge knowledge

not

4 B0I - importation 13 BOI, tax incentives 15 no knowledge 22 no knowledge

5 16 18 19 23

no no no no no

VAT

2 BOI 3 none

Large-Scale 2 2 2 1 3

NOIC

THE

Medium-Scale 2 2

Assets:

NO.

1 6 7 8 9 10 ii 12 14 17 2_ 21

2 1 2 i C.

Table II.16 INCENTIVES GIVEN BY

P5 million to P20 million P20 million

Investment

Code

& mach. no no no

no no no

same aware

same knowledge knowledge knowledge

knowledge knowledge worse knowledge better

•.


47

by exporters policies

III.

and their recommendations.

are reproduced

in Table

chapter

is divided

export

structure

Philippine forecasts

of exports

A.

From exports during

a has

level

but has recovered

steadily

readily

comprised discerned

level declined

more

Using

using different

export

structure

one-digit

rapid

has changed

of

Philippine

growth

occurred

annual

average

substantially

t/qe Philippines By the 1980s,

than half Of total exports. classification

1980s

of natural

44.5 percent

PSCC classification

was still

manufactured Changes

are

principal

percent exports

in 1987.

scheme,

to be very pronounc_d.

resource-Oased

in 1970 to 9

in the top ten

in i97_ to 13.8 percent

are found

These

in the

scn_es.

of exports

from around

29.5 percent

the

level

the first half of the

and inineral exporter.

The share of logs and l_oer

fell down from

presents

financing.

grew byan

Even as late as the mid-1960s,

has fallen markedly

1987.

The most

during

exports

Table III.l shows that theshare sectors

second

_]e

from i986 to 1988.

of Philippine

an agriculture

exports

in 1965, t_e

Of 197_ to 1980 when exports Export

basically

discusses

ExporÂŁ Structure

of 20.7 percent.

last two decades.

the

for pre- and post-shipment

of only US $768 M

The composition

fiscal

AND D_MAND FOR

The first

from 1970 to 1988 while

grown to US $7.1 B by 1988.

the decade

OF EXPORTS

into two sections.

and demand

The Philippine

to trade and

II.17.

PHILIPPINE EXPORT STRUCTURE AND FORECASTS PRE-AND POST-SHIPMENT FINANCING

This

in

Those related

the changes

This

is

in

_le

presented

in


48

TableII,17 SUMNARY OFSELECTED TRADE-AND FISCAL-RELATED PROBLEm, RECOMMENDATIONS AND PROSPECTS DECEMBER INDUSTRY DIAL_UES CONDUCTED BYTHE IASG

INDUSTRY SECTOR

BOTTLENECKS

RECOMMENDATIONS

ABENCY INVOLVED

A.Problems/Recommendation Common ToAllIndustry Sectors PRODUCTIONUnavailability ofcompetitively priced Allow importation ofnecessary raw BOI/CB/DTI andgood-quality rawmaterials inthe materials these arenotavailable locally domestic market, inorder tosustain industries. High cost ofproduction,

Work forthereduction oftariff rates on BOI/DTI imported rawmaterials andequipment in Inadequate technical assistance, technoorder tocutthehigh cost ofproduction. logical skills andbasic facilities, particulary small entrepreneurs or Allow theapplication ofearned creditsBOI/DTI farmers/planters, aspayment foruseofpublic utilities andother taxes tolessen thefinancial High tariff rates imposed onimportedburden ofrising electric power cost, rawmaterials andequipment, water andother taxes, Unreasonable cost offreight bothin Provide moreinfrastructure, transportPresent international endinter-island shipping, ation andcommunication facilities, Administration Inadequate dissemination ofinformation Forge amore effective labor andmanage-DLE/DTI tosmall exporters regarding market mant tominimize labor disputes which may developments andprospects eventually lead totheerosion ofthe competitive edge ofPhilippine exports Decreased production duetotheeffectscheap labor -ifnotgiven theproper ofrecent natural calamities such as direction, drought andtyphoons, Address theprevailing political Present Mounting labor-management problems, uncertainty brought about bymounting Administration insurgency problems, Deteriorating peace endor_rcondition,

FISCAL

Rising cost ofredtape andbureaucracy Promote efficiency inallgovernment Allgovernment ingovernment channels, specifically in channels tominimize thecost ofbureau-agencies theprocessing ofpertinent documents, crecy andredtape andtoeliminate uncoordinated activities ofthe Lack ofinnovative andeffective government, incentives, particularly for small exporters whoarebeing discriminated in Review andrevise/amend existing policies DTI/BOI/DF/NEDA favor oflarge corporations, perceived bythebusiness sector to


49

INDUSTRY SECTOf_

BOTTLENECKS

RECO_ENDATIONS

fiBENCY ]NVOLVEO

Sluggish actionontheCARP hasstalled strengthening structuralsupport at the plansforexpansion anddevelopment of" fiscal level. nost-agri-andagro-industrial enterprises, Request for thegovernment to be,rare Present "pro-active" andpromtiveratherthan adm!nistration reactiveandregulative soasnotto scare awayinves_ts andothergrowth opportunities, Provide a morehealthybusiness environ- Present ad_inismentthrough government andprivate tration and sectors joint efforts inorder toattractIndustry members moreinvestments into thecountry. Rationalize travel taxesi particular)' to DF/DTI/BOI exporters whotravelfrequently to promots/sell their products abroad, Fornulats andprovide appropriate schemesDTIandIndustry to.improve thecometitivsness of members Philippine exports relativeto other exporting countries,

EXTERNAL Stiff competition from producers.who. Reduce oreliminate tariff andnon-tariff OTI/NEDA enjoy better incentives andsubsidiesbarriers through international agreements bytheir governments, withtrading partners. Existence oftariff andnon-taiiff tradeConduct onanon-9oing basis review of DTIandIndustry barriers a(lainst some Philippine current market trends andopportunities members exports, byboth theexport sector andthe government sector. Establish amarket intelligence networkDTI inorder toprovide market information as wellasdata onothercompetitor countries,

PROCEDURALIneffective import procedures/System Improve onimport procedures/system to CB/BOI which delay processing ofpertlnent hasten procurement ofrawmaterial documents, requirements ofmanufacturing industries, Lack ofcomprehensive andeffective classification scheme forso_export products which leads toconfusion in .reporting andpolicy information,

Lessen export documentation process by CB/BOl/Bureau of establishing 'one-stop shop" forexport Custom shipment applications, permits and clearances,


5O

INI}USTRY SECTOR

BOTTLENECKS

RECO_NI)ATIONS

AGENCY INVOLVED

B,Problems/Rec{me_tion.of SpecificIndustries (1) Coconut Products ProductionDecreased production because ofthe Implement andsupervise closely the DA/PCA effects oftherecent natural replanting, intercropping andfertilicalamities like drought andtyphoons,zation schemes inorder toimprove the quality andquantity ofproduction. Deteriorating peace andorder condition in _t coconut-producing areas, Extend theresearch andstudy agreementDA/PCA with theHarvard Medical School to Limited de_estic market forcoconut develop newproducts oruses ofcoconut products which should comIemnt the andtoprovide medical basis against export industry, thesmear campaign ofASA. Introduce innovation andmore _ffectiveDA/PCA drying procedures andtechniques to limit theaflatoxin content found in meal,

Sluggish action ontheCARP hasstalledMonitor carefully theestablishment of DA/PCA plan forexpansion anddevelopment,barangay cooperatives inorder to meximize theuseoffunds, especially in Thegrowing concern over thefollowingthegrass roots level, recent developments inthe.international ... market which would substantially reduce External export .earnings ofcoconut products if Continue thecounter-offensive move DTI/PCA these areallowed totake their course,against thesmear caml_ign undertaken by theAmerican Soybean Association. a) thesmear campaign oftheAmerican Soybean Association against coconut oil Strengthen thelobby against thebills DTI/PCA andother tropical oils being launchedwhich bantheentry ofcoconut products intheU,S., andthediscriminatoryintheU.S, nowpending intheUS bills being debated currently intheUS Congress, i,e. HB2148, SB110g and1699, Congress about thedeterioration ofthe degree ofsaturation ofthetropical Intensify thelobby being staged againstDTI/PCA oils. theproposed imposition ofthevegetable oilconsumption taxinEEC, b) theproposed imposition ofavegetable oilconsumption tax:on local Penetrate other.prospective markets such DTIIPCA andimported oilinEEC. asPRDC, Indonesia andother socialist countries which hold great potentials in c) theproposed stringent measure in order tooffset thelikely negative EECtolimit theaflatoxin content foundImctonthedmndforcoconut products inimported copra mal, duetotherecent developments intheUS andZEC_rkets, Fiscal


51

I_USTRY SECTOR

BOTTLENECKS

..............................................

_--

REOOI4ENDATION$

ABENCY INVOLVED

.....................................................................

(2)Sugar and No]lasses ProductionReduced profitability duetoincreasing Implement acontract-farming scheme SRk/and kssocialabor demands, between thesugar planters andprocessed tionofSugar food exporters, whereby both parties willPlanters Lack oftechnical andfarm facilitiesbegiven afree hand inthedetermination toattain efficiency inproduction, ofprice. Mounting insurgency, Rising cost ofproduction relative to world market prices duetofarm end milling inefficiencies,

Fiscal

Redtapein government bureaucracy increases thecost ofproduction and operation,

External Low.world market prices,

Diversify idle sugar landeto,other cropsDA like ramie, cassava andother root crops tomaximize theuseofland, Accelerate thepreparation ofstudies on BTI/SRA theethanol program andother industrial usesof sugar.

Formulate a comprehensive program throughSRA andIndustry a concerted effort between theprivate members sector andthegovernment, defining the policies onadministration, pricing marketing andfinancing aspects.

Penetrate other prospective markets, SRA/DTI

Continued dependence ondeclining US quota allocation.

.,

Shift inpreference ofAmerican consumers toalternative sweeteners,

(3)Fruits (a)Bananas Production Reduced production duetonatural Enhance production bymaximizing the Industry members calamities such asdrought andtyphoons, allowable hectsroge planted tobananas.

Fiscal Sluggish formulation andimplementation Formulate andimplement thefinal guide-OA/DAR/Congress oftheguidelines oftheCARP which lines oftheCARP toeliminate uncertainstall plans ofexpansion interme of ties that surround itsimplementation and additional hectsrage planted tobananas, enable theindustry todetermine the proper courses ofaction.

ExternalTraditional markets have grown to _turity sonotsuchimprovement in volume shipments tothese markets may beexpected,

Explore orpenetrate newmarkets such DTI asSouth Korea andthePeople's Republic. ofChina tooffset thedeclining Philippine market share inthetraditional Japanese andMiddle East markets.


52

INDUSTRY SECTOR

BOTTLENECKS

RECON_ATIONS ,

A6ENCY INVOLVED

-e

Strong re-entryof Co]uebian and Equadorian exporters to theJapanese market posing athreat onthealready declinging Philippine share inthesaid market, Existence oftrade barrier against Philippine bananas landed inJapan in theform oftariff rates.

Explore thepossibilityof negotiating DTI withtheJapanese gover_nt the reduction oforexemption from thetariff rates imposed onPhilippine bananas in order toease upthetrade ofthe commodity inthesaid market,

(b)Pineapple Products Fiscal Agrowing concern ontheimplementation Work fortheimmediate implementation DAR/Congress ofthefinal guidelines oftheCARP. ofthefinal guidelines oftheCARP. Export-oriented pineapple farming requirelargehectarage andinclusion ofthese farms intheCARP might lead tothedeath oftheindustry,

ExternalThere maybenegative reprcussion onthe Diversify into other potential markets,QTI demand fortheproducts intheU8asan aftermath oftheUSstock market crash, albeit minimal.

(c)Mangoes Production High cost ofairandseatransportation Reduce airandseatransportation costs DTI/MARINA/PAL forcargoes going toU.S. & Europe toreasonable levels inorder toprotect compared tocosts incurred bySouth exporters speedy access totraditional American andAfrican suppliers therebyandprospective markets. impeding thecountry's ability to strongly penetrate U.S. andEECmarkets, Undertake acomprehensive research DA development ofhigh-yielding and Further research isnecessary toproduce disease-free varieties. andexport high-yielding anddiseasefree varieties, Disseminate information regarding the DA/DTI/BOI newtechnology infumigation called the vaport beat treatment toother growers.

ExternalTheimmediate implementation ofthe Negotiation with theJapanese government DTI Japanese banonmangoes having been onhowtocompensate thedrop inNovember treated withEDBresulted inlower andDecember 1987 shipments. shipments inHovember andDecember 19B7,


53 ..............

. ..................

IND_TRY SECTOR

....................................

BOTTLENECKS

d .....

_

RECONME_ATIONS

A6ENCY INVOLVED

(d) AllFruits Production Prohibited importation ofcheaper of- Explore the possibility ofprocurin9 SOl/Ca the-road orutility vehicles, imported andless expensive utility vehicles which arenotavailable locally. Mounting labor probleme, Address tothepresent administration Present Deteriorating peace andorder condition, the concerns onlabor disputes and goverreent national security.

(4)Coffee Production LoW production level due toinadequate Upgrade traditional production and Ok technological andagricultural extension marketing techniques. assistance tosmell farmers. Provide updated information about exportDTI/ICO-CA Inadequate dissemination ofinformation quota allocation and other recent export tosmall farmers regarding export developments toother coffee growers to market developments and prospects, beable togive them anincentive to produce more,

Fiscal

Only thebig traders benefit fr_the quote allotments forexport granted bytheICO-CA.

Implement vigorously theban on importation ofcoffee inany form.

DF/CB

External Exports arelimited toquota markets Develop the potential ofexporting DTI because non-quota counVieshave not tonon-quota countries. yetbeen explored and also because thecountry cannot compete qualitywise andprice-wise. (5)Tobacco Production Low yields toinsufficient technology Undrtake R&Dtoimprove yield and ontobacco farming, quality oflocally-grown tobacco.

DTI/PVTA

Poor quality OfPhilippine virginia tobacco,

Fiscal

Imposition Oftaxes ontobacco products Formulate effective incentives to reduces profitability ofgrowers and mutivate 9rowers andexporters to processors, produce efficiently,

External T)e growing anti-smoking campaign worldwide dampens prospects for growersand processors,

BOI

Develop new market prospects, such DTI asChina which could beinitiated on a9overnmont-to-9overnment basis.


54

IND_YSECT_

BOTTLENECKS

RECO_ENDATION$

A_NCYINVOLVED

(6)Fish andFish Products ProductionLowproductivity because ofthegovern-Implement effectively andenforce DNR/Bureau of ment's inability toimplement strict strictly, fishing regulations toconserve Fisheries marine regulations onproper fishing, thenatural fish resources andmake the industry self-reliant inthelong run. High cost ofproduction inputs such as energy andthe20-11)0 percent import Review theimport liberalization program_I/DTI/CB/NEDA taxslapped onthevalue ofimported inthelight ofitsadverse effects on fishing equipment, theIooa] fish andfish products industry, CeroI]ary tothis, there isaneed to Imported fish products allowed under monitor thesupply requirement offish theimport liberalization program ere canners todetermine theright volume and competing stiffly with local catches, kind ofspecies tobeimported inorder tokeep thelocal canneries' operations Limited capacity ofcanneries dueto going, lack ofsupply ofcannery grade fish,

Fiscal

Lack ofgovernment subsidy and incentives forthefish sector,

External There exists stiff competition from Thailand which gives subsidy toits fishing industry,

(7)Forest Products ProductionReduced logexport earnings because ofthebantoprotect thegrowth of theancillary industries,

Fiscal

Formulate aneffective incentive scheme SOl topromote theindustry,

Penetrate ortapother prospective DTI markets.

Enhance thelocal value added contributed towoodproducts.

DTI/BOI

Inability oftheindustry tooperate Allow theindustry tooperate through DNR/BFD freely because ofgovernment inter- market forces with3ess government vention ontheallowable timber cut intervention. andlogging tobeexploited, Ascertain theduration orthesecurity of DNR Theuncertainty regarding thetenure of tenure ofthelicenses ofproducers/ timber licenses asthenewconstitution planters which will serve asasincentive implicitly prohibits thegrant ofti_er toreforestation andensure increased license agreements, production. Theimposition ofI0%duty andother Work fortheelimination oftheTDIduty BOI non-tariff barrriere such ascontrols on oninimported logs toarrive atamore theimportation oflogs areburdensome, competitively priced manufectured wood product exports.


55

INDUSTRY SECTOR .........................................

BOTTLENECKS

RECOMMENDATIONS

ABENCY INVOLVE@

_ ....................................................................................

Being a partytothejoint venture orprofit/production sharing arrangemnt withthegovernment does notguarantee theproducer thetenureof his license.

External Stiff competition posed byIndonesia,Tapother potential markets andproduceDTI/D_/BOI Sabah andSarawak which manage to better products tocompete with other produce more yields atlower cost. producers;

(B)Furniture and Fixtures ProductionDwindling supply oflocal rawmaterials, Work outascheme providing continuousDTI/BOI particularly _attan poles duetothe supply ofnecessary rawmaterials (specirapid denudation offorests, ficaIly rattan) through importation to suppIemant thedwindling local supply and Inadequate technical assistance, techno - thus sustain theindustry. logical skills andnecessary equipment tosetupoperations. Formulate andimplement aneffective DNR replanting scheme ofrattan po]es, its Agrowing concern onlabor unrest and proper care andhandling whenharvested. national security exerts further pressure tolocal manufacturers. = Encourage integration and/or theuseof BFD/DTI indigenous materials. I11ega1 exactions byrebels andmilitary personnel atforest concessions increase Conduct training programs tobeable Industry thecost ofproduction, toupgrade andstandardize skills and members/DTI technical know-how. Disseminate market developments, trade opportunities andparticipation in international furniture exhibits and trade shows,

DTI

Lock into theimplementation ofa strikeDLE moratorium inorder toenhance labor productivity.

FiscaI

High cost ofbureaucracy andred-tape Discard thedocumentation requirements oF DNR ingovernment channels intheprocessing theDepartment ofNatural Resources which ofpertinent documents increases the arenotnecessary intheprocess of costof production, securing concessions onrattanresources.

(9) Handicrafts ProductionLowproductivity because ofrising laborImprove product anddesign innovationDTI!BOI/ disputes andother related manpower given avi]able raw_terial _pplyand Industry member_ prob]eme, production constraints,


56

I_TRYSECTOR

Fiscal

BOTTLENECKS

RECOMNENOATIONS A6ENCY INVOLVEO

Political instability and national secu-lwlement astrike moratorium inthe rity concerns stir fear and appreh_ision mdium term tocounter the effects of amngforeign borrowers, strikes Gn!__Uor productivity.

OLE

The risingcostof government bureau- Encourage and promote efficiency inall cracy andred-tape, particularly in government channels, securing applications forimportation of raw mterials onconsignment basis,

Concerned goverrwnt agencies

External Heavy competition posed byThailand and Provi_ assistance forthe establishment DTI/BOI China which enjoy favorable edge over ofaproduct and market development local producers because ofincentives center. provided bytheir respective governments which translate into lower prices (I0) Mineral Products Production CB's high rsfining charges compared to Reach acompromise agreement between the Chamber ofMines other foreign gold refineries increase gold producers (through the Chamber of the cost ofproduction and operation, Hines) and the CBonimproving the recovery rates applied togold bullion. Conduct research anddevelopment studies Chamber ofHines/ onlow cost andhigh r_covery mine Bureau ofMines systems with short gestation periode and exploration ofbetter oregrades. Disseminate important geologocisl,Industry members/ technical andeconomic informaton vital Bureau ofMines tomineral investment decisions.

Fiscal

Theproducers arenot allowed bythe Enforce theselling ofallgold CB government tosell their primary gold production tothe CBbysmall-scale produce inthe freemarkst which some- miners and gold panners, times offers higher returns. Study the possibility ofareduction DFthrough the The production ofsmall-scale miners or orexemption ofgold producers from the recommndation of gold panners arebeing smuggled outof 30Z sales taximposed onmanufactured CB the country due toinadequate government articles fabricated with gold andother surveillance/menitoring oftheir precious metals. Sales toCBshould not operations, betreated asanordinary comercial transaction since gold bullions become The 30_ sales tax onmanufacturedmnetized gold forming part ofthe articles fabricated with gold and othercountry's international reserves. precious metals isanadded burden to the producers.


57

I_TRY SECTOR ...........................

BOTTLENECKS. ................

..L ........

RECOMMENDATIONS

AGENCY INVOLVEO

L--._ ........ - ..... _..................................................

--

(11) Petroleu_ Products Production Operation of hydro-power plantswas Promote anddevelop thelocalor indige- NEDA/BEU hampered bythelowwaterlevelcaused nous sources of energy to beableto probytheprolonged drought, duce them economically andefficiently. Heavy reliance Of. expdrt shipments on excess domestic consumption of petroleum products,•

External

Minimize thedependence oftheexportable BEU/Office ofthe capacity onthesurplus indomostic con- Energy Affair sumption of petroleum ,products bydevelopingindigenous orconventional sources of energy, orbyadding more valueadded inthem through further processing of petroleum products tosome hlgher-priced exportable grades,

Unstable world prices ofcrude oil,

(12) Chemicals Production:Supplyof coconut oil(the mainingre- work forthereplacement ofimported DTI/PCA/BOI dients forcoco-chemicals maybe • ingredients/materials partfcuiarIy those adversely affeceted bythedrought and thatdirectly affect theecological thetyphoons _ichhitcoconut-producing balance ofnature with coco-ch_icals. regions,

Fiscal

Lack ofproduct standardization onthe Formulate andenforce product standard-DTI/PCA, part ofgovernment particularly-for, ization measures inorder tobecompeticoco-chemicals. .. tire quality-wise intheinternational •market, Work fortheremoval oftariff rates imposed onimported rawmaterials which BOI are.procured atlesser costinthe international market,

(13) Electronics ProductionMounting labor disputes,

Implement astrike moratorium inorder DEE toenhance labor productivity. Inadequate support forthedevelopment ofhigher assemblies because oflimitedFormulate measures that will prevent/ DLE domestic market forsemi-conductor and minimize sudden orunannounced strikes other electronic devices, (such astheWelga ngBayan) which disrupt orparalyze operations, Facilitate agradual shift from simple Industry members assemblies tohigher-level assemblies,andOTII@OI


58

INDUSTRY SECTOR

- BOTTLENECKS

RECOHNE_ATIONS A6ENCY INVOLVED Develop efficiency inproduction of high Industry members qualityproducts inorder to improve thecountry's export competitiveness,

Fiscal

Inconsistency ofsome provisions with Coordinate formulation andimplementation CB/BOT regard toiwortation byforeign-owned ofappropriate policies among concerned fires contained inCBCircular 1029 and government agencies. the Omnibus Investment Code 226.

External Red,cad bullishness brought about bythe Encourage potential investors byprovi-BOl/DTl/Industry August 28coup attempt mayhave stalled ding aclimate ofpolitical andeconomic members plans ofexpansion and may_have even security and effective incentives. driven away potential investments,' Theimpact ofthe USstock mrket fall maydampen demand for1988.

Procedural The30-dey repayment scheme onO/As and Eliminate further costs asaresult of CB D/As bec(_nos overdue fors_ecompanies delayed releases ofdocuments o_.O_/DAs because oftherequiremnt that abank repayments through exemption from the could notremit without the documentsClCCO registration requirement everytime bearing theClCCO registration first, importation ismade. Theinitial registherelease ofwhich isalways delayed, tration should suffice. 14)Garments/Textiles Production Limited growth of thelocaltextile Forge astrong interface between the Industry groups industry because ofthe dependence of textile andgarment industries tobeablewith thesupervi m thegarment sector onimported raw todevelop and enhance their respective sion ofDTI. materials, which cannot beproduced capacities. efficiently bylocal producers orare unavailable inthelocal market. Optimize the utilization ofquotas in DTI/GTEB order toimprove thesupply ofgarments. High cost ofproduction. Lack oftechnology andlocal raw materials tomanufacture good quality fabrics.

External Stiff competition from new producers. Penetrate other ace-quota countries DTI initially ona 9overnment-tOmgovernnN)nt S_ggling ofquality fabrics because of basis, theinability Oflocal producers to manufacture atreasonable costs.


59

INDUSTRY SECTOR

BOTTLENECKS

RECOMMENOATIONS

AGENCY INVOLVED

.......................................................................................................................

(15)Processed Food andBeverages ProductionHigh cost ofpacking materials dueto Reduce orscrap thetariff rates appliedBOI/DTI/DF inavai]abi]ity ofgood quality materials onimported packging materials, intheIoca] market andthehigh tariff rates imposed onimported materials. Inc]ude packaging items andother CB/DTI/BOI/ necessary inputs ftheindustry inthe NEDA Higher prices ofdomestic sugar relative import liberalization scheme inorder totheworld market price, tominimize thecost ofproduction, Unreasonable cost offreight bothinthe Provide food processors andexporters DTI/SRA international andinter-island shipping, access tolower-priced sugar through the BRA's assistance, Corollary tothis, industry representatives arerequesting toSRAtoreclassify/treat sugar used as inputs toexport products asexport su9ar which ispriced lower than domestic sugar. Rationalize frei9ht rates, bothininter-DTI/MARINA national andinter-island transportation. Exempt orgive preferential rBtes on travel taxtoenable theexporter to at ]east recover promotion costs abroad,

Fiscal

Lack ofincentives forsmall exportersImprove oncustoms drawback mechanism and BOI/DF which arebeing discriminated infavor onBOItaxcredit system onimported raw of)arge corporations particularly the materia]s Forming part oftheexport multinationals, products. Dup]ication offunctions oftheBureau ofFood andDrugs andtheNFA-FTI by virtue ofthebilateral memorandum of understanding between USFDA andNFAfor testing offood products before the actualshipment,

Conso]idate under onecentral agency Bureau of theresponsibility oftesting thequality $tanderds/FDA offood exports inorder toavoid duplication offunctions among government agencies, thus minimizing cost for exporters,

Disincentive posed bythetravel taxto small andmedium-sized fires inthe promotion ofthier products abroad,

Hold re9uIar forum between food DTI/BOI processing industries, research agencies and/or other government agencies inthe development ofpolicies, plans orprograms proeotive/supportive oftheindustry rather than regulative,

Excessive fees arechar9ed bytheFTI inthetesting offood products for export relative tothose ofBFAD.


60

INDUSTRY SECTOR

BOTTLENECKS

RECQ_4ENDATIONS

AGENCY INVOLVED

FTI,being themarketing andtestingarc oftheNFA competes withprivatefood exporters intermsof market share and capebilityto attractforei9nclients. Highcostof dealin9 withthegovernment iredtape,exorbitant licensing and permitfees,graftandcorruption,

ProceduralCertain food products like ethnic foods Coordinate between concerned government DTI/BOI/CB arenotcaptured ingovernment etatls-agencies theformulation ofaneffective tics(OTI, BOI, CB)onprocessed food, monitoring andclassification system hence, theindustry's real performance fortheindustry's products. couldnotbeproperly ascertained,

Source: Inter-Agency Study Group onExternal Trade Statistics andProjections Foreign Operations Comittee Central Bank ofthe Philippines, Annual Report 1987.


61

Q

5_0!

......

3999 ?? "

78

?9

96

8i

,82 83

84

....TOT_ (?oral -exports,FOB-_Million)

85

86 87

88


_

-

,, •

z_

r,_

_I

_

_0 r'.-

:5]

'_I_ 0'_

"-"

r",,.,",_:P .P'_

I u")

_ _

r-i "_d'_ 0'_ _

_

,_1_c,,,ie-I

C_!('_")_r_ '_ _

m

e'_:_ r"-,

_r_r_-_ LO_ c_l_o_t_oo ',.O_P4c'_I*_'_,-I,-II",-,.-0,--I,--I

r-I "'-"

J_

ul

_ P'..--

_

_ O_

_

,--I

A

,,-I

-

r,,- _

A

_

_r_ r',..c'_l

,-.-10'1

_

_

_"') 0"_ r_') P"I

i',,,,,, c,_l _'_,i,_:1 _ ,.,

C_

_

,--.t

"_

_

o_ _ _ oo oo ,--I0'_ .co •

m

u"_

.,.-..

_.,_

o _.

.

.,.._

0 .,-I

u)


63

TaDle

III.2.

the

Food and Food

and

Crude Materials,

to

In 1970, more

only around

PSCC

3

Preparation

(PSCC 0), Beverage

Inedible

25 percent

of Philippine

(PSCC 3).

in 1988.

On

the

other

hand,

transactions

not

B_

of garments

exports

Percent

Another

priLnary

the

commodity

and

While the

distinct

pattern

manufactured examples, priLmary category

have accounted nonfuel had

transferred

to

developing

world demand

and

changing

which

factors tastes

for

and

consist

of

from

.05

is by

re-

(i)

fuel

exports;

(3)

by

a

including

and

the period

categories

are

the

1987.

one source

of

exports.

this shift

as lignt labor

relatively

commodities

the development Added

The

The

intensity, low

wage

has been

these

latter new

manufacturing

of synthetic to

prime

surpassing

in

wit_]

a

Labor-intensive

furniture

of

1977-

exhibited

share of the total,

nonfuel

technology.

ski 1l-intens ive

III.3b).

_igh degree

countries

and

exports.

the first time

for primary

and

in

structure

during

five

and

garments

of labor dictated

characterized

to several

III.3a

for an increasing

industries,

due

these

the perennial number

division

capital

unpredictably

along

Tables

commodities

been

percent

(commodities

commodity

and skill-intensive

defined

of

in

categories:

primary

moderately

fluctuated

(see

exports,

international

Moreover,

(4)

capital-

composition

went down

rose dramatically

following

(2) nonfuel

exports;

total exports

2),

occurred

10

which

in the export

into the

exports;

(5) highly

9

the bulk of

the change

commodities

labor-intensi ve exports;

elsewhere,

PSCC

in

in 1988.

way of analyzing

classifying

under

were (PSOC

change

in 1970 to only

and s_ni-conductors)

in 1970 to 29 percent

Tobacco

The most drastic

exports

classified

and

exports

This share consistently

which went down from 54.0 percent

1988.

1988,

than 80 percent

is

were rates.

declining substitutes the

stiff


_0 -- _

_

I

i _ •

_

_

,o

_o

o,

_

_2; MMd

d

eo

M__dd

d_M

dM_M _

_

2ddddMd

_

_

4_ _ _

_ _

MdM

"'_........;22;222

_

_ _

_

II

, !

;

!1

ii

i

e_

el

el

i!

ee

___

!!

ee

II

e_

i_

ee

ii

i_

ii

_

}!

el

ii

_,

_ _

_!

_}

_

le

.... el

!1

el

_e

,i,

ll

_

ll

el

el

__

i_

.._ .............. .....................

ii

i_

.......... _u el

_ _ ._

o ._

o


85

DISTRIBUTION

Year

MCSI-

Table III.3a PHILIPPINE MERCHANDISE (million FOB $)

FUEL

1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 '1995 1996 1997 1998 1999 2000

NFUEL

OF

.-

NFUEL

19 10. ii 50 . 42 33 .11.4" 87 42 66 97 113 143 176 128 165 214 161 167 281 253 261 320 330

2432 2408 3156 3784 3318 2649 2519 2410. 2_63 "'2091 2171 2688 2852 2990 3251 3530 3771 4234 "4662 4862 5275 5570 5874 60_0

LI. .576 824 1164 1634 2_13 2005" 1942 2195 1969 1883 2438 3113 3565 4046 4630 5294" 6159 7300" 8492 9631 10972 12561 14418 16500

EXPORTS

MCSI 59 123 158 231 244 230 310 470 365 447 620 849 1030 1187 1428 1599 1886 2336 2747 3179 3798 4385 5073 6000

HCSI 52 61 112 89. 106 95 86 105 150 243 245 311 333 396 414 441 "541 569 583 748 802 924 1015 1170

Fuel primary commodity exports Nonfuel primary commodity exports Labor-intensive exports Moderately,capitaland skill-intensive exports Highly capitaland skill-intensive exports

-1989-2000

values

are

forecasted

values


86

Table PERCENTAGE PHILIPPINE

Year

PFUEL

1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 19_8 1999 2000

FUEL NFUEL LI MCSI HCI *

0.6 0.3 0.2 0.9 0.7 0.7 2.3 1.6 0.9 1.4 1.7 1.6 1.8 2.0 1.3 1.5 1.7 i.i 1.0 1.5 1.2 i.i 1.2 i.i

III.3b

DISTRIBUTION OF MERCHANDISE EXPORTS

PNFUEL 77.5 7_.3 70.1 65.4 58.0 52.9 50.7 45.8 45.0 44.2 39.0 38.0 36.0 34.0 33.0 32.0 30.0 29.0 28.0 26.0 25.0 23.5 22.0 20.0

PLI 18.4 24.0 25.8 28.2 35.2 40.0 39.1 41.7 42.9 39.8 43.8 44.0 45.0 46.0 47.0 48.0 49.0 50._ 51.0 51.5 52.0 53.0 54.0 55.0

PMCSI

PHCSI

1.9 3.6 3.5 4.0 4.3 4.6 6.2 8.9 7.9 9.4 ii.i 12.0 13.0 13.5 14.5 14.5 15.0 16.0 16.5 17.0 18.0 18.5 19.0 20.0

1.6 1.8 2.5 1.5 1.8 1.9 1.7 2.0 3.3 5.1 4.4 4.4 4.2 4.5 4.2 4.0 4.3 3.9 3.5 4.0 3.8 3.9 3.8 3.9

-

Fuel primary commodity exports Nonfuel primary commodity exports Labor-intensive exports Moderately capitaland skill-intensive exports Highly capitaland sKill-intensive exports

-

1988 figures are 1989-2000 figures

estimated values are forecasted

while value s


67 competition

mnong

developing

countries

for markets

for

these

types

of

commodities.

Another moderately in

•category

that

capital-and-skill

1977 to ii percent

at-20

in 1987.

percent These

for primary

for MCSI exports figures

differ

puts the percentage

Tables

products only

share

and minerals)

decline

respectively

in

nonfueli with

55 percent

the rest going

was more

also declined

certain

Coconut

products

remain

by the

the bulk of these shares. (e.g., footwear,

ch_aicals,

which

of exports 12/ Bank. sugar,

products and

although

grew

suffered

although processed

and

their

to the

3.9

share

in 1987.

in On

around

manufactures

the healthy food

In

percent

from only

Non-traditional

by

forest

20.4

in 1970 to 9.8 percent

However,

ADB

and 4.2 percent

exports

20

categories.

The share went down

important

in 1987.

and

respectively.

26.2 percent

1.2 percent

from 19.7 percent

in 1970 to 73.4 percent

sectors

two

(coconut products,

the other hand, the snare of non-traditional

compose

will stabilize

used by the Central

18.5 percent,

of

that by

intensive,

to t_e other

Sugar,••forest and mineral

IH70 to only around

exports

percent

for labor

than 91.5 percent.

is

export

It is predicted

those projected

categories

frem around

in 1987.

one

III.4b, and III.4c show the composition

in 1987.

percent

8

the number

of these three categories

share of traditional • exports

23.9 percent

largest

Semiconductors,

share

rising from 2 percent

snares as 36, 46, and 14 percent,

III.4a,

the

increasing

(MCSI) exports

significantly.from

traditional/non-traditional 1970,

an

fall in this category.

2_00 the percentage

percent

experienced

intensive

the •Philippines at present, the year

has

and

growth

of

beverages

12__/ Central Bank defines traditional exports have exported at least uS $5 million in 1968.

as those

sectors

which


68 Table ll|.4a VALUE OFEXPORTS DYHAJOR COHHODITY GROUP 1970-1997 (In H/Ilion US Dollars)

-Commodity Group

I,

1970

1971

1972

1973

1974

1975

1976

1977

1978

Traditional Exports

972

1027

962

1606

2306

1767

1773

2097

1975

CoconutProducts

209

255

229

374

609

466

540

761

907

90 96 19 14

114 104 21 16

110 84 lB 16

166 153 32 23

140 381 60 28

172 230 31 33

150 299 37 54

201 412 ?O 5G

1_6 620 62 69

196

220

2t7

293

765

615

454

532

213

189 O

212. 8

211 6

275 18

737 28

59] 34

429 25

512 20

197 16

278

259

226

416

225

270

263

_2U

237 13

215 11

164 10

304 35

216 30

167 27

135 68

134 b7

145 85

20 8

24 9

34 iB

59 IB

27 19

23 9

47 tg 2

41. 20 |

72 22 4

217

218

239

439

519

332

..371

386

375

CopperConcentrates 6old Chromium Ore Others

185 -6 26

195 8 6 19

191 27 5 16

290 ]04 9 35

393 74 13 39

212 76 13 31

2_6 65 15 25

269 71 25 22

250 7b 25 24

Fruits and Vegetables

26

24

23

24

37

44

59

73

77

21. 2 3 --

20 1 2 1

l? 1 2 1

20 1 2 1 â&#x20AC;˘

31 l 3 2

35 3 3 3

47 I 5 5

56 3 5 9

60 2 5 10

AbacaFibers

15

13

13

20

38

14

IB

17

15

TobaccoUnmanufactured

14

14

17

26

30

34

29

28

29

PetroleumProducts

1T

24

19

]5

16

37

34

_7

31

Copra Coconutoil Desiccated Coconut CopraHeal/Cake Sugarand Products Centrifugal Refined Holasses Forest Products Logs Lumber Plywood VeneerSheetslCorestocks Others Hineral Products

CannedPineapple PineappleJuice Pineapple Concentrates Others

292


69

Conodity group

],

1979

[980

1981

1982

198_

19B4

1985

1986

19B7

Traditional Exports

2561

3068

2742

2116

2068

1828

1302

1275

1_67

CoconutProducts

1024

811

750

590

680

727

459

470

56J

Copra Coconutoi] Desiccated Coconut Copra Nea]/Cake

" 89 742 107 86

47 ••567 116 81

_4 533 102 81

49 401 68 72

4 516 88 72

.... 5BO .106 41

347 76 36

18 33_• 44 75

_2 _Bl 75 73

Sugarand Products

239

.657

604

441

316

279

185

103

71

212 27

624 33.

566 38

416 25

299 17

.246 33,

169 16

B7 16

bO 11

490

425

352

294

33[

271

199

201

24_

144 198 107 35 6.

. q2 .181 111 36 5

?6 126 ill 31 8

79 124 67 20 4

74 149 76 28 4

88 107 56 14 6

39 91 51 12 6

27 104 56 9 5

0 154 _8 15 6

'.918

757

532

440

266

243

267

224

429 215 25 B8

312 169 15 36

249 154 10 27

115 104 J9 2B

84 100 12 47

90. 140 11 26

109 91 7 17

128

107

133

J_b

137

J50

Centrifugal Refined Molasses Forest Products Logs Lumber ely,ood VeneerSheetslCorestocks Others .. Hinero] Products

609

CopperConcentrates gold Chromium Ore Others

440 10_ 23 42

_45 2_9 .33 101

•" Fruits andVegetables

100

111

74 _ 10. 1]

82 6 9 '.14

89 6 7 19

8B 9 10 21

74 .4 ? 20

97 5 13 28

89 7 14 26

8_ 6 18 30

86 6 20 38

CannedPineapple PineappleJuice Pineapple Concentrates Others

121

AbacaFibers

.25

27

21

20

19

30

17

1]

12

TobaccoUnmanufactured

33

29

4B.

47

34

29

24

21

IB

PetroleumProducts

42

89

64

142

_

_9

6_

88.

.90


70

Commodity 6roup

1970

1971

1972

1973

1974

1975

.1976

1977

197B

B5

I00

119

269

407

504

749

1024

1422

72

74

77

212

328

367

546

711

1045

Elec. & Elec, Eqpt,/Parts & Telecom. Gareents Textile Yarns/Fabrics Foot.ear Travel Goodsand Handbags MoodManufactures Furnitures andFixtures Chemicals CopperMetal Hon_Metallic Mineral Manufactures

---1 6 7 1 1 1 I 11 7 I I 5 6 ?................. 3 10

2 2 9 1 2 B 2 6

11 5fl 24 2 5 24 3 I0

27 94 20 4 8 35 6 15

47 100 22 ,3 1+0 29 5 21

B5 185 39 5, 4 32 10 27

124 250 34 10 b 2B 22 51

253 327 44 32 9 30 27 59

S

25

37

33

28

38

4_

Machineryand Transport Eqpt. ProcessedFoodand _everages Misc.Manufactured _rticles, n.e,c. Others

l B 5 _0

2 , 9 4 25

3 11 10 13

3 15 20 12

6 17 23 36

10 14 4b 27

16. 20 65 30

26 31 60 _1

37 41 Bl 62

13

26

42

57

79

137

203

313'

377

3_

'59

55 104 B4 4 34 57 14 25

II. Non-Tradition_ Products -Non-Traditional Manufactures

Non-Traditional Unmanufactures Nickel Iron Ore AggLomerates Bananas Mangoes Coffeet Rawnot Roasted Fishp Fresh or 8imply Preserved Rice Others

.......... .............. 5 1 .......... 2 .............. 5

TOTAL EXPORTS

7& 3 25 26

8

15

II-

14

I

9

9

21

2B

1&

&

8

4

2

3

2

24

14

22

1136

1106

1886

2725

2294

2574

3151

3425

._6 1

24 1

28 1

45 2

5

11

20

4

6

1

5

1062

Ill. SpecialTransactions

IV. Re-Exports

17

73 2 2 16

77 57 73 2 45 41 4 14


71

Commodity Group II. Non-Traditional Products Non-Traditional.Manufactures Elec. & Elec. Eqpt./Parts & Telecom. Garments Textile Yarns/Fabrics Footwear TravelGoodsandHandbags WoodManufactures Furnitures andFixtures Chemicals CopperMetal Non-Metallic Mineral Manufactures Machineryand Transport Eqpt. ProcessedFoodand Beverages Misc.Manufactured Articles, n.e.c, Others Non-Traditional Unmanufactures Nickel Iron Ore Agglomerates Bananas Mangoes Coffee, Rawnot Roasted Fish, Freshor Simply Preserved Rice Others

• liT.

Special Transactions

IV. Re-Exports

TOTAL EXPORTS

80URCE:Dept. of EconomicResearch, Central Bankof the Phil.

:

1979

1980

1981

1982

1983

1984

1985

1986

1987

2000

2650

2920

2851

2846

3430

3275

3447

4197

1474

2005

2374

2376

2387

2992

2765

2879

3642

412 405 55 51 8 40 55 112

671 502 74 67 .9 35 77 89

838 618 69 73 I0 46 87 105

1000 541: 56 62 I0 41 72 95

1053 545 44 55 8 53 84 86

1329 603 38 46 6 50 88 105

1056 623 39 39 I0 43 84 150

919 751 44 31 12 49 89 243

1119 1098 68 31 16 62 130 245

60

48

40

26 26

111 21

168 24

172 18

162 " 22

47 46 I18 94

47 92 149 133

47 154 155 124

48 150 143 118•

35 1_7 133 112

36 109 137 313

30 106 136 257

45 116 159 231

78 126 199 286

526

645

546

475

459

438

510

568

555

92 120 97

138 118 114

103 116 124

49 106 146

53 114 105

12 105 122

64 95 113

15 85 1_0

76 191

5 44 87 46 35

7 45 107 73 43

6 39 90 24 44

8 49 71 -46

9 47 77 g 45

7 76 69 .... 47

7 70 99 62

8 119 143 :68

12 32 207 25 82

11

33

50

45

57

8

12

8

7

29

37

10

9

34

125

40

112

149

4601

5788

5722

5005

5391

4629

4842

5720

........ 31.

5021


72

Table I11.4b 6ROHTH RATEOFPHILIPPINE EXPORTS (In %) 1970-1987

Commodity Group

I.

1971

1972

1973

1974

1975

1976

1977

1970

1979

Traditional Exports

5.66

-4.38

63.54

43.59

-23.37

0.34

16,27

-5.82

29,67

CoconutProducts

22.01

-10.59

64.04

62.83

-23,4B

15.88

40.93

19.19

12.90

42.50 8.33 10.53 14.29

-3.51 -[9.23 -14.29 0,00

50.91 82.14 77.78 43.75

-15.66 22.86 -12,79 149.02 -39.63 30.00 87.50 -48;33 19.35 21.74 17,B6 63.64

_4,00 37.79 143.24 7.41

-32.34 50.49 -8,89 18.97

-34.56 19,68 30.49 24.64

12.24

-1._6

35.02

]61.09

12.77 0.00

-0.47 -25.00

30.33 200.00

-6,B3 -12.74

84.07

-29.81

-22.95

-23.72 85.37 -9.09 250.00 41.67 73,53 100.00 0.00

-2B.95 -14.29 -54.24 5.56

-22.69 -10.00 -14.91 -57.69

19.49

-36.03

Copra Coconutoil DesiccatedCoconut CopraHeallCake Sugarand Products Centrifugal Refined Molasses Forest Products Logs Lumber Plywood VeneerSheetslCorestocks Others Hineral Products CopperConcentrates 6old Chromium Ore Others Fruits andVegetables CannedPineapple PineappleJuice PineappleConcentrates Others AbacaFibers TobaccoUnmanufactured PetroleumProducts

-9.28 -15.38 20.00 12.50

0.46

'9,63

63,26

-19,61

-26.18

17,16

-59,96

12.21

166.00 -21.17 55.56 21.43

-26.16 -26.47

19._5 -20,00

-61.52 -20.00

7.61 6B,75

20.00

-2.59

24.71

49,$9

-19.16 -0.74 151,85 -1.47 104.35 -12.77 12%00 11.11 -50.00

9.21 26,97 75._1 I0.00 300.00

-0.69 132.94 48.61 59.09 50.00

-2.85

62.13

-6.72 7.04 0.00 9.09

76.00 35.53 -8.00 75.00

5.48

29.67

11,75

4.04

0.00

3.24 51,B3 35.52 -46,06 25.47 0.75 237.50 295.19 -29.B5 2.70 -14.47 9.23 0.00 -16.67 80,00 44.44 0.00 15.39 66.67 -26.92 -15.79 11B,75 11.43 -20.51 -19.35 -12.00 -7.69

-4.17

4.35

54.17

-4.7_ -50,00 -33.33

-5.00 0.00 0.00 0.00

5.26 55,00 12.90 34.29 19.15 7.14 23.33 0.00 0,00 200.00 -66.67 200.00 -33.33 50.00 0.00 50.00 0.00 66.67 0,00 0.00 lO0.O0 0.00 100.00 50,00 66.67 00.00 II.II 30.00

-13.33

0.00

53.85

0.00

21.43

52.94

41.19

-20.O_

-21.05

90.00

L0.92

31,B2

25.96

-63.16

29.57

-5.56

-11.76

66,67

15.38

13.33

-17.65

0,00

3.57

13.79

6.67

131.25

-O.ll

8.92

-16.22

35.49


•73 Table lll.4b

(cont'd) Commodity 6roup

l,

nVER_EFORTHEPERIO0 1980

1981

1982

1983

1984

Traditional Exports

19,60

-10.63

-22.8._

-2.27

CoconutProducts

-20.80

-7.92

-21.33

15.25

-47.19 -2_.98 8.41 -5.61

-27.66 -6.00 -12.07 0.00

44.12 -24.77 -$3,33 -11.11

-91.84 28.68 29.41 0.00

12,40 20.45 -43.06

174.90

-8.07

-26.99

-26.34

194.34 22.22

-9,29 -26.50 19o15 -34.21

Copra Coconutoil DesiccatedCoconut CopraNeat/Cake Sugar andProducts Centrifugal Refined Iqolasse_

-11.61

1989

-2.07

7,22

14,81

-2.73

6o91 -36_86

2.40

19,35

24.52

_-1,05

-40.17 -28,30 -12,20

-4.03 -42.11 108,33

77.79 14.41 70.49 -2.67

16.90 35.49 $9,40 24.10

2.7L 3.45 7.71

-11.71

-33.69

-44.32

-31.07

25,49

-5.71

-28.13 -32.00

-17.7_ 94.12

-31.30 -51.52

-48.92 0,00

-3L.03 -$1.29

26.09 29.35

-5.21 3.13

1.01

20.90

4.16

1.70

-13.27

-17.18

-15.46

12,54

-18.13

-26,57

Logs Lumber Plywood VeneerSheet_lCorestocks 6thers

-3&.11 -8.59 3.74 2.86 -15.67

-17.39 -_0.39 0,00 -13.89 60.00

3.99 -1,99 -39.64 -_5.48 -50.00

-6.33 20.16 13.43 40.00 0.00

18.92 -28.19 -26.32 -90.00 50.00

-55.68 -14.95 -8,93 -14.29 0.00

90.99

-17.54

-29.72

-17,29

-39,95

-8,65

CopperConcentrates 6old Chromium Ore (]ther_

23.86 132,04 43.48 140.40

-21,28 -10.04 -24.24 -12.87

-27.27 -21.40 -40.00 -99.09

-20,19 -8.88 -_3.33 -25,00

-53.82 -32,47 90.00 3.70

•Fruits and Veqetables

11,00

9,01

5.79

-16,ql

10.81 100,00 -10.00 7.59

9.54 0.00 -22.22 35.71

8.00

TobaccoUnmanufactured PetroleumProducts

CannedPineapple PineappleJuice PineappleConcentrate_ Others AbacaFibers

1967 1_70-77 1978-87

-28.77

Forest Products

Hinera] Products

1986

-30.77 -100,00 14,29 48,06 ?.80 21.4_ -25,00 66.67 -16.67 20.00

-2,74 -21,59 50.23 15,86 22o53 9.77 28.04 4,90 -50,00 _9.57

9.88

-16.10

13.09

-0.87

-26.96 -S.85 -36.84 67.85

7.14 40.00 -8.33 -44.58

21.11 -$5,00 -$6.36 -$4.62

i0.11 81,88 27.12 5.09

-2,81 10.30 -5.36 L1.99

24.30

2.26

0.74

9.49

17.61

8,15

-1.12 _15,91 50.00 -55,56 42,R6 -10.00 10,53 -4.76

17.57 25.00 44.44 49.00

2.30 40.00 7.59 -7,14

-6.74 -14.29 28.57 15.39

3.61 0.00 11.11 26,57

16.59 40.49 11.90 49.44

4._5 16.18 19.25 16.52

-22.22

-4.76

-10.00

55.67

-43._3

-23.53

-7.69

12.91

1.80

-12.12

65.52

-2.08

-27,66

-14.71

-17.24

-12.50

-14,29

12.21

-1.77

114.29

-l,ll

-28.09

121.fib

-34,51

-58.06

51,54

39.6fl

19,70

23,49


74 Table I|I,4b

(cont'd)., Commodity Group

I|.

Non-Traditional Products Non-Traditional Nanufactures Elec,& Elec. Eqpt.tParts & Telec_. Garments Textile YarnsFabrics Foot,ear Travel GoodsandHandbags MoodNanufactures Furnitures andFixtures Chemicals

1972

1973

1974

1975

17.65

19.00

126.05

51.30

2_.83

2.78

4.05

175.32

54.72 145.45 62.07 616,67 100.00 60,00 45.83 100.00 50,00

450.00 100,00 2800.00 16,67 28,57 166.67 _,00 0.00 100.00 _.,_ 100,,00 150.00 -36.36 14.29 200.00 0.00 I00,00 50.00 20.00 0.00 66.67

1976_

1977

1978

1979

48.61

36.72

_8.87

40.65

11.B9

49,77

30,22

46.9B

41.05

74.07 6.38 10,00 -25,00 25:00 -17.14 -16.67 40.00

80.85 85.00 77.27 65.67 -60.00 10.34 100.00 2B.57

45.88 104,01 62.85 35.14 30.90 23.B5 -12.82 29.41 25.00 100.00 220.00 59,3B 50,00 50,00 -11.11 -12,50 7.14 33,33 120.00 22.73 103.70 8_.B9 15.69 89.B3

CopperMetal Non-Metallic Mineral Manufactures

233.3_

-20._0

212,50

48,00

-10.81

-15.15

_5,71

13.16

-27.91

Rachinery and Transport Eqpt. ProcessedFoodandReveraqes flisc, flanufacturedArticles, n.e.c. Others

100,00 12.50 -20.00 -16.67

50,00 0.00 22.22 36.36 150.00 100.00 -4B.O0 -7.69

100.00 13.33 15.00 200,00

66.67 -17.55 100.00 -25.00

60.00 42.B6 41.30 11.11

62'.50 55.00 -7.6_ 3.33

42,_1 32.26 ,35.00 lO0.O0

27.03 12,20 45.68 51.61

38.b0

73,42

48.18

54.19

20.45

39.52

78.7,9

30.51

33.33

-42.86

-62.50

B3._3

-33.33 1100.00 -41.62

57_14:

31.82

Non-Traditiond Uneanufactures Nickel IronOreAgglomerates Bananas Mangoes Coffee, Rawnot Roasted Fish, Fresh or Siaply Preserved Rice Others â&#x20AC;˘

III.

,

1971

100.00

220.00 0,00

TOTALEXPORTS

50.00 0.00

150,00

120.00

-20.00

50.00

Special Transactions

IV. Re-Exports

61.54

60.00

6.97

35.71

-2B.57 67.27 82.46 15.38 16.67 60.71 '62.22 4.11 -3.95 I).07 15.4B 0,00 I00.00 0.00 50.00 -l).33 i00.00 25.00 .1150.00 BO.O0 -24.44 29.41 81.82 -15.00 -5.99 62.50 57.89 39.02 52.63 250.00 228.57 33.33 87.50 -26.67 27.27 0.00 78.57 40.00

0.00

_00.00

0.00

-50.00

-50.00

50.00

-2.64

70.52

133.33

44.49 -ID,B2

12,21

22.42

8.70

)4.34


75 Table llIo4b (cont°d)

MERA6EFORTHEPERIOD

........................................................................................................

_

Conodity Group ...........................................

If.

1980 ..._.i

.......

1981 -_- ........

1982 :1983 _-_ ...........

1985

19Bb

1982 1970-77 1978-87

......................................

Non-Traditional Products

32,50

10.19'

-2.36

':;-0.1B

20.52

-4o52

5.25

21.76

46.17

16.27

Non-Traditional Hanufactures

_6.02

18.40

0,08

0.46

25.35

-7.59

4.12

26,50

46.82

1%14

EleC._ E]eC. Eqpt.IPar_sl Teleco_, 62.8_ _24.89 19._3 Garments 23.95 ,23.11 -12.46 Textile Yarns/Fabrics _4.55 -6,76 -18,84 Footwear : _1.37 8.96 -15.07 Travel Goodsand Handbags 12.50 11.11 0.00 Moo_Manufactuce_ -12.50 31.43 -10.87 Fureitures andFixtures 40,00- 12.99 -17,24 Chelicals -20,54: IT.DR -9.52 CopperBeta] _ Non-Beta]]ic Bineral Manufactures _3.55_'_I-20.00 -16.67 Bachineryand Tr_mSportEqpt, 0.00 0.00 2.13 ProcessedFoodand_everage_ 100.00: 67._ -2.60 _isc. BanufacturedArticles, n.e.c. 26,27 4.03 -7.74 Others 41.47 -6.77 -4.84 Non-Traditional Unsanufactures Nickel : Iron Ore Agglomerates •Bananas _angnes ....Coffee, Ra. not Roasted Fish_ Fresh or Sieply Preserved Rice Others

Ill.

1984 _--------_-_

..........................

Special Transactions

IV. Re-Exports

TOTAL EXPORTS

SOURCE:Dept. of Economic Research, Central Bankof the Phi],

5.30 26.2! -20.54 -12.fY 21.76 0.74 10,64 3,32 :20,55 46,21 -21o4_ -13,64 2.63 12,82 54,55 -11.29 -16.36 -15.22 _-_g.5I 0.00 -20.00 -25.00 66.67 20.00 33.3_ 29.27 -5,66 -14.00 I3;95 26.53 16,67 4.76 -4.55 5._5: 46,_ -9.47 22,09 42.86 62.00: _e_82 326,92 51.35 2.3B.... 5._B1 -35.00 -19.23 t4.2_ -2_;0_: 22:22 -27.08 2,B6 -16,67 50.00 7_._ -15.33 -14.17 +2._ _ ?.4_ 8,'62 -6.99 3.01 -0.7I: 16.91 25,16_ -5.09 177.46 -17.89 -10,12 23.81

22.62

-15.35

-13.00

-_.37

50,00 -1.67 17.53

-25.38 -1.69 8.77

-52.4_ -B.62 17.74

_,16 7.55 -2D,08

40.00 -14.29 2.2_. -13.3_ 22.99 -15.89 58,70 -67.12 22.86 2._3

33.33 25.64 -21.11

-4.58

16.44

-77._b_:_,_|_ -7.89 -9.52 16.19 _-_._8

11,_7

7,1B

-76,_ fftO0,O0 , p4,65 -• -10.53 -10.59 _5,0_, ,6.92 _8,54

19o85

0.00 -7.89 43,48

4.55

-2.17

4.44

31.91

26.67

-B5.%

50.00

277,7B 267.65

:69.00

180.00

-14.1_

4.60

200.00

51.52

-10.00

27,59

-72.97

-10,00

25.80

-1.14

-12.25

-0.32

7.71

69.0B 62.74 _.5_" M;09: 16.73

29.37 17.07 9.83 24.1_ 13.75 9°B6 23.11 21,17 %,71 -0,06 15.39 19.50 14.06 35.17

58,8W

12.50 -22.22 -4.OR 61.70 B,45 -10o39

-2.29

159.25 5'14.76 38.53 4_.91 4_.43 _9.21 :i_ 6_.76 _0_

14.29 5_.00 70,00 _3.11 44.44 44.76 _.6B

-33.33

6.34

16.67 615.00 64.45

2_.86 6.62 20.84

21.63

21.28

153.97

20.72

33.0_

147.86

72.40

18.13

19.73

7°14

20.59

-12.50


7B

T.ble I I.4c STRUCTURE

OF PHILIPPINE (In _percent)

EXPORTS

1970 .......... A. COMMODITY I.

"................... GROUPS

Traditional

- :

Exports

91.53

:oconut Products Sugar and Products Forest Products Mineral Products Fruits and Vegetables _baca Fibers Tobacco t_nma_ufactured Petroleum Products II.

53.01

19.68 14.01 18i.46 ii.35 26!.18 7.34 20.43 15.86 2.,.45 .... _ 1..92 1.41 0.47 1.32 0.50 1.6_ 1:.55

1985 â&#x20AC;˘ ,''

1987 . ,_-.-..,----

28.13 9.92_ 4,_00 4.30 5.25 2.9.4 0_37 _,52 0...84

23.,90 ,9.,81 1.24 4.25 3.92 2.62 0..21 0.31 1.54

Non-traditional

Products

8.M0

45.78

70.75

Non-Traditional Non-Traditional

Manufactures Usmanufaeture_

6.78 I..22

34.64 11.14

59.73 11.02

0.0_ _

0.57

0.26

0..12

0.47

0.64

@.86

2.60

100.00

100. _0

100.00

100.00

7.50

16.60

21.40

18.50

8.70

16.70

13.60

L8.50

41.50

27.20

35.70

34.60

39.60

26.50

18.90

17.20

2.70

13.00

10.40

11.20

100._0

i_0.00

100.00

100.%0

III.

Special

IV.

Transactions

Re-Exports

TOTAL

B.

1980

73.37 63.67 9...70

MARKETS ADB

Developing

European United

Member

Economic States

Others

TOTAL

of

basic

Community

of America

Japan

Source

Countries

data:

(EEC)

Dept. of Economic Research, Central Bank of the Phils.


77

and

furnitures

percent

for

the

manufactured Garments total

fixtures which

period

export

and

is

in

grew by an average

1978 to 1987)is still

electronics

exports

manufactures 9.7

and

in

has also been substantive

percen_ _ in

1987.

Bananas,

in

the

Raw Coffee

and

a_our_

and

15

electronics.

39

share iof

from around

than

non-traditional

garments

already makeup

19871, i.Theincrease

more

worth: noting_

concentrated

together,

of

percent

non-traditional

1.2 percent

in 1970

FreSh

Fish,

of

or

to

Simply

/ â&#x20AC;˘

Prepared,

are

among

%

it/lemore

important

non-traditional

unmanufactured

exports.

If and

define

tradi%ional

non-traditional

changes of

we

in

exports

exports

the compositio_

of

as manufactured

values.

exports

was

trade

as

has

with

is

percent percent member

countries

particularly

of F_C rose from 8.7 percent ADB 18.5

developing percent

III.6b and

in

are

Hongkong,

South

rose from

(Table III.6c).

in

the

namely

traditional exports

Tne

The growth

of

share

the US and

in 1987

in

Japan

in 1970 to

34.6

in 1970 to 17.2

Korea and ASEAN.

around

was

direction

by EEC and ADB

in 1970 to 18.5 percent

their

and others.

41.5 percent

up mostly

slight

definition

of

fell fram 39.6 percent

was taken

goods

forecasting

III.6c).

partners

fell from around

imm%ber countries in 1987

re-exports

not as marked,

trading

that for Japan

The slack

there

the share of non-traditional

although

by traditional

in 1987 while

PriL_ary

in 1987 the share

the rest falling under

The US share

in 1987.

will be used

shows that

(see Tables III.6a,

exports

declined.

exports

while

some change,

well

Philippine

III.5

33.6 percent

63.7 percent,

There

TaDle

goods,

to

exportsalongtheselines. Th_

traditional/non-trad/itional

future

to be equivalent

developing The

w_ile

share that of

7.5 percent

in 1970

to

in Philippine

exports

to


7B

Table I_II.5 PERCENTAGE DISTRIBUTION OF TOTAL TRADITIONAL/NON-TRADITIONAL (1971 '- 1987)

Year

1971 _

Non-Trad_tioqal

6.5i _

Traditional

EXPORTS,

Others

92_69

0.79

92.59 _8.18 87.5.2 83_.0_ 76.77 76.48 68.67

0.45 0_58 0.44 I_00 2.02 0.95 0.82

19_ 1973 1974 1975 1976 1977 1978

6._6_ ft:2_ _ 12.04. 16.00 _ 21.21 22.56 30.51

1979 1980 1981 1982 1983 198_ 1985 i_86

32,04 3_4_'64 41.49 _.32 47.69 55._0 59.73 59.46

67,_9 6'4_i5 57.46 51.60 50..49 42_0_3 ' 39.14 38.'06

0.87 1.21 1.05 i. Z8 1.82 _2.47 1.12 2_48

1987

63.67

33.60

2.73


_

...... -

8

m

•,_

_,_

_

__

_.el"

e'---

_:,

_.,_

_

-..

..............

_:_

_

_._

__

_

_

_

,----

_

_

o'_

,,.-.- ,_--..

_

_,._

_

:..

n---- _--

..

_

_-.-

_

_'-_

0_-_

_

_

_

1.1_

_,_

_-_

_

o

u---

_t_

,u_

_

_._

_,_

t_'_

_

,._-

....

_c,

!_.1

._

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-_

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81

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82 ADB developing worth

member

noting.

more

Philippine

than double

growth

rate of 75 percent

away

especially

Table

stagnant

A comparison,

proportion

manufactures,

4_ percent

1975 to 1980.

ASEAN, have

and

percent

for

unlike

compared

the world

the trend

in

198b

and chemical.

to and

to

73

the

t_e

world

percent

for

The

most

1987.

The share

exports

to

in Philippine

to 29 percent

for Philippine

products,

than it exported manufactures

noted

shows.• the

of non-traditional

to DMCs

thus

The composition

however,

This share• grew

•growth was in electronics

of garments

to the world

(see

III.7a).

With exports export 1981-85 growing ASE_N

exports.

a greater

the

r_ains

(DMC_), especially

in that there was a

during

phenominal

annual

1965-1975

pattern

to DMCs was around

62

grew at an average

for the period

The snare of non-traditional

period

The

follow •the general

non-traditional

and

respectively

1975-1988.

partners.

exports

DMCS

the period

rate

trading

exporting

rest of the world.

during

annual

Philippine

from traditional

P_ilippines

to DMCs grew at an average

countries

important

trend of exports

shift

is especially

III.6b).

member

become

in particular

for ASEAN, which

and 23 percent

ADB developing

and

exports

spectacular

(see Table

increasingly

(DMC) and ASEAN

that of world exports

rate was most

1975-1988

countries

respect

to ASEAN,•coconut

(in contrast

with the declining

grew at an enormous before by around

products

failing

pace during during

32 percent.

trend

destination

is given

exports

It picked

of garments,

in Table

classified

III.Tc.

the

for the world).

in the recent years nave also been encouraging

The value of Philippine

among

1975-8H, modestly

1985-1986.

Exports

are

according

high-growth Electronics

during

up

textile

again

the period in

1987,

and footwear

(see Table

to

III.7b).

to coranodity groups

by


83

Table III.7a .._ERAGE PERCBT_IiE-DISTRIBUTION OF EXPORT PRODUCTS TOTOTAL EXPORTS Exports toAsean, DMCs andWorld (In %)

â&#x20AC;˘Commodity Group .....................

_.._

.................................................................................................

I, Traditions]Exports Coconut Products 223,1

Copra Coconut oil 057.72 Desiccated Coconut 081_3700 Copra Meal/Cake

7.25 13.2325,12

1,94

4.59 15,80 2,15

3,74 12,37 2,55

3.05 9.76

0,00 1,88 0.05 0.00

0,16 4,06 0,37 0,00

0,06 3.41 0,28 0,00

1,68 0,85 0.03 0,00

1,44 1.41 0.20 0,00

12,04 6.96

0,00

0,79 1,68

20.16 15,51 14,91 8,26 11,15 6,47 0,00 0,75 0,83 0,00 0,88 0.49 0,00

0,00 0.00 0.00

0,30 1,42 0,50 0,26

Forest Products

t.03

7,70 8.04

0.33

4.09 5.59

0.10

2,29 4,20

Logs Lumber P1)rwood Veneer Sheets/Corestocks Others

0,14 0,60 0,00 0.29 0.00

4,20 0.49 2.62 0.27 0.13

0,00 0.23 0,08 0.02 0.00

1,62 0.44 1.84 0.06 0.12

1.37 2.32 1.39 0.40 0,11

0,00 0.07 0.03 0.00' 0.00

0,20 0.34 1.64 0.02 0.10

0.06 14,86 15,47 0,05

8,64 8.56

0,10

2,79 4,72

0,00 0,00 D.05 0,01

I0,52 9,37 3:92 3.90 0,15 0.67 0,27 t.63

0.00 0,00 0,05 0.00

5,76 2,80 0.17 0.41

0.00 1,721,88 0.00 0,752,24 0,03 0,17 0,17 0.07 0,16 0.42

0,21

0,39

1,92

0,23

0,64 2.44

0,81

0.92 2,73

0.01 0.01 0.00 0.20

0,20 0.02 0,00 0,16

1.45 0,II 0,15 0,21

0,01 0,01 0.00 0,21

0.30 0,02 0.00 0,32

1,66 0,12 0.21 0,45

0,00 0,02 0,00 0,79

0,20 1,61 0,030,11 0,00 0.36 0,70 0.64

II,26 0,00 0,29 10,96

5.54 0,25 0,17 5,12

2,86 0,51 0,78 1,57

2.32 0,02 0,08 2,22

2,59 0,I0 0,27 2.21

2,76 0,41 0,70 1.65

3,69 0.00 0,09 3.60

3,39 2.03 O,Ol 0,24 0,12 0.37 3,19 1,42

Centrifugal Refined 06115200 Molasses

Mineral Products 287,1102 Copper Concentrates Cold 287,9101 Chromium Ore Others FruitsandVegetables 058,9908 Canned Pineapple 058,5400 Pineapple Juice 058,5705 Pineapple Concentrates Others

265,5 121

34.66 49.34 59.82 13,35 31.75 38.68

0.33 9.17 1.70 1,17

Sugar andProducts

247 248 634.2

1975-1980 : 1981-1985 : 1986-1987 ASEAN DMCS WORLD ASEAN DMCS WORLD ASEAN DMCS WORLD

OTHERS Abaca Fibers Tobacco Unmanufactured Petroleum Products

2,71 9.86 1.82 1,41

0,00 2.09 0.05 0.00

20.16 16,26 15,74 8,27

3.20 2.57 1.66 0.54 0.06

4,53 2,86 0,31 0,87

0,47 6.77 1,11 1.41

0,28 2.42 1.17 0.22 0.10


84 : Commdity Group

11, Non-Traditional Products

65 85 83 82 5 682,1205 66

89

1975-1980 : 1981-1985 : 1986-1987 ASEANDMCSk_ORLD ASEANDNCSWORLD ASEANDMCSWORLD

60,02 47.09 39.02 82,76 65,23 59,81 83.60 79,8672.28

Non-Traditional Manufactures

47,63 39,65 29.35 77.43 59.59 50,35 75,68 72,5961,57

Elec.Eqpt,/Parts &Telecom. Garments TextileYarns/Fabrics Foobear TravelGoods andHandbags Wood Manufactures Furnitures andFixtures Chemicals Copper Metal Non-14etallic Min,Manuf, Machinery andTransport Eqpt, Processed Food andBeverages Hisc.Manuf, Articles,n,e,c. Others

24,23 15.22 8,88 61,36 36,09 20.61 1,57 1.90 7.45 0,54 1.50 11,42 1,43 3,32 1,19 0.57 1,52 0,95 0,06 0,27 0,87 0,05 0,40 1,06 0.02 0,02 0,24 0,01 â&#x20AC;˘ 0.01 0,17 0,22 0,11 0,79 0,11 0,12 0,91 O,N 0.10 1,01 0,07 0.20 1,62 3,79 2,99 1,36 3,19 3,65 2.13 0,00 0,01 0.00 0,00 0,00 1,24 5,60 5,32 1,15 2,29 2,35 0,61 2;02 1,90 0.71 1,79 1,27 0,76 1,24 1,53 1,31 1,74 1,83 2.51 1,32 1,07 2,41 0,86 0,86 2,74 6,07 5,89 1,98 4,85 9,80 3.62

Non-Traditions1 Unmanufactures 12.39 7,43 9,68

5.32

5,64 9,46

7,91

7,28 10.72

0,07 0.00 0.00 0.08 0.79 2,17 9.11 0,16

0.38 0,00 0,19 0,83 0,33 1,00 3,97 0,94

2,12 1,46 2,31 0,11 0.58 1,52 0.90 0.67

0.03 0.00 0.04 0,22 2.69 0.41 1.38 0.55

0.15 0.01 1.22 0,56 1,32 0.57 0.58 1,24

1,09 2.08 2,38 0,15 1,10 1,59 0.12 0.96

0,00 0,00 0.10 0.18 4,36 0.53 2,43 0.32

0,13 0.00 0,92 0,37 1,89 0,82 1,08 2.08

III, SpecialTransactions

3.90

2.31 0,67

2.05

1.53 0,66

0,38

0.26 0.14

IV, Re-Exports

1.42

1,27 0.48

1,84

1.50 0.84

8.76

6.64 2,48

931.2805 057,3100 057,9703 071.11 042.2102

Nickel IronOreA991owates Bananas Man9oos Coffee,Raw notRoasted Fish,Fresh orSimply Preserved Rice OLhers

55,62 32,7319,27 0,51 1.79 17.35 0,52 1,40 1.05 0,07 0.19 0,59 0,01 0,01 0.26 0,09 0,13 1.05 0,12 0,26 2,06 9,96 12.87 4.65 0.00 0,00 3,19 0.29 0,85 0.38 1,29 1,05 1.15 1.12 1.47 2.30 0,99 0,75 3.38 5,09 13,10 4.89

TOTAL EXPORTS

0,15 1.54 2,40 0.19 1.51 3,29 0,22 1.42

100,00 100.00100,00 100.00 100.00100,00 100.00 100,00 100.00


85

Table III,7b AVERAGE G_OWTH RATE OFPHILIPPINE EXPORTS TOOHCSANOWORLD EXPQ_TS •{In_)

Commodity Group

I, Traditions]Exports

155.44 82.17 14.73 -23.35 -18,61 -15,22 79,91 -3,00

CoconutProducts

3036,33 40,41

223,1

Copra Coconut oil 057.72 Desiccated Coconut 081,3700 Copra Heal/Cake Sugar endProducts

061.5200

CentrifugalRefined Molasses

287,1102 287,9101

058.9908 058.5400 058,5705

285.5 12I

14.8!

80,28

0,83

-7,88 235,42 47,73

-8,71 234,98 31,49 -5.04

7,22

47.17 55,25 19,36

23,87 _14,53 53,30 58,23 -35,08 21,26 32.67 25,93 63.85 98,02 77.78 42,20 29,30 8.7,33 4.88 -5,97 74,60 -4.12 -9,93 i9,80 29.76 14,41 31.34 54.84 7,78 -1.38 -4,77-16.07 -9,62 0.02 19.74 0.66 70.45 0.00 29.09-20,00-22,8S:13,27 0.00 -33,33 31,16 -2,67 1,37 -23.96 -9.69 -21,76 -57,91

10.45 -36,36 -33.68 !04.47 -31.07

0,00 1048,61 1.48 -23.44 -9,46 -22,59 -33.33 405,25 -36,95 0,00 57,50 -0.59 19,80 13,66 -1,69 -33.33 -18.19 -27,59

1282,54-31.03 0,57 -31,25

103.46 10,05 IT,7E-35,61-14,38-13.I5 -7,65 -2,08 -I.50 37.33 46,80 20.90

•Logs Lumber Plywood Veneer $heets/Corestocks Others MineralProducts

0,00 0.00 43,92 0,00

0,00 701,56

Forest Products 247 248 634,2

• 1976-1980 1991-1985 1985-1987 1986-1987 ASEAN OtiCS WORLDASEAN OMCS WORLD ABEAN I)MC5 WORLD ASEAN OMCS WORLD

;

-20,00 -9,83 -8,98 0.00 -7,86 -11,3! 0,00 -69.57 -62,15 -100,00-100,00 19321,31 4T4,77114,07-32,03 -7.21 -10,99-18.25 1!,4__15,60-16,83 45,22 48,08 -20.00 151.30 76,52 -20,46 -17,20 -12.29 226,28 30.28 7,43 790,87 105,73 21,43 O.O0 0,00 70,00 -20.03 -21.48 -14.73 -32.35 595,11 9.13 -53,48 1931,88 66,67 0,00 0,00 0,00 -20,00 42,40 12,00-65,41 55.38 1,11-100,00-65.91 20,00 205,72 116.36 35.30 86,60 -25,62 -22,55 01,81 -17.22 -4,96

Copper Concentrates Gold Chromium Ore Others

0.00 0,_0 0,00 -15.25

Fruits andVegetables

-2.04

Canned Pineapple Pineapple Juice Pineapple Concentrates Others OTHE_ AbacaFibers Tobacco Unmanufactured Petro]eum Products

117,71 110.8_. 479,05 93,43

31,42 0.00 -29,T4 42.89 0,00 -20,98 30,77 _,34 ;5,49 45,!@1375.46 82,67

56.61 30.45 !30,86 20,!0

16.20 -T6,37 -16.10

-29,90 0,00 -!3,07 0,43 -]5,33 0,00 -10,85 0.38 -8,88 0.69 -I0.06 -27,18 -100,00 :5,08 2532.42 -40,90 -3,81 146,72 4.99

30,55 10,64

4,16

-8.95 21,11 -20,89 -35,00 -75,61 "-38,36 -20,01 -34,62

65.72 21,48

9,49

-5,04 147,6626.85 93.74 15.38 2,27 110,08 -15,27 -0,_8325,63 -19,79 3,61 !3,00 27,26 20,00 15.52 8,17 11.89 3,36 20,6I 8,57 -14.89 28.84 0.00 0,00 0,00 40,00 0.00 424,92 12,55 0,00 708,20 15,79 11.11 -2,43 22.2t 73.33 295.90 28,97 14,87 33,82 25,70 11,64 67.22 36,11 26,67 0,00 0 O0 O, O0 2_,79 3,7,05 14.35 -25,72 __o8,33-5,96 297,98 77.16 -1,49 983.62 129,88 21,65 =70,00 ;7,30 18.57 40,00 --2,70 -2,73 -33,33 16,14 -24.85 -10,71 -7,69 -4,63-I0.21 -2.94 -8,46233.02 0.77 16,36 73,06-14.68-34.46 2,97 -14.29 30.62 42.70 29.55 -27,16 -25.54 0.02 351,36 89,36 14.39!148.00 143,33 39.68


86 T

â&#x20AC;˘

Commodity Group If,Non-Traditional Products Non-Traditional Manufactures

1975-1980 ASEA_DMCS _I.D

1981-1985 1985-1987 1986-1987 ASEANDMCS WORLDASEANDMCS WORLDASEANOMCS WORLB

89.00107,4585,1619,1413.76 4.73 0.85 5.08 7,50 34,20 17.8421.76 65.2892,$889.2624,6016.43 7,34 1,49

5.04 7,68 38.28 19.1826.50

Elec, ZElec, Eqpt,/Parts &Tel. _2q.882009,07 285,5332,8423,42!1.04-3,25 0.32 -3,9231.6934.1021.76 C_rmnts 4,54 31.37 80.40 -15,49 -5.39 5,07 3229 39,90 23,36 104.68 -1.34 46.21 65 TextileYarns/Fabrics 4.95 105,35 47.27 172,571537,78-11,51 341,402645.07 23,33 25.32 82.03 54,55 85 Footwear -T.24 134.01426.67 39,05 =1.00 -9.80 27.65 -2.70 -11,91 63.33 -1.16 0.00 83 TravelGoods andHandbags -9,34 21.97 -2,00 30.39 -4,44 6.56 114.31174.34 40.00 152,71 7.39 33,33 Wood Manufactures -11,35 43,45 4,I4 72,08 60,02 5.03 -14,40 21,13 8,83 -79,56 -3,96 25.53 82 Furnitures andFixtures _0,25 68,13 288.00 61,54 2I,!2 2,53 29,95 9,08 15,82 9.98 35,44 46.07 5 Chemicals 6.85 14,6964.7647,0937.5912,79100.8583,7235,2364,9116.35 0.82 682.1205Copper Metal 0.00-20.00D,OO 0.00 0.00 75,65 0,00 0.00 15,97 -5,81 66 Non-Meta]]ic Mineral Manufactures -0.8822,38 18.36*20.95 -;4,8645,92-39,29-28.273,84-20.24 -21.2322,22 Machinery andTransport Eqpt, 0,!8 53,2074,00 7.92-II.76-7,7512,I329.2435,56-64.7653,12 73.33 Processed Food andBeverages 137,35115,59111,43 5,79 1.41 6,51 -0,28 5,23 5,10 1.91 13.71 8,82 89 Misc.Manufactured Articles,n, !71,56 160.51 _,78 -8.14 -10,75 -1.69 !1,21 10,13 13.78-17,42 12.11 25,16 Others 46.03 58,84 78,52 11.47 71.05 28,98 29.00 2.73 -1,40 111.30 -0.38 23.81 Non-Traditional Unmnufactures922.24331.1674,16 1,90 -4.59-3,97 5,42 8.76 8.51 15,81 5.26 -2,29 Nickel 0.00 0,00 63,64289,10 643.2157,27 0.00 6.92 85,59 -lO0.O0 -lO0.O0 IronOreAgglomerates G,O; 0,00 C,OO Q.00 -16.11 -4,04 0,00 -60,19 -10,21 -10,59 Bananas 0,00 122,46 1t,23 50,06 135,7_ 1,45 -0.52 -6,88 0,25 -14.99 -39.33 -8.92 Mangoes 3533,88 40,99 50,00 23,!9 -2,11 !,87 16,95 24,0I 21,43 100,49118,86 80.00 Coffee,Raw notRoasted _8.87 34,15 430,00 94,83 92.7_ 12,4! -21,68 -16.74 -3,87 -76.26 -78.43 -73,11 Fish,Fresh or Simply Preserved O,O0 0.00 113,75 41,82 18,38 0,91 100,22 68.22 44.23 -12.85 52,50 44.76 842,2102Rice 0,00 79681,76 0,00-48,90 0.00 Others !23.16 102,57 58,18 73,07 11.53 8,21 10,07 22,87 20.73 7.42 16,48 20,59 931,2905 057,3100 057.9703 071.11

IIhSpecial Transactions

IV.Re-Exports TOTAL EXPORTS

326,21204,1291,43-12.56!0.07 8.44 18.8540.84 1,39 33,72-0.60-12.50

G,O0 _.00 _0,00 12!,_6 _2,50 ?_,_9 68,34 8!.30 48,35 52,79 33,63 33,04 !!3._9 9E,50 30.4E 9,37

!.59

-4.03

4.20

4,07

2,87 44.20 22.37 18,13


87

Table llI,Tc _ITIONALANDNDN-_AI)ITIONAL EXRJRTS TODEVEL_I_ NEMBER COUNTRIES ANDNORLD EXPQITS {)975-1987) (In MillionU.S,$)

ComexJity Group

[, Traditional Exports

18

92

1,767

137

O

13

466

8

39

8ti

1

12

489

13

39

561

0 0 0 0

1 11 I 0

172 230 31 33

0 B 0 0

I 35 3 0

47 567 118 81

0 1 0 0

0 9 2 O

O 347 76 36

9 4 0 0

20 17 2 0

32 381 75 73

0

5

615

88

181

657

0

65

185

0

11

71

0 0

3 2

581 34

88 0

174 7

624 33

0 0

59 6

169 16

0 0

6 5

60 11

1

35

225

4

53

425

0

23

199

0

29

243

1 0 0 0 0

32 0 3 0 0

167 27 23 8

0 3 0 1 0

16 5 27 3 I

92 TaT 111 36 5

0 0 0 8 O

8 3 10 0 2

39 91 51 12 6

0 0 0 0 O

0 4 23 1 0

0 154 68 15 6

0

22

332

0

t48

918

0

29

243

0

25

224

Copper Concentrates Gold Chromium Ore Others

0 0 0 O

15 6 0 0

212 76 13 31

0 0 0 0

105 39 2 3

545 239 33 101

0 0 0 0

16 8 2 3

84 100 12 47

0 0 0 0

77 7 1 1

109 91 T 17

Fruits andVegetabTes

0

1

44

0

3

111

2

7

136

¢

10

150

Canned Pineapple Pineapple Juice Pineapple Concentrates Others

0 0 0 0

0 0 0 1

35 3 3 3

0 0 0 0

2 0 0 I

82 6 9 14

0 0 0 2

3 0 0 4

89 7 14 26

0 0 0 4

2 0 0 8

gg 6 20 38

OTHE_ Abaca Fibers Tobacco Unmanufactured Petro]eum ProUucts

I4 0 1 14

16 i 1 14

85 14 34 37

35 0 1 34

47 2 I 44

146 27 29 90

5 0 0 5

8 I 0 7

80 17 24 39

33 0 0 33

50 1 1 48

lt8 12 18 68

Coconut Products 223.l 057.72 001.3700

Copra Coconut oil Desiccated Coconut Copra Heal/Cake SugarandProducts

061.5200

CentrifugalRefined Holasses

ForestProducts 247 248 834.2

Logs Lumber Plywood Veneer Sheets/coresLocks Others NineralProdocCs

287,1102 287,9101

058.9908 058,5400 058,5705

265.5 121

: 1975 : 1980 : 1985 : 1987 : * ASEANDNCS WORLD ASEAN OMCS WORLD ASEAN DNCS WORLO AGEAN DMCS WORLD

471 3,068

9

144 1,302

51

166 1,367


88

Commodity Group

: 1975 : 1980 : 1985 : 1987 : _ ASEAN ONCS WORLD ASEANDHCB WORLD ASEANDHCS WORLD ASEANDNCSWORLD t

41

73

504

223

465 2,650

510

825 3,275

408

893 4,197

Non-Traditiona] Hanufactures

40

68

367

169

385 2,005

487

770 2,785

372

817 3,642

Elec.Eqpt./Parts &Telecol. Garments 65 TextileYarns/Fabrics 85 Foot_ar 83 TravelGoods andHandbags Wood Manufactures 82 Furnitures andFixtures 5 Chemicals 882.1205 Copper Metal 66 Non-Netallic Min.Nanuf, Machinery andTransport Eqpt. Processed Food andBeverages 89 Nisc._nuf.Articles,n.e.c, Others

1 4 3 0 0 1 0 7 0 13 4 I 1 6

2 6 5 0 0 1 0 13 0 19 5 2 1 14

47 100 22 3 10 29 5 21 0 33 10 14 46 27

106 3 3 0 0 0 0 10 0 12 4 5 5 20.

172 16 33 3 0 0 I 22 0 41 17 15 11 54

671 502 74 67 t 35 77 89 0 60 47 92 149 133

410 I X 0 0 • I I 32 0 2 3 5 3 29

470 t,056 8 623 11 39 2 39 0 10 I 43 2 84 67 150 0 168 16 26 6 30 13 I06 6 136 188 257

269 3 2 0 0 0 1 54 0 I 3 5 4 31

390 1,119 18 1,098 18 88 2 31 0 16 I 62 3 130 143 245 0 162 8 22 13 78 16 128. 8 199 195 286

1

5

137

53

80

645

23

55

5t0

36

77

555

0 0 0 0 I 0 0 0

O 0 2 I 0 0 2

33 0 73 2 2 16 0 11

0 0 0 0 2 9 40 I

4 0 2 5 3 11 45 9

138 118 114 7 45 107 73 43

0 0 0 I 17 3 0 2

1 0 9 4 17 9 0 16

64 95 113 7 70 99 0 62

0 0 O 1 6 2 25 I

0 0 7 5 6 10 25 23

0 76 121 12 32 207 25 82

[II, Spocial Transactions

I

2

21

16

24

33

2

3

12

I

3

7

IV. Re-Exports

0

2

6

15

37

10

17

40

48

79

149

381

975

Non-Traditional Un_nufactures Nickel IronOreAgglomerates Bananas Mangoes Coffee, Raw notRoasted Fish,Fresh orpreserved 042.2102 Rice Others 931.2905 057.3100 057.9703 071.11

TOTAL EXPORTS

• t Fi9ures does notsum uptotaldueto roundin9

57

167 2,294

5,788

II. Non-Traditional Products

530l

989 4,629

506 1,140 5,720


89 It

is

countries 2800

will

(see

increase, year

TaDles

2000.

U.S.,

t_at

the share

On

slightly,

the other hand

the share

from 34.5 percent

of economic

the

capitalist

countries.

This will result mainly

various

is also worth

attempts

and

traditional

EEC

in the case of

the

The

of exports,

moderately

skill-intensive)

and non-traditional.

;

trade

reason

would

trade then

will

of

becane

exports

rise from 11.3 percent

from increased

values

(2) the five aggregated

fuel, labor intensive,

of

trade with

the

to the outside

to

to 14

socialist

world.

for Pre- and

to forecast merchandise

forecasted

classifications

and

States

that the share

will

the end in view of determining The

the

for EEC countries.

noting

Forecasts of Exports and Demand Post-Shipment Financin 9

categories;

capital-

to 27 percent

as the latter open up their economies

requirements.

will

in

United

!ntra-regional

percent.

with

Japan

in

these four categories

2000

year

forces that will see the rise of protectionism

outside

section

to

the

the

countries

This

in

member

be

It

B.

developing

in 1987 to 22 percent

of the direction

Lnore prevalent.

countries

to

exports

of the

to 12 percent

in the pattern

realignment Western

Similarly,

from 17.2 percent

and from 18.5 percent shift

exports

in 1987 to 25 percent

III.8a and III.8b).

will decline,

this

of

rise frcm 18-.5 percent

though

countries

for

predicted

from

pre- and post-shipment

will

then

namely:

be

1989

disaggregated

(primary fuel,

along

(3) by country

of

PSCC

prilmary

and skill-intensive, destination;

to

financing

(i) the ten single digit

categories capital-

exports

and

non-

highly and

(4)


90

TaDle I_I.8a DISTRIBUTION OF PHILIPPINE EXPORTS BY DESTINATION (1987 - 2_00)

PERCENTAGE

Year

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Developing Member

European Economic

Countries

Community

18.54 18.96 19.46 19.97 20.47 ...... 20.97 21.48 21.98 22.48 22.98 23.49 23.99 24.50 25.00

United States

18.53 17.46 17.00 16.55 16.09 15.64 15.18 14.73 14.27 13.82 13.36 12.91 12.45 12.00

34.55 34.00 33.42 32.83 32.25 31.67 31.08 30.50 29.92 29.33 28.75 28.17 27.58 27.00

MERCHANDISE

Japan

Others

17.16 19.85 20.03 20.21 20.39 20.57 20.74 20.92 21.10 21.28 21.46 21.64 21.82 22._0

11.22 9.73 10.08 10.44 10.80 11.15 11.51 11.86 12.22 12.58 12.93 13.29 13.64 14.00

Table III.8b DISTRIBUTION OF PHILIPPINE MERCHANDISE EXPORTS BY DESTINATION (1987 - 2000)

Year

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Developing Member

European Economic

Countries

Community

1032.86 1341.23 1541.82 1756.36 2016.3_ 2312.99 27_0.04 3209.08 3742.92 4297.26 4956.39 56_5.63 6541.5_ 7500.00

i_32.31 1235.12 1346.91 1455.57 1584.87 1725.09 1908.13 2150.58 2375.96 25_4.34 2_i_.96 3059.67 3324.i5 3600._0

United States

1924.7_ 2405.16 2647.87 2887.40 3176.63 3493.20 3906.76 4453.00 4981.68 5484.71 6_66.25 6676.29 7363.86 81_0.00

Japan

955.98 14_4.19 1586.98 1777.47 2008.42 2268.87 26_7.02 3054.32 3513.15 3979.36 4528._b 5128.68 5825.94 66_0.00

Others

625.0662 688.3002 111.79 128.52 148.93 172.16 202.58 242.42 284.85 329.34 381.95 440.96 509.8b 588.00


91

In

order

disaggregated

to

forecast

total

into its various

exports,

components

the

dollar

equivalent

was

thus:

x$ --x - P/E X where is

X

is

the

the implicit

peso

equivalent

of

peso price deflator,

exports

and E

at

constant

is the implicit

prices,

P

exchange

rate

X applying

to

exports.

A

log-linear

variables

using

data

compounded

growth

rates were obtained:

for

P

and 3.1 percent

covering

model

for

E . X

was

the period

fitted

1967-87

6.7 percent

to

and for

these the

X,

three

following

12.5 percent

Since

X$=X+P-E X the compounded

growth

rate for dollar

exports

should De approximately

16.1

percent.

Ad3ustments there

were

is an impending

rate of real exports 1988). an

economic is placed

This was combined

inflation

for dollar

The From

made when making

of 8 percent

slowdown

projections. in the world

at 7 percent

For

example,

economy,

(from a growth

the

since growth

of 21 percent

wit_ a rate of peso depreciation

of 3 percent

with a net result of 12 percent

growth

in

in and 1989

exports.

forecasts

of merchandise

exports

a level of $8B in 1989, exports

The export

projections

presented

by

are presented

are expected

in

to reach

Table $30B

up to the year

the Central

2000.

1994 are lower than similar forecasts 13__/ Bank of the Philippines. The forecasts are

13/ A similar

in

III.9.

methodology

was applied

by the Central

Bank.


82

H_ |

â&#x20AC;˘

_

I

r_

*rt

â&#x20AC;˘ F"4

_

_

4J

_-

O_

_

.

I

I

I

i

I

i

I

i

t

i

I

i

I

I

i

I

I

I

i

I

I

I

I ____

!

____

I

____

,-.4 _

_i _i _,}._

L_ _P C"-

_

._

_

I ,_


93

compared

in

introduced economy

Table in

consolidates that

order

which

Recessionary

I•II.10.

to account

in

turn would

forces

would

expansion

relatively constant

growth

growth

be present

Hopefully,

from these trade.

rates

financing

in The

incorporates

financing

former

is quite difficult

officially

from

negligible)

and

data are

exports

are covered

to

supported

trend

coverage

interviewed

past

finally

reflected

1993-95.

was applied

to in

•After

the

this,

(9

a

a

percent •

required

of total

ADB

on terms

of

and

it

exports

components.

on the percentage of exports

the

It

of exports•• which

are

are not •readily available

and

are self-financed.

an educated

of credit.

by post-shipment

in the

and percentage

post-shipment

by letters

based

and imported

behavior

financing

At present

about

The remaining

financing. • It is

rise to 10 percent

is then adjusted

(which

guess had to be made

arise from this need.

will gradually

of financing

is

presented

Data on these variables

available,

demand would

percentage

EBC

leading

were calculated

for both domestic

insurance

on

credit

be

requirements•

to estaDlish

financed.

no

trade.

for E ).

is equal• to 14 percent

needs

most of the exporters

As

U.S.

world

the

disappear

12.•5 percent

the sample •c_nputations

reference.

under guarantee

•on

the

X

Pre-snipment used

in

was

this time the uncertainty

This prospect

X, •and 3 percent

forecasts

slowdown

when

events would

of exports

our

impact

after

figures

in

up to 1992

rate of approximately

for P, 6.5 percent for

bias

nave a significant

in • world

nigh

downward

for the impending

its contain market.

would • have resulted

renewed

The

on

surely how

much

95 percent

amount

estimated

by the year 2000.

by ass_ning

is

is

of

assumed

that

this

The• amount

a 90-day turnover

rate.


Table III.10 COMPARISON OF CENTRAL BANK AND PIDS FORECASTS, 1989-1994

Year

1989 1990 1991 1992 1993 1994

Sources:

PIDS

Forecast

7923 8795 9850 11030 1257_ 14600

CB

7980 9015 10725 11930 13415 15230

Table III.7 of this study, and Inter-Agency Study Group on External Trade Statistics and Projections of the Foreign Operations Committee, Central Bank of the Philippines, Annual Report 1987


95 The forecasted in

Tables

III.lla

financing

from $50M

for post-shipment,

value)

III.12.

III.12a,

II_12b,

Tables requirements

a

III.lla will

that

growth

the

in 1989 to $4.2B

requira_ents

will

increase

and

primary

III.12c

in

and

financing

percentage

Tables

III.ll

requirements

of classification:

show

exports

requirements

SUPPORT

across

are

the ten

exports

are

(see

l-

Tables

of Philippine

role coming

easier

financing

This is

an

indication

long term

and

is

based

cheaper to

in nature

to

on

the

finance.

distribute

the

of maturities.

SECTOR

support exports. export

is provided

from the private

of

This

the spectrum

by which a fledgling

mentary

exports,

bulk

it is not possible

institutional

share of this support

the

will be relatively

FOR THE EXPORT

tantial

that

rate is involved).

of lack of data,

direction

"infrastructure"

two modes

requirements

a large extent, and

(both

and III.12d).

turnover

INSTITUTIONAL

To

from $1.1B

III.3 and III.4

come from manufactured

because

total financing

â&#x20AC;˘â&#x20AC;˘

are shown

pre-shipment,

and traditional/non-traditional

III.12c

shorter

assumption

IV.

For

and post-shipment

but only along

that much of the credit

However,

requirements

for total exports

in Tables

Pre-shipment

PSCC categories

(i.e.,

to increase

the financing

forecasts

are shown

disaggregated

digit

respectively.

are expected

disaggregated

and

also

III.llb,

financing

in 1989 to $750M in 2000.

The

through

and

requirements

in 2000, while

terms

pre- and post,shipment

plays It

a vital

provides

the

sector can thrive.

by the government

sector.

role

with a

for

the

necessary A

subssupple-


96

I

I,.,4

11_

.,-n.

C 0 ,---,"4

01_4J

_

0"_ I'_ _-I ¢'_ _--I _ .

t"- 0'_ kO O00_ .

.

_._

,':_ ,_ _0 I"" _I "r_ r"l CI_ ¢_

r-4 _

_

_

,--I _I _'_I

I_" gO ,_ _

_,--'I

_f_.Ot""

Mdu_r2dd,_dd_M

4dMd_d_d_r_g_dd


_

I

_ m_

M

.?

O

_

I

___

_____

_ __-__ _____

•_

"

.

____ ____

___

_ _

4d_g_M_ddM

__

__

,

97


98

Table llI.llc PERCENt'AGE DISTRIBUTION OF PHILIPPINE MERCHANDISE 1 - DIGIT PSCCCATEGORY (1987-2000)

EXPORTS

BY

,_,

Year

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

0

1

15.94 0.50 14.94 0.45 14.45 0.43 13.95 0.41 13.44 _.39 12.96 0.37 12.46 0.35 11.97 0.32 11.48'0.30 10.98 0.28 10.48 0.26 10.00 0.24 9.50 0.22 9.00 0.20

2

3

4

5

6

7

8

9

9.60 10.02 9.67 9.33 9.00 8.67 8.33 8.00 7.67 7.33 7.00 6.67 6.33 6.00

1.74 2.16 2.06 1.97 1.87 1.77 1.68 1.58 1.48 1.39 1.29 1.19 1.10 1.00

7.13 6.81 5.75 5.50 5.25 5.00 4.75 4.50 4.25 4.00 3.75 3.50 3.25 3.00

4.40 3.63 3.48 3.32 3.17 3.02 2.87 2.72 2.56 2.41 2.26 2.10 1.95 1.80

8.42 10.14 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00 10.00

9.93 9.81 10.16 10.51 10.86 11.21 11.55 11.90 12.25 12.60 12.95 13.30 13.65 .14.00

13.61 13.49 13.87 14.24 14.62 15.00 15.37 15.74 16.12 16.50 16.87 17.25 17.62 18.00

28.74 29.34 29.98 30.62 31.25 31.89 32.53 33.17 33.81 34.45 35.08 35.72 36.36 37.00


_I

_

• _

M

N

_._

N

I

I

_

_ _

_

_

_

_ _

_

_

_

_ _

_

_

_

__ __

d_d_dg_2dgddd

I

_

__d_4_Mdd_dd

_____

_

I •

l I

_

_

_

_

_

_

_ _

_

_

_

_ _

_

_

99


Tamle III.12a PERCENTAGE DISTRIBUTION OF PHILIPPINE MERCHANDISE EXPORTS CLASSIFIED AS TRADITIONAL/NON-TRADITIONAL (1987 - 2000)

Year

Traditional

1987 19_8 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2_0

33.6 32.5 31.5 3_.5 29.4 28.4 27.3 26.3 25.2 24.2 23.1 22.1 21._ 2_.0

DISTRIBUTION CLASSIFIED

Year

1987 19_8 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 199_ 200_

OF AS

63.7 64.6 65.4 66.3 67.2 68._ 68.9 69.8 70.7 71.5 72.4 73.3 74.1 75.0

Table III.12b PHILIPPINE MERCHANDISE TRADITIONAL/NON-TRADITIONAL (1987 - 2000)

Traditional

1871.9 2299.1 2495.7 2682.5 2_95.9 3132.5 3431.6 3839.8 4195.8 4525.4 4874.1 5i37.7 5607.0 6_0.0

Non-Traditional

Non-Traditional

3548.7 4569.8 5181.6 5831.1 6619.2 7500.4 866_.7 i_19_o8 11771.6 13370.5 15276.4 17372.1 19784.7 225_0._

Others

2.7 2.9 3.1 3.2 3.4 3.6 3.8 3.9 4.1 4.3 4.5 4.6 4.9 5.0

EXPORTS

Others

150.4 205.1 245.6 2_1.4 334.9 397.1 477.7 569.4 682.7 804.1 949..5 1098.2 1308.3 15_0.0


101

PRE-SHIPMENT

•Table III.12c FINANCING REQUIREMENTS

CLASSIFIED

AS

TRADITIONAL/NON-TRADITIONAL (1989 - 2000) (Current $ Million)

Year

Traditional

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

349.3 375.5 405.4 438.5 48_.5 537.6 587.4 633.6 682.4 733.3 785.0 840.0

POST-SHIPMENT

Year

1989 199_ 1991 1992 1993 1994 1995 1996 1997 1998 1999 •• 2000

Non-Traditional

""

725.3 816.2 926.7 1049.9 1212.6 1426.7 1648.0 1871,9 2138.7 2432.1 2769.9 3150.0

Table III.12d FINANCING REQUIREMENTS TRADITIONAL/NON-TRADITIONAL (1989 - 20_) •(Current $ Million)

Traditional

Others

CLASSIFIED

Non-Traditional

15.8 16.8 21.8 31.2 42.9 57.6

32.7 36.5 49.7 74.8 108.2 152.9

73_3 84.9 103.5 117.8 133.1 15_.0

205.7 251.0 324.4 39_.7 469.8 562.5

34.4 39.4 46.9 55.6 66.9 79.7 95.6 112.6 132.9 152.6 183.2 210.0

AS

Others

1•.6 1.8 2.5 4.0 6.0 5.0 11.9 15.1 20.2 24.5 31.1 37.5


102 The support is

first section

to â&#x20AC;˘enhance local exports

presented.

organizations

A.

The latter focuses toward

section

development

program

the

existence

Philippineâ&#x20AC;˘

an

share

of the

objective of

concensus

Philippine

products

identification

to assess

in

a

foreign which

and

time,

concern

the

is

export

is to look

development

attempt

to

that

assess

an

through

of the

there

Secondly,

markets.

of foreign demand the country's

meeting the

such other

It

must

increasing there

the

is

a

institution

hand,

of its production,

skills

Dealing

includes

development training,

Promotions

and

in

product encompasses

product

the

terms

the

marketing

to

former

of in

to the

their

products'

development, the

concepts

the

in order

to engage

enhance

local

the need

with

products

resources To

of first

and second,

advantage,

and other demand.

viability involves

for particular

comparative

Product

manag_nent.

of enhancing

are marketable,

and marketing.

production

towards

and competitiveness.

in

knowhow

exporter

existing

primary

and foremost

process

production

promotions

the

in foreign markets.

of local raw materials

on

The

same

First

availability

marketability,

review

can best be achieved

is

their marketability

able

major

program.

of products

is to nave knowledge

by

initiative

Progr_a

policy

the

products

development

exportable

to

coordinated

that this objective

Export

be

government.

at

goverr_lent

sector

meet - that is the need to achieve

of an export development

enhance

the

system.

to

Development

attempt

and

the private

of

of exports.

an

of a

exports

effectiveness be

of

an overview

on the role played

the develo_nent

is

provides

afterwhicn

The Goverl_nent's Export

This

into

of this chapter

and

technical

and

design,

involve

selling


I03 t_rough share

the of

exposure

the

penetration,

Given

and promotions

market,

such

as

such as negotiations

this background,

of the product,

negotiations

for

for lower tariff

this chapter

negotiations

proceeds

quotas,

for

and

a

market

and non-tariff

barriers.

by asking

following

the

questions:

(a)

What

is the present

development

support

- the agencies

given by the government

involved,

the policies

for

export

and programs

of

action? (b)

How amply covered

(c)

How

effective

accessibility

1.0

The Present

and

trade,

Export

is mainly

country' s

organizational

ensure

Develo_nent

(DTI).

ITG a

in terms

of export of

development?

implementation

and

structure

government's

export

formulation,

(2) program

its wings

with

government

formulation These

development,

for business

its

implementing

the International

program

of ten agencies

to the Department

office

as one of

the formulation

of the Department

program.

is assigned

the exports

development

is composed

comprehensive

exporters

expands

concerned

export

Program

As the primary

As such it has under

(ITG) which

The

the program

Philippine

the Deparhnent

strategies.

the

is

aspects

to its intended beneficiaries?

The task to develop of Trade and Industry

are the various

Trade

Group

and implementation

(see

Annex

B

for

of the

of Trade and Industry).

which

are

and a focused agencies

brought

together

implementation

are involved

(3) monitoring,

in

(i)

of

to the

policy

(4) regulation,

and


104 (5) service agencies

(a)

delivery

pertinent

and their mandate

to international

are described

Philippine

Trade Training

Center

The

is responsible

for

PTTC

Filipino offers

exporters

through

three major

exhibition

The

first aims

international

This

includes

research

and market

financing

Product

the knowledge training

and

skills

program.

(2) product

on

preserved

foods.

The

testing;

of

agency and

(3)

Cottage

Product

Standards

Exhibition

of

manageaent,

the

Food

Institute Industry

has

exporters

in

their

costing

products.

and

pricing,

techniques

in

market

materials

and

finished

involves

This

the

government

linkages

(FI'RI), Forest Technology

Center

quality

personnel

Products

and

fresh

other

specialized

(FDC),

Philippine

Research

(CITC), and the

and

Institute Bureau

of

exhibition

for

testing.

use of

products,

as

well

as

of

the

to trade fairs.

involved in

Center

presenting

in participation

is

with

the effective

includes

Center

raw

furnitures

Development

(BPS) for product

managanent

of

textiles,

Center

training

addition,

of marketing

production,

testing

and

The

products. and

aspect

efficient

includes

as

(FPRI),

planning

on

the

of local

penetration.

Research

promoting

on

garments

such

the competitiveness

and financial

testing

products

agencies

to develop

knowledge

of

skills

upgrading

(i) training;

market

sources

In

(PTTC)

training.

the

Textile

These

below:

a comprehensive

services:

trade and commerce.

in

the field of

the

upgrading

international

market


I05

researcn,

market

of export

training

information

dissemination,

and planning

ated

:

Budget

Department

and

studies

facilitation, and

Considered offers and a

consultancy

financing one-stop

An

export

prlmary

can

in

promoting

conducts

strategies.

private•

in

and •promotion,

under (i)

the

export

(3) market

assistance

procedures,

and Would-be

register

and •

under

ex/x_rters.. It

also

and an export assistance

his

product

with

Registry

of Philippine

and promotions

DTI,

it

doc_m_entation, marketing,

•the

program.

•international sub-contracting

operates unit.

agency

•Exporters

Likewise, between

which

it

is

foreignbuyers

and producers.

studies

on • product

profile

The agency for

is involved

on export

doctm_entation center

its • marketing

international-market

measures

agency

exporters

agency

revlew and coordination.

services ••on export

and local manufacturers

It

The agency

an internationally-distributed

•part • of

engaged

for

exporter

circulates •as

_the

and information

(2) marketing

(4)•policy

88

(BETP)

assistance

of Trade and IndUs£ry.

assistance product

is an export

[m21M

:

Export Trade Promotion

The • BETP

1986

:

Personnel Complement

Bureau of

management

and seminars.

Year

(b)

and

appropriate

and foreign-trade

and

is also

and

formulate

raw

materials

country

and

involved

in identifying

export-import

procedures.

missions

and •conducts

sourcing,

product and

export

recommending

It

industry-sector

monitors dialogues


108

with

local

exporter

coordination

efforts.

organizations

Center

It Basically, trade

Budget

:

P26.7M

:

150

Center

main

The regional

foreign

assistance

of

buyers

and

assistance

and

countries

exporters

also

in the planning

and

(CITEM)

%mder

the

DTI.

participation

in

as a way of

exposing

updated

and developments

exhibition

and trade

the products

Budget

:

P47.5M

:

150

of garments

Export Board

ob3ective

Lastly, The

and

it

latter accurate

fairs

locally

on

a

(GTEB)

is to oversee

and textiles.

involved

of exporters.

1987

Complement

of

of new products.

:

primary

It is also

services.

Year operated

and Textiles

organization

producers/manufacturers.

specialized,

conducts

and

and exhibits.

and consultancy

basis as a way of exposing

GTEB's exports

in

about new products,

Garments

arm

organization

in trade fairs

Personnel

(d)

and Missions

and promotions

the

and

provides

matching

Center

Expositions

policy-review

products.

Filipino

information

is

here

merchandising

provides

Trade

marketing

participating

on-site

provides

Complement

activity

export

exporters in

the

exhibitions

The

its

1987

its

Philippine

of

:

for International

is

part

Year operated

Personnel

(c)

as

the overall

This agency

is given

administration the task to

of issue


107

quota

allocation

textiles.

and export authorizations

It issues

other raw materials

It

licences

international

data,

such as prices

trends

in garments,

and other developments

Foreign

This in

the

1979

Budget

:

@57M

:

268

Trade Service

formulation

specific

selling

strategy.

markets.

As

the

in

scheduling

and marketing

and specific

such,

of product-market

makes

participate.

commercial

of market

It

also

foreign

buyers

This

in the

industry,

to garments.

involves

agency

is

as an

input

identification

that have also

potential

involved

which on-site

visit

of trade

enables promotional

to the country

and

missions.

Year Operated

:

1986

Budget

:

@II9M

:

80

Personnel

industry/market

information

products

to organizers

countries conducts

warehouse.

in

of in the

strategies.

representations

foreign

and

(FTSC)

investors

FTSC fairs

Corps

areas,

implementation

pertaining

:

agency gathers

investment

developments

Year operated

Complement

on

and

materials

garments

information

up-to-date

of garm_its

of textile

of a bonded

exporters

and demand,

Personnel

(e)

for the importation

and in the operation

provides

on the exports

Complement

exhibitions

the â&#x20AC;˘

country

activities servicing

such

and to as

incoming


108. (f)

Bureau

This trade

of International

agency

relations

such,

it

is

the

is responsible

for

especially

matters

involved

negotiations

and

(GSP,

assume

in

or

and

This

government-wide

Philippine

assistance

:

91

and

country's on

the

provides

to provide

as

provides for

assuring major proper

adequate,

a clearinghouse

assistance

lower

adequate ports.

It

of

reliable

and

economic

on

shipping

information

to exporters

surcharges,

and

shippers

rates of

conducts on

also provides

to

freight supply

techniques

assistance

Shippercon various

(Shippercon)

and services.

negotiating in

and

to

on trade negotiations.

P4.7M

tasked

for

agencies

:

services

The agency by

other

Budget

is

schemes

allocation

1979

Shippers Council

is

barriers,

trading

:

Complement

trade

tackles

Year Operated

Shippercon shipping

with

As

for

non-tarlff

for quota

coordination

foreign

access.

it

preferential

of positions

to

to market

issues

and

negotiating

requires

pertaining

and strategies

primary

tariff

in

consistency

Personnel

(g)

positions

in the different

ASEAT-PTA),

products.

of

matters pertaining

The

reduction

(BITR)

all

formulating

of local products

GSTP,

specific

on

consultations.

elimination

inclusion

Trade Relations

one's

information

terms

exporters products,

of all types

products.

booking

to

export

a training program

regarding

shipping

for various

containers

shipping

exporters

especially

for

in

the

exporters

In addition,

it

and chartering.

on basic