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
._
_r_
,...
79
• ,---
I
__
8O
•
_
_
I __
I I
_ ....
"_
__
.__
_N_
_
" .... _
©
_ ,
_
"
........
_ I
•
I
,
i !
,
' I
I I
-_
_ __
_
_
_
.
i,,_
__ _ "_
_,
__
__
" _
_
_ .....
_
_.._
-
_
............. _'___
-_
,
.
"_
'
_..= __
_
__
" "_
.......
,
-_
-
_
.
.
_..
.....
_4_
_
_ " " "_
_
_o_ _ ___
__=__
_
_
_ " "
....
........
, _ _, ............
....
_____
_ _
_,_
_
_
____
___ " " "_
....
__
__.,_
, _ -_
__N.
,
•
i .... _
.I
-
_
I
i
I
I
,
"i
i
.-
_
.__ -__ .......
_
.
•
-_.__ _
............
_o_ "__
.........
.........
_
.
.
.-
....
__
.:
-
-
__
.
.
.
.
._ .............. ..._
.
, __
.__
_._g_ __
..........
I
.
I
I
I
I
I
" "
__
__ -
__ __
.
.
_
__
.
.
.
_ _ __
__
.
_
.
.
.
81
_
_ .=
• _
'
I
, ,
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
and conditions.
freight It
also
rates, gives
109
assistance
to
exporters
in
computing
freight
co_ts
and
in securing
insurance.
•The agency in the regions
have field offices
outside
by the DTI Regional
Offices
Manila
:
=
1982
Budget
:
PI.2M
:
18
International
Coffee
Complement
Organization-Certifying
Agency
•This agency• is•responsib! e for• the administration exports -
and represents
an organization
develo p
•and
Specifically,
of coffee
promote it
the country
buyers and producers.
•coffee
exports
to
quota
required
to exporters,
provides
by ICO, andprovides
The
agency
production, opportunities
•the clearance
also provides
quota and export
information
guidelines.
and world prices
of coffee
and
to
countries.
monitors ••quota
of the coffee's
origin
as
for •coffee exports.
to exporters Similarly,
is provided
pertaining
information
on
by the agency.
•
1981
Budget
:
@4.3M
:
21
Complement
task is
." ..
Year operated
Personnel
coffee
Organization
non-quota
assigns
certification
Coffee
Its primary
and
•accredits coffee exporters,
(IC/)-CA)
of Philippine
in the International
_
allocations
and are represented
Year operated
•Personnel
(h)
Metro
coffee market
110
(i)
Product
This through
Development
agency
contributes
product • quality
research
and
assistance charge.
•in product
Producers
changing
market
trends,
market
and package
are assisted
it such
as
utilization
two
conducts
design
technology
and
Philippine
PITC
is
engages
in
private
enterprises.
engages
in.
private socialist
export
First
sector countries
design,
of new products products
information
style
design
in
free of as
well
to adapt
to
latest
in
of products
the to
suit
foreign
consultations
on
the
for such materials.
awareness
to
the
in adapting
region
to the
Year operated
:
1978
Budget
:
@20.8M
:
145
Complement
Trading
government' s and
import
Corporation
and•
latest
(PITC)
international of
products
trading not
arm.
normally
It pursued
AS such, there are two types of trading is
is
exporters
in design.
International
the
product
and technology.
to help exporters
Personnel
(j)
exports
is
provides
in product
as well as the source
workshops
function it
also • provides
bring
(PDDCP)
Philippine
This allows export
Center
mobiles
and processes
connection,
exporters
color
materials
its seminar
ones.
of
primary
evaluationand
materials,
The
•Its
in the development
provides
preferences.
Its
In this
conditions,
In addition, design
and design.
of existing
of the Philippines
to the marketability
development.
as in the design
proper
and Design Center
trading hesitant
of new non-traditional to engage
that are normally
in.
Second
inaccessible
that
products is
which
trading
to the private
thus by PITC the with
sector.
111
PIT(: also engages producers.
On
in
this
aspect
warehouses
(CBTWs)
materials
requirements.
processing
and shipment
materials
under
Lastly,
the
for
PITC
export
the duty-drawback
PITC operates
front
of line
ICO-CA, the
these
need
for
agencies,
a BETP
to be general
As
a
of
would-be
procedures financing and unit
of
the
the
whose
BETP,
the
faster of
raw
exporters.
the
delivery
regulatory
the
ITG
namely
are
under
task is to address
strategy.
agency.
of
Among
Its mandate
the
the ten
is considered
the nine agencies.
Industry
information
tec_Lnical
in
main
export
lead
government's
thrust to provides,
on setting-up
and raw-material
services Export
and
quality
Assistance
encourage
exports,
free of charge,
export marketing
product
raw
: 217
comprising
and comprehensive
and incentives,
under
for small
Of the ten, three are
documentation,
of
the importation
are involved
The agencies
and
trading
their
benefits
facility
Complement
agencies
the
local
system.
services.
Trade
development,
added
: own revenues
exporters
and
import
Budget
in nature vis-a-vis
for
bonded
: 1977
considered
sign
Department and
is
may
and eliminates
of one undersecretary
focused
custom's
who
the
a @IOM financing
GTEB, Shippercon.
supervision
raw materials
Year operated
ten
export
has
for imports
of
operates
producers
This
Personnel
All
importation
export and
the
exporters
business,
export
promotions,
export
sourcing, control. Network
product A
design
separate
(EXPONET),
has
112 been
set
regions
up
by
One program
to provide
DTI's
of
these services.
regional
the
offices
innovative
is the government's
the
time by which exporters
shy
away
from government
Extensive
paperwork
Stop-Export
export Procedures
This
brings
application,
These
are
the Bureau
Bureau
of Fisheries
(BPI),
Philippine
(PPA),
Garments
Division,
In
of Customs
(see
In this
the
1984.
development to minimize
Most
exporters
time-consuming,
the
and the Bonded
addition
Bureau
paperwork.
regard,
t_e
to
Resources
Bureau
government of export
of Animal
(BFAR), Bureau
(PCA),
One-
simplify
IV.I).
The
OSEDC
is
exporters
export
of
on
garments, and
in
Industry
Ports
(BAI), Industry
Authority of
located
in key export-oriented
Trade at
the
regions,
and Baguio.
Center
of raw material of
Warehouses
matters
to
documentation.
(GTEB), and Department
Custom's
Assessment
and Conduction
such
provision entertaining
as policies of
(OSIDC) has been set
requirements
Division,
action
Bonds
center
and procedures
information
complaints.
by exporters.
Division.
to these, GTEB has its oWn 0ne-stop
assists
offices
of Plant
Philippine
Import Documentation
the importation
houses
(BC),
and has offices
Zamboanga,
a One-Stop
various
Export Board
Table
Trade Center
opportunities â&#x20AC;˘
of
and approval
Authority
and Textile
up to facilitate OSIDC
processing,
Coconut
such as Cebu, Davao,
The
export
(OSEDC) has been established
under one roof
and Aquatic
Industry-NCR
Similarly,
since
the process.
because
in
and documentation.
office
International
present
also gives rise to red tape.
facilitate
and
of the
will go through
Center
represented
to ease on export procedures
services
Documentation
is
and has been operating
features
policy
EXPONET
regarding
Likewise,
a
that
on
the
market one-stop
113 Table IV.I ONE-STOP EXPORT OOCURENTATION CENTER: PARTICIPAT]N6 AGENCIES
Agency
Commodity
Bureauof CustomsExport Coordination Division (BOC-ECD)
Oocuments [ssued
$ Authority to Load ! Special Permit to Load â&#x20AC;˘! Certification of Origin (GSPandnon-GSP) ; Certificate of Shipment ! Certificate of Re-exportation
Bureauof, AnimalIndustry (BAI)
Animaland Animal byproducts
!
Export Clearance
Bureauof Fisheries and Aquatic Resources
Fish andFishery aquatic
! !
Export CIearnance CITESClearance
Bureauof Plant Industry (BPI)
Plants
!
Phytosanitary Certificate
PepartJent of Tradeand Industry, National Capital Region (OTI-NCR)
Handicrafts
I
Philippine CoconutAuthority {PCA)
Coconutand by products
$ Export Clearnance
Philippine Ports Authority(PPA)
Fiber Industry Development Authority (FIDA) Garmentand Textile Export Board(6TEB)"
Special Ooculentation Certificate for Preferential ,Treatment to Australia and EEC
$ Exemptionfrom #harfage Fee for 901 and EPZARegistered Exporters $. Accepts Paymentsfor _harfage Fee
Natural Fibers
!
Commodity Clearance
Garmentsand Textiles products
I
Textile Export Clearance
114 action unit
center has
that
also
serves
been
as
a
complaints,
set up by the Bureau
assistance,
of Customs
and information
and
the
Philippine
on Exports
Procedures
Ports Authority.
The
government
(CEP).
The
procedural need
Commission
sector
Customs
DTI
incentive
underline in
(Philexport)
Commissioner
on exporting
in response
and guidelines
to simplify
has
with
instituted
for
Philippine
an exporters '
exporters.
All exporters
had
at
least 10 exports privileges:
warehouses
for
Philippine
Exporters
Customs
instituted
a
transactions (a)
to
the
export NEDA the
importation
of
by
in
who
have
at least
Registry;
and
(c)
(b)
availment
Foundation
scheme been
full
are
as
an
operating
$100,000
for a 2-year period,
materials;
goverrhment
Exporters
the use of Philexport-operated
and have given
customs listing
bonded in
of the services
the
of
the the
Group in the OSEDC.
subcontractors
sub-contractors. contractors
the
frQm
the
accreditation
at least three years or most have exported
Also,
of
the CB Governor,
exporters,
for
Special
with
and four representatives
its support
cooperation
to bonafide
following
review
as members.
further
t/_rough
new policies
an overall
It is headed by the DTI Secretary
Director-General,
To
undertakes
requirements
or introduce
procedures.
the Commission
periodically
and documentation
to amend
private
has also created
the DTI.
exchange
The program
This enables meeting
important
contribution
linkages.
SUBCONEX
export
matches
the former orders.
of the export assistance
known
sector
covers
as
SUBCONEX
manufacturer-exporters
to have access The
has
also
in the development
the garments,
with
to reliable
program
gifts
and
serves of
been
suban
backward houseware,
115
furnitures
and fixtures,
footwear
and leathergoods,
and fresh and processed
foods sectors.
To supplement is
the
Exporters
exporters exporting would-be a
these services,
and
Manual, a
would-be
including
compilation
of present
with
helpful
to
without
extra cost
exporters
a Registry
it exposes
on their part.
to produce
all
It is for sale
circulations information
to
about
to
world-wide to be very
foreign
of the ten
as a way to inform
and
Exporters,
This Das been found
Likewise, each
to
all exporters
circulated
their products
its brochures
One of these
of Philippine
exporters
and products.
since
for
contains
DTI registered
their addresses
encouraged
which
financing.
publications.
puDlication
It also publishes
complete
also
4-volume
exporters
export
exporters.
DTI produces
buyers
agencies
is
exporters
of
their services.
Recently, with
in addressing
all the other agencies
sector,
under
such as the various
products
for
exports
scheme
is for the government
concentrate that exhibit
Table Agencies
The reason behind
potential. its resources a potential
IV.2 presents
in 1989.
organization,
to serve as a basis
strategy.
export
the ITG in consultation
exporters
export
good
the need to draw up an export
this product
to focus
to products
that
with the
has identified a
BETP
private priority
3-year
product-market
and market
classification
its support
This will enable
demand
for
strategy
on products
the government are marketable
to
that
exhibit
channel
and
and to
markets
support
to
for local exports.
the level of government
financial
ITG
116
Table IV.2 FUNDING AND SUPPORT, (DTI AGENCIES)
GOVERNMENT
Agency
Office 8OI BEMB ClAP CMOF CITC EPZA ICO-CA PTTC PDDCP CITEM BITR FTSC BETP
Fund
of
the
Secretary
1989
Allotment million)
% of
615.423 67.465 3.76i 19.587 13.686 5.411 65.000 4.335 20.542 20.865 47.480 4.'771 i19.183 26.965
I/
Snippercon PITC GTEB
Total
0.41 1.90 2.00 4.50 0,46 11.52 2.60
1.200 2/ _/
0.111 23.5
i/ Subsidy
requirements
on
top
of
operating
budget
2/ Self-supporting Source: General Note:
Total effort
government Appropriative
agencies or Act, 1989
government support for its is reflected in the 23.5%
agencies comprising the ITG to funds alloted to the Department Industry
corporations
export share
the of
total Trade
development of all government and
117 2.0
•A
Service
Coverage
comprehensive
export
development
different
aspects
3udge
from
the
then
it can be said that
it
agencies, export
and
• and strategy
for
(PDDCP),
exporters and
services
programs
the Primary
are amply
•and
(BETP, FTSC),
This
marketing
trade
one
of
an
develoim_nt BETP),
trading
to
these
effective market
involved
the
is
by
negotiations
(CITEM,
(GTEB, ICO-CA)•, international
If
includes
•personnel
and promotion
on how
offered
elements
covered.
government
for.
services
product ••testing (PTTC), product
product
administration
and
(BITR),
in
export
and
design
export'product
(PITC), and
transport
(Shippercon)•i.
Having
personne ! • based
products,
works
exhibits,
helps
strategies.
for
BETP,
the country's
on
BITR • is • involved
regarding
in training
CIT_M its
in
products
tariff
is
identifies
participation
in
and implementation
the other hand,
• techniques
Philippine•
_'_SC
conducts
•new
exportable
trade
fairs
•of
and
product-market
product
studies
on
production
and
commodities.
engages marketing
abroad,
in the development
identified
through
respective
research
development,
these
are aaply provided
strategy
training
can be gleaned
of the program
development
product
program
and
exporters
in
testing
trade negotiations in
various
and non-tariff
the vehicle
GSP,
on basic • export products among quota
for
which
quality are
negotiation
control.
inclusion and
of
negotiation
barriers.
by which
local products
trade fairs and exhibits
are exposed
here and• abroad.
BETP
to
buyers
complements
118 Exporters.
PDDCP provides
and information
on trends
Both
and
GTEB
accreditation Shippercon
of
helps
booking
in
seminars
last year.
increase
various
involved
for garments
transport
January
of
on
while shipping
and shipping.
their has
trade fairs
respective
conducted
in major
14
cities
in
that go to the regions
to
are, however,
a total
lower
handling
Shippercon
holds
and
respectively,
agencies
for lack of facilities.
1989, PTTC conducted
allocation
through
seminars
it has design mobiles
only
quota
on freight
conduct
There
use of raw materials,
and coffee,
and assistance
awareness.
in Metro Manila
in
their products
CITEM regularly
seminars
proper
and shape.
parts of the country.
In addition,
design
are
these agencies
services
the country.
ICO-CA
exporters
of
on designs,
such as color
exporters
rates, chartering,
Majority
service
that
conduct
One is the PTTC.
of 13 seminars
alohe
in
its
In new
facility.
All of t_ese agencies Offices.
These offices
are represented
are located
Oro. For others
such as Shippercon,
shipping ports,
such as Legazpi,
not
of Export
The
effectiveness
of the government's
Development
directly
inferred although
greatly
improved
despite
An
important agencies
Cagayan
de
in other
key
program
may
performance
has
and increasing
Program
export
the country's
constricting
consideration
Cebu,
Regional
Iloilo and Zamboanga.
Effectiveness
in d_nand
like Davao,
Oy DTI's
it _as also field offices
De
these
in cities
3.0
by declines
in the regions
overseas
develo_nent export inarkets
brought
about
protectionism.
to make,
to grab a larger share
however,
is the
of the export
contribution
market
than
what
of it
119
used to be when indicators attest
sucn
direct
exporters
foreign
buyers
resulted
in
exporters freight
total
handling.
exporters
of
using
The
six.
a guided
exports
contributing export
factor
done
export
with a clear mandate and
agencies
also
about
2,424
and
about has
through
its
buyers
that
assisted
1,017
2,162 other exports
96 coffee
of 1987 has
exporters
already
has
program
with
increased functioned
In the performance
and
of
which
on fr_n
trained
180
meager of
accuracy
in
of
trade
for
pinpointing
according
to the
of their
specific
be
and
this
is
exports
to
priority of
a
products.
focused
goal-setting.
This
by
bringing
into one group
This has greatly the
various
tasks, the
overall various
each
reduced
gover_nent
accountability.
gover_aent's
and
to one direction.
bureaucracy
to work on. functions
may
traditional
resources
the
years
policy
enables
international
and objectives
duplication
strategy
two
been the inception
a streamlining
dealing
for the past
from the usual
the government's
through
all agencies
and
4,054
FTSC
foreign
directly
to the classification
develo_nent
in channeling
agencies
CITEM
2,239
accredited
exports
by a shift in emphasis
overlapping
agencies
its new facility.
to
was
abroad,
suppliers.
and trained
PTTC by year-end
attributed
was vital
in
these
sourcing
buyers.
Shippercon
problems
P_ilippine
comprehensive
policy.
$26M.
ICO-CA has already
non-traditional
together
brought
of
Another
This
has
increase
exemplified
with Filipino
foreign
of
in shipping-related
original
partly
sales
their products
with
abroad
by
the BETP has provided
on raw material
linked
on tl_e performance
serviced
of 1987,
information
exporters
efforts
as
in marketing
were
Statistics
of exporters
For instance
given
1,440
pr_notional
the
the number
assistance
were
matched
an
as
to this fact.
exports
384
these were not in existence.
These export agencies
120
came
to
appreciate
exchange
of
facilitated
the
need
information by having
for
closer
coordination
as well as referrals
a regular monthly
among
meeting
through
regular
themselves.
among
This
the agencies
is
chaired
by the DTI Secretary.
A
great majority
of the respondent-exporters
of the services/assistance Most popular which
among the government
helps
programs, products
of certain
exporters
such
as
market
and exporters,
services
of
government' s
export
inadequate;
and
Despite exports,
lack
outside of
additional agencies
three
would
products
to rate
the
Thirteen
having
renewed
services
in extending
IV.3).
is
CIT_
through
various
brochures
listing
overall
of
them
seven
no
drive
closer
non-financial said
said
that
that
knowledge
is still
the
they
at
their respective
offered
all
to
were about
in the
Majority
has
by the fact that most exporters This point
is
region
regional
This
will
country's
beneficiaries
This
the
operations.
services.
the
intended
to be desired.
staff
Dy these agencies.
in the next chapter.
intensify
its
the facilities
for a separate
_he
to
to
for their respective
as evidenced
further
(see Table
by exporters
exhibits,
were adequate;
Metro Manila
accessibility services
government.
admitted
these
aspiring after
asked
government's
personnel
look
trade
availed
services.
funds
are
were
services
bringing
especially by
the
mentioned
for their
encounter,
agencies
having
etc.
the
government' s export
agencies
find markets
Respondent-exporters export
gover_aent
admitted
hampered or of
hire these
offices
hampered
who their
do not know be
taken
of up
121 Table IV. 3 SERVICES OF GOVERNMENT AGENCIES AVAIT_ OF BY EXPOI_ERS
Assets A.
Export
Small-Scale 1 1 •1
B.
C.
C_v' t Agency
.
Services _
1 6 7
56 15 156
1
8
5
1 1
9 10
15 35
1 1 1
ii • 12 14
5 15 25
1 1
17 20
1
21
5
Medium'Scale 2 2 2 3
5 12
CIT_4 PDDCP CIT_ - Exposure of products PITC - Raw materials
4
15
1 2 1
13 15 22
16 nap 135
Large-Scale 2 •5
Assets:
CITEM exhibition Exposure of products FF_C -Exhibit PI%_ - Source of potential Product exhibition
nap• 35
2
2 2 1 3
NOTE:
No.
16 18 19 23
Exposure of products, list of buyers CIT_MInternational exposure GTEB - no red tape Exposure of products PITC - Source of potential buyers gov't promotion of Filipino •products to foreign countries nap regular information about foreign buyers, trends, new decrees •fair/exhibits
Provide information n.a. PI%_C/CITEM
5
n.a.
7 nap nap nap
none yet nap nap nap
1- less than _6b million 2 - P5 million to _20 million 3 - more than _20 million
nap - did not avail n.a. - no answer Gov't Agencies:
1 2 3 4 5 6
of the services
-
PITC PDDCP GTEB ICO-CA CITF_ PT%_
7 - others
buyers
(BF2T)
about buyers
122 B.
The Private
Private
sector
organizations. (i}
assist
products, sourcing,
In
addition,
maintaining
an
private
appropriate
specific
marketing
support
programs The
importation
training
Philippine
semi-government the
product
of raw
a
for
vehicle
agencies
out
form
through
provides
program
to adopt
in the
involved
inefficiencies
development
in
of
and
and
in
order
to
requests
fiscal
shipment,
development,
These
and
for
financial
promotions
and manpower
and
development
programs.
Exporters
Foundation
organization
development about
to point
financing,
the
packaging,
representation
for the government
of inputs,
with
and marketing
serve as
Collective
either
with a
sharing.
and the various
export
andassistance
corporations
financial
organizations
latter may come
of their products,
The
towards
export
together:
themselves
the pr_aotions
programs,
export
of their members.
and information
gover_nent's
exports.
and exporters
profit
the
nonprofit
through
band
to provide
interests
forth for the exporters
reco_nending
incentives,
the gover_nent.
and development.
in
goverlaaent
with
with the government
deficiencies
why exporters
(2)
training design,
by way of the various
and
the business
product
promotions
comes
nonstock,
their m_m_ers
linkages
encourage
are
manpower
material
in export
representation
of pr_noting
organizations
exports
are two main reasons
organizations
purpose
their
for
their own interest;
for collective
Export main
support
There
to promote
medium
Sector and Ex_orts
membership
of
50_
individuals
the me_ership
of
the
active of w_ich
(PHILEXPORT)
intended
to mobilize
country's and
is a nonstock,
exports.
inactive
contriOutes
the private It
exporting to more
than
nonsector
boasts companies
of
a and
three-fourths
123
of
the
total
PHILEXPORT the
was established
general
private
traditional
welfare
sector
fourteen
presence
underscore
provides
the develo_nent
a starting forum
gover_nent
of government
to
propose
the
objective
a
joint
export
country.
of
promoting
government of
industries
and
Trustees, and
seven
agencies.
representatives link between
in its Board
exporters
of local exports.
point to lobby
of
by a 21-man Board
of the different
its role asia primary
in fostering
through
It is managed
of the different
exports
the prLmary
of local exporters
of these are heads
The
a
in 1984 with
initiative.
undersecretaries
and
and non-traditional
effective
measures
of Philippine
Exporter
and the
PHILEXPORT's
for govermnent
for
policies
to
government
strong
incentives
and
serves
linkage
exporters
pertinent
to
exports
The Confederation nonprofit
organization
its
main
objectives
and
to
seek
msnbersnip
Some have
being worked
another engaged 250
support
individual
industry groups
m_nbers
agreed
The
300
and
assistance
exporters
and
in principle
Like PHILEXPORT,
exports.
corporations
COPE's
comes
involved
from
in exports.
of PHILEXPORT.
The details
nonstock,
of its member-exporters for
and trade associations
to merge.
private
in 1973.
the interests
of COPE are also members
Lately,
of the merger
are
they still
out.
Philippine private
Chamber
organization
in local _andicraÂŁts.
members
established
are to promote
government
of
the different
of exporters
(COPE) is
to date.
PCHI's
of Handicraft
Industries,
ofmanufacturers,
producers,
It was established efforts
are geared
in 1984 towards
Inc. and
(PCHI)
is
exporters
and
_as
about
the
development
124 of
small
and
handicrafts
medium such
other
promote
trade
t/leir business
was established the
in
established
counterparts;
benefits
come
information as
well
pertaining
The
the
per
of the need
the
deficiencies
benefits
aside
inputs,
services raw-material
exporters.
A listing
in Table
and/or
demand,
exports. for
These
provides
their
some
bigger
efforts
of
of
on
the the trade
a
product
on
matters
these
associations
trade
export
come
in
acquisition
of
local
on market
trends,
to
development
an exporter
benefits
arises
in response
by the government
information
price and recent
It
including
measures
in the goverr_ent's
exporters,
sourcing,
exporters.
up-to-date
some
or trade
supplementary
provided
Federation
government
of
to
IV.4.
organizations
from those already
the
export
For Philfoodex,
the latest and
from
are
in order
Like
of self-help
industry.
in these organizations
develop
such as market
is given
or inefficiencies
Membership
marketing
industry.
for stop-gap
of local food
with the same producers
assistance
of umbrella
program.
to
food
industry
existence
out
program
dealing
as in see_ing
to
associations
exporters
different
is tX_ Philippine
are examples
to a particular
there
themselves
in the country.
in the form of exchanging
among
the
it has 62 active members
food corporations
in
and handlooms.
of
links among
all
woodcrafts
of exporters,
each
Anexample
To date,
belonging
textiles,
organizations
close
sectors
shellcrafts,
an association
trade associations
part of exporters
â&#x20AC;˘line
1980.
product
baskets,
within
interests.
(Philf_)dex),
ten
house
associations
whose aim is to maintain
of Food Exporters
of
house ornaments,
from these big umbrella
smaller
sectors
in
as toys, ceramics,
and paper products,
Aside
enterprises
additional
through
its
form
of
the or
imported
and trade prospects
and training
assistance
for
125
TRADE
Table IV.4 ASSOCIATIONS OF
INDUSTRY
Footwear,
Bags
and
EXPORTERS
TRADE
Belts
Association of Footwear Industries of the Philippines Marikina Footwear Development Council Association of Philippine Leathergoods Exporters and Manufacturers Footwear goo_s
Jewelry and Accesories
Giftsand
Fashion
Toys
and
Other
Commodities
Linens, Handweaves Houseware
Construction
and Integrated Leather_ Industries Foundation
Fashion Accessories and Jewelry Associations of the Philippines Fashion Designers Association of the Philippines
Baskets
Fruits
ASSOCIATIONS
EdiDle _
and
Community Crafts Association the Philippines Philippine T_y Manufacturers Association, Inc.
of
Handloom Weaving Association the Philippines Philippine Toy Manufacturers Association, Inc.
of
Philippine
Association
of
Fresh
Coconut Exporters, Inc. Philippine Mango Exporters Foundation, Inc. Philippine Banana Growers and Exporters Association Coffee Exporters Association oÂŁ the Philippines Knitting and Weaving Association of the Philippines Philippine Association of Einuroidery and Apparel Exporters
Export of G.I. Wire
Metals Industry Association Of
Council the
Philippines Philippine Electrical Suppliers Manufacturers Association, Philippine Cement Manufacturers
Inc. Corp
126
INDUSTRY
Home Decor, Accessories,
TRADE
Furniture Furnishings
Antique the Ceramic
ASSOCIATIONS
Dealers Association Philippines Association of the
of
Philippines Ceramic Export Manufacturers Association, Inc. Lamps and Allied Electrical Products Manufacturers of the Philippines Marine Products Processed Food
and
Ot_er
Association of Shrimp Producers and Exporters Philippine Food Exporters and Processors Organization Philippine Tuna Producers and Exporters Association Philipplne Federation of Food Exporters Tuna Canners Association of the
Industrial Supplles, and Equipment
Parts
Philippines
Philippine Association of Electronic Exporters Metals Industry Council Metalworking industries Association of the Philippines Semicoaductor Electronics Industry Foundation, Inc.
Non-Rattan Furniture and Components
Philippine Wood _roducts Association Pipes and Tubes Association of the Pnilipplnes
Garments
Confederation of Garment Exporters of the P_ilippines, Inc. Garments Business Association of tne Philippines Textiles Producers Association of tile Philippines
Others
Association Coconut
of Philippine Dessicators
Association of Philippine Copra Exporters, Inc. Philippine Bonsai Society Samailan sa Pilipinas ng _nga Industr iyang Kimika
127 An essential product
promotion
foreign
buyers
advantage
buyers
rendered
an
exhibits
These organizations
foreign
exporter
to prospective
come
by these organizations
and marketing. and/or
for
referrals
service
organizations
in the exposure
buyers.
when
Opportunities
they
sponsor
organizations,
likewise,
provides
convenient,
reliable
and
Another
important
organizations
contact
benefit
is in the sourcing
inputs.
PHILEXPORT
(OCBWs)
for the importation
provides
members
duty-free facility. release
availing export or
of
exporters
are
must
exporter
CCBWs
is open
to members
the exporter
exporter
must be personally
guaranteed
accreditation accredited,
committee. they
and
For
may qualify
new
any
exporters
or
for
bonded
imported warehouses This tax and
simplified processing
non-members at least
import for
alike. a
the
member those
if they can get endorsement
period
Otherwise, of
the
PHILEXPORT's
who are not from
In
cumulative
for any two-year
good-standing. by
exporter
its members.
of a
should have
of
single,
with goverD/nent agencies.
of $100,00_ and ten transactions
De a BOI-registered
a
inputs through
tedious
when dealing
these
joining
needed by
by
potential
and exporters,
common customs
burdened
as
with
especially
way of obtaining
well
trade
with
in
as well as the convenience
this service,
performance
exporter
of raw materials
of their input requirements
PHILEXPORT' s
an
of raw materials
with an economical
Most
buyers
added
foreign
Enlistment
local producers
for examplemaintains
importations
fairs.
of
in
with
an
as
for contacts
foreign
for
therefore
participate
trade
with
have linkages
of his products
about when these organizations
and
and
is in the form of
BOI
yet while
â&#x20AC;˘
128 endorsement
from any two of PHIr_XPORT's
BOC in order
An to
to be able
important
indirect
end-products
to avail themselves
feature
exporters.
certification
Indirect
important
helping
program.
exporter
individual
irrevocable
assists
indirect
This
exports
or
borrow
from
for
Livelihood
their resources
members.
The details
a loan.
that
the
development
loan scheme
together
PCHI
has three schemes.
One
credit
services,
through
form of
Development
One
it
PCHI-TLRC
for small
packages
are open
0nly
these organizations
provide
of
export is
market
training
and
that provided
which was established
the order
record
in
hard
to
financing
to offer
in Table
on trade and
of
a
subcontractors
are given
such service
Foundation
track
by
has
purchase
and find
the
of
but loan
through
enough
information
sponsorship
(TLRC)
limit
sufficient
of these three programs
its
-
Center
Another
Lastly,
These financing
programs. and
package.
to
such
of collaterals
programs.
provide
One
or subcontractors
to these benefits,
consultancy
training
Research
secure
which, may be availed
his packing
has the small subcontractors
for
members
program
financing
reached
exporters
a loan
Resource
financing
those who are short
addition
secure
[/3 in his favor.
other financing
can pool
In
open
first
they are linked with
is for those who have yet to establish
security
and
msmbers
T_e PCHI-TLRC
who has already
or
financing.
program
however,
these organizations
of loan is the letter of credit
program
must,
it is also
services
is the joint Technology
confirmed
and/or
will be exported.
program
who
exporters
is that
whom
is
an
CCBWs
exporter
members
type
or from DTI, CB,
of the facility.
of PHILEXPORT's
from the direct
One of the most
financing
Trustees,
by in
these to
as PCHI
IV.5.
exporterprospects, manpower the 1984
PCHI as
a
129
Table IV.5 THE PCHI-TLR_ FINANCING .__
: : :
PROGRAMS
, ,
LC Financing "Balikatan sa Kabuhayan"
Purchase Order Financing Under ULFP
Socialized Scheme
Credit
: : :
P200,000.00
P100,000.00
PI0,000. _0
:
Letter ofl Credit*
Purchase Order From Exporter
Purchase Order FrQm Exporter with PCHI Endors_aent
: : :
:Collateral/Security :
Soft***
Soft***
Collateral
:Maturity :
60 to 120 Days or Life of LC
60 Days
60-90 Days or Life of Purchase Order
80%of
50% of Purchase. Order-One R_lease 70% of Purchase Order-Staggered Release
50%-70% of 'I_tal Appraised Value of Collateral (for Single/Staggered Releases )
14% Per Annum
15% Per Annum
v •
:Maximum
Loan Limit
:NegotiaDle : :
Document
Pool**** : : : m
:Loanable : : : :
Amount
LC
v
: : : : : u
:Interest
12% Per Annum
•
: •
:TL_C Filing : :
Fee
:PCHI Processing : :Principal : : :
5% Per Annum
Fee
Borrower
2% Every Months
Six :
500.00
300.00
200.00
: :
LC Beneficiary
Purchase Order Beneficiary
5-15 Members Signing Jointly and Severally.
: : :
Notes: * ** *** *****
Only Confirmed and Irrevocable Letter of Credit payable at sight than 60 days maturity data. Purchase Orders 60 days or more in Duration. Soft Collaterals: Office Equipment, Household Appliances. Issuer of Purchase Order Co-signs the loan. If t_ze collateral of the loan is not enough, the Purchase Order Issuer co-signs the loan.
with more
130 clearinghouse members to
for subcontracting,
and non-members
foreign
market
buyers
and product
There represent
are
to
point
of
or
either by
• Bureau
the
of
of
a
regarding product
system
is
for
the
financing
jointly
PHILEXPORT
allocations.
traders for
Bank
as
with
such
charged
for exporters.
such
as
other
in DTI's
by PHILEXPORT
exporters
when
handle
the
therefore,
services may
such
in cases
of
as
where
the
there
agencies
program;
On
offered
facility
government
Registry
be
expeditious
guarantee
and the DTI.
lower these
for
financing
tax
Lastly,
agencies to a
of
or
programs
•or _MYC;
and
the
through
fiscal
training
such as the PCHI-TLRC
PHILEXPORT,
is
endorsements
for financing
or
simplification
for individual
pTrc
these
are
of any of the government
organization
by DTI to
these
for export papers.
gaining •accessibility
undertaken
of
Second
the different
as enlistment
First,
for exports,
and development
such
can• effectively
in the form of
assistance
in the case of PCHI;
prcm]otions
Exporters
and
opportunities
the
is •small or new. These
agencies
between
export
agencies,
or availing
the manpower
Customs;
tie-up
for both
to air their grievances
Examples
endorsements
export documents
like Philguarantee is
valuable
exporter
government
processing
financing
assistance
for accessing
the
in the system.
by the Central
@rovide
if
for exporters
and quota
liberal
government
especially
wider
organizations
with the government
charged
organizations
exporters
with the government.
tape in government
bargaining
rediscounting
seeking
red
procedures,
incentives
with
these
of their members
deficiencies
import-export
them
sharing
development.
serve as a platform
elimination
and information
It has also exposed
three ways by which
out
collective
alike.
and has provided
the interest
organizations
trading,
and for
Philippine the
latter,
registration/accreditation evaluates
applications
and
131 issues certifications,
which
in turn are used as a basis
for the enlisb_ent
in the registry.
Overall, of
local exporter
local producers
local products
V.
EXPORT
export
export
chapter
SYST_
earnest
efforts
to increase
by-product
the
share
of
IN THE PHILIPPINES
is divided
system
experience
into two sections.
in the Philippines
and
policies
The first
and the second
as well as
describes
discusses
exporters'
the
banks'
experience
with
financing.
A.
The Export Financing
Actually,
there
Philippines. institutions, Central
Some
of
them
by a discussion
schemes
export
by non-financial
refinancing
rediscounting facility
to understand
of export
financing
administered
scheme
by
lending
To better
in providing the overall
The
This
is
system
on
The export
the end of this section.
of the Central
facility.
banking
the
financial
first.
to exporters.
ScHeme of the Central
scheme
in
institutions.
discussed
programs
toward
schemes
government
government
will be
will be discussed
The
important
are
and the various
Export Refinancing
rediscounting
in the Philippines
of the role of the co_nercial
1.0
overall
System
a number
refinancing
financing
guarantee
exist
while others,
Bank's
followed export
are an indispensable
in foreign markets.
financing
finance
and traders'
FINANCING
This
organizations
credit
monetary
Bank
Bank
appreciate
is a part
of
its
the
of
the
to the export policy
role sector,
of the Central
it Bank.
is
132 Liquidity Bank.
This
rate-money a certain
is anchored
period base
manipulating
greater
and
credits
hypothesis
linkage.
consistent
components
of
the
inflation
rate target
Bank then determines with that target.
of the monetary
Central
of a strong
Once an inflation
on, the Central
that is deemed
components
Net
Domestic
by
and
respect
to
instance,
others its
from
conducting selling
the
for
level
It does
base over
which
this
it
allowed
Bank
its
increases
has
liabilities
is literally
to increase,
window
may
be
(e.g.,
(i.e., Treasury
kept constant,
but the increase
Bank may
CB bills,
while
with
NCDMB.
For
monetary
do
In
by
repos)
or
the
by an equivalent
by
this
in the latter case,
is offset
base
offset
reverse
bills).
loans,
monetary
completely
The Central
Bank
in the
in the
net hanks
of export
in an increase Increases
money
the
its rediscounting
readily into
Central in
Assets
more
to the deposit
equal.
operation.
be
decomposed
is reflected
resulting
own liabilities
Treasury's
can
The action of t6e
window
ultimately
market
The latter
(NCPS), net credit
things being
open
base are the Net Foreign
NDA can be further
tile rediscounting
either
case, _DMB
Bank.
rediscounting
other
an
National
(NDA).
(NDAOTHERS).
increases,
assuming
arising
Assets
sector
if the Central
NCDMB
of the monetary
the Central
to the public
(NC[AMB),
base,
base
is decided
the
major
controlled
then
on the classical
functions
control.
The (NFA)
is one of the major
supply-monetary
of monetary by
management
former
NCDFB
is
decline
in
the NCPS.
The November allocate Within
rediscounting 1985. credit the
Before
facility
of the Central
this period,
to high priority
export
sector,
Bank took a major
the rediscounting sectors,
including
the non-traditional
export
facility the
turn
in
was used
to
export
sector was
sector. given
a
133 preferential
rate over
the traditional
for the former was three percent lending
export sector.
per annua with a prescribed
rate of banks at 12 percent
per annum, while
eight percent
per annum with the ceiling
at 14 percent
per annum.
Starting Bank
has
been
allocating value
eligible
November used
credit
that
the
papers
production working Bank
in
Central at
stabilization
sectors.
cottage
financing,
rediscounting
a uniform
it was
of
the
rather
than
of
include
credits,
short-term
for
rate that is aligned
loan
for
all
agricultural purposes
The
another
with the
for
the
general
credits.
fixed
Central
standardized
papers
industries
and other
rate of banks
the proportion
for 90 days renewable
rediscount
for the latter,
window
has been
Eligible
and small
on the
purposes
Thus,
Bank rediscounts
8_ percent.
and capital
Moreover,
for
rate
ceiling
on the lending
1985, the rediscounting
to priority
credits,
grants
more
The rediscount
Central 90
days.
market
rate•
14__/ has
been
Although Central have In
(see Table
Bank regularly
effect,
monitors
rediscounted,
loans refinanced
study indicated loans
This is
on banks
by the Central own funds.
that it charges
before Central
adjusted
lending
t/%e interest
and when necessary
those funded by hanks'
export
V.I).
there is no more ceiling
been
than our
applied
rates,
every
nevertheless,
rates especially exerts• moral
between•17
Bank rediscounting
the
on loans
suasion
Bank have lower
For example, one
quarter.
on
banks.
interest
bank
to 19 percent and 14 to 16
that
rates
included per annum percent
in •on per
i:
14--/ The rediscount rate is based on the MRR90 (Manila Reference Rate). The old MRR is based on the interestrate on promissory note with a 90-day maturity. TOe new MRR90 which appeared starting January 1989 is based on the weighted average of the interest rates on promissory notes and time deposits with a 90-day maturity.
134
Table V.1 CENTRAL BANK REOISCOUNTIN6 POLICY,INFLATION RATE ANDVARIOUS INTEREST RATES
Year
Date
CB Rediscount Circular Rate Number High Low (%p.a.}
Loan Value High Low (Z p.a.)
I Lending Time Treasury Reverse Domestic U.S. U.S, ] Rate a/ Deposit Bill RepurchaseInflation Inflation Prigs ](Secured Rate a/ Rate c/ Rate Rate Rate Rate : Loans) l(Z p,a.} (Z p.a.I (_ p,a.) (Z p.a.) (_p.a.) j% p.a.) {_ p.a.)
B5-19-78CLR618 198B_9-24-91 CLR762
9.B0 9.Bi
1.Bi I.BB
IH IH
50 : 58 :
198182-27-81 CLR784 83-18-81 CLR786 g6-18-81 CLR883
8.88 8.88 8.88
3.88 3.08 1.8g
1g8 IBB 188
16.g8
16.74
12.55
12.39
18.4
18.88
198285-23-82 CLR938 1983
B.g8 B.8g
1,88 1.g8
188 188
88 I 88 [ 88 I I 88 _ Bg ]
17.13 21,28
15.81 15,38
13.79 14.23 1_.93
18.21 18.17
6.2 3.2
14.81 18.78
88 I 88 ] 88 _ 88 ]
39.18
24,16
27.16 29.25
58.35
4.3
12.84
28.38
21.83
19.65 24,18
23.18
3.6
9.93
14.8e
12.14
.
17.b8
15.24
1984BI-23-84 CLR991 LR-6 I.R 83-12-84 CLR994 HRR-6 MRR-12
188 98
1985 85-38-85 CLR1863 BRR-3 MRR-12 11-22-85 CLR1886 12.75 12.75
98 88
198689-1-86 CLR1114 11.75 12-15-86 CLR1125 IB.H AVE12.27
11.75 18,00 12.27
8B 88
88 ] 81 I
17.38
14.77
16.98 13.25
8.75
2.1
8.32
1987 1988
ll.H 18.08
88 88
BOI 88 I
13,38 15.92
9.77 13.16
11.58 11.64 13.59 9.85_b/
3.79 9,06
3.6 4.8
8.28 9.31
CLR1125 18._8 CLR1125 10.88
NRR- Honetary BoardResolution LR- LendingRate a/ - NeightedAveragefor all maturities b/ - Neighted_verage for TransactedRates c/ - MeightedAveragefor 91-day T-Bill rates SOURCES : CBReview(various issues) CBAnnualReport (various issues) IMFInternational Financial Statistics (various issues) IMFSurvey(_arch1989)
135 annum
after
commercial
In
rediscounting.
of the loan value and rediscount
seems to have
lost its advantage
rediscounting silently
policy.
pursuing
understandable
to
In
an
since
to
the
export
reality,
however,
export-oriented
the Philippines
rediscounting sector,
rate,
over other priority
former
on export
the
as
the Central
loans
the non-traditional
Bank
the
sector the
new
has
been
This
is
with a balance-of-
it is easier
than on non-expOrt sector
under
policy.
has been confronted Indeed,
export
sectors
rediscounting
in the. last few years.â&#x20AC;˘
situation
obtain
the
usually' refer
rates.
terms
payments
Banks
for
loans.
is given priority
banks Within
over
the
on
the
f
non-traditional
Banks
sector.
can be credited
same day that _they apply order and
are su_nitted
Currently, to the
monetary
policy
This is reflected a forecast
could
allow
year
to validate
our
framework
export
not be grossly
quarter.
in the rediscounting
for the reference
which
Trade
above,
Bank
all papers
liquidity.
This forms of export
quarter. Statistics
term forecast
the projected
loans will cause an increase
affected
from easy to tight
is headed by the Central its medium
provided that
Bank sees to it that the export
(i.e., a change
every
with the Central
are
in
noon.
window will
Study Group on External Committee
before
in the way it manages
of exports
the net increase
account
for rediscounting
the Central
the rediscounting
in their
sector's
access
by any change monetary
The Central the basis
for
policy).
Bank
makes
determining
loans that the Central
Aside fr(_n this, and Projections Bank meets
net increase in NCDMB, which
in
Bank
the
Interagency
Foreign
Operations
with exporters
of exports.
in
Thus, going the
twice
a
back
to
rediscounts
in turn will
exert
of an
136 upward
projected t_e
on the monetary,
pressure
increase
base,
in the monetary
rediscounting
of export
other
base arising
loans exceeds
consistent
with
the inflation
rate target,
downwards
its
rediscounting
of export
open
market
its targeted
operation
been above
It
suggests
in
the case where reverse
that rediscounted
government,
to
towards
its
liquidity
rediscounted
subsidized
endorsed
deed
of
refinanced domestic
by
window; ensures
regardless
loans
including
Bank
original
to the Central
In
in
is thought
it will
to
be
engage
in
base
to
in the monetary
Bank's
repos and
the Treasury
exporters (2)
export
byCentral
the following
effect,
sector's
loans
Indirect
Bank's
monetary
appeared
approach access
to
policy; to
and
have
been
for its loans
note of
the
order
direct
with
who
coPY
(PO)
exL_orters may
to
exporter
banks; original
exporters
order or sales contract
(i) from
government.
Bank by commercial
Bank.
the
automatic
continued
as collateral
of
and by
somewtmt
Central
copy of the promissory
only loans
Bank,
conciusions:
of the prevailing export
rate.
bills were used.
have
the
Treasury
rediscounting
subsidized
and copy of the L/C, purchase
the Central
L/C, purchase
been
Bank and the national
requires
assignment; (SC).
the Central
Bank,
window
banks:
duly
contract
Rather,
lead us to the following
managemenÂŁ
by the Central
The Central commercial
increase
Bank will not adjust
rates on reverse
in the case where
rediscounting
the rediscounting (3)
loans.
loans have
point of View of the Central
access
the Central
the
repos were used to mop up liquidity,
So far, the discussions the
the level that
If
level.
nave consistently
national
being equal.
from the net
to bring down the increase
Table V.I shows that the interest bills
things
of
or
sales
are
being
be
holding
final exporters
are not
137 given access
to the rediscounting
window
of the Central
least two reasons
we could think of why the Central
loans of indirect
exporters.
is
afraid
that
rediscounting the
it might
window
pre-shipment
traditional.
loans
can
adequately
financing
access.
meet
Bank
aggregate
Whether
that
percent the
result the
rediscounting
especially
Bank's
window.
banks
two
in
impact
of
This
is
probable
schemes
effort In
schemes
value
is,
loan rediscounts.
to reduce
to commercial
of
the
in 1980
ratio
the ratio of loans outstanding
of
V.2
about
one
sector
banks
to
as
a
access
to
outstanding
export
has
by the
have been above
of
Table
sector's
the loans granted
since
the
construed
to commercial
banks
to
of
of the export
the export
exports
of the
as an indicator
this should not be
Also,
can
below.
rediscounts
years.
reason
that indirect
financing
in the access
fact,
still system
base.
The other
from nine percent
for refinancing
of the total loans granted decline
financing
of indirect exporters
Bank export
However,
to total outstanding
Bank to commercial
is
the possible
financing
to export
a decline
window.
in the last
that
Philippines
these alternative
banks
to the Central
of the Central
It is to be noted
(1988) uses the ratio of loans outstanding
in 1988, suggesting
rediscounts
The
special
the financing requir_nents
the ratio has fallen
rediscounting
its
export
in the last chapter.
to commercial
access
the
Bank
if it opens
on the monetary
a big issue which will be discussed
Central
in
Bank regarding
exporters
there are several
base
of borrowers, system
are at
is that the Central
of the pre-shipment
detail
The World Bank study
shows
range
of indirect
in greater
reason
There
Bank does not refinance
of the monetary
fears of the Central
is that presently
course,
to a wider
Modernization
refinancing
exporters
lose control
export
could help allay
discussed
One probable
Bank.
risen Central
85 percent
1984
(see Table
the
Central
V.3).
Bank
to
138
..tu_
•I
,I
=:'-,=.i,x., =L:E I'-" "_' LZ. '1_
_¢_ (,=) (.',','_ O
I-,(.9 _.n
_
_
000000000
_.-,=_N_
OOOOOOOOO t_
1-4
_._._ _._._._._._.
_.. , , , ,
_°"-= '_ It) 0,,i _') _3'
O_ _
_
0"
N "==
_, 0,1 ¢D,I',,-
_
_" I1_ 1=
._ ffl I_ ,"_ i_ _l"
,,,_ _. ,_
_,_
| ....................
=========
,__ _-__
_, 0
,0_
:_ "_ "
•-_UI
! _
0
g
_
=_
(;_ _'-, C_ (_ _
•,.
_
,,_
I
i I_
q..v
..................................
o
0
_
.................................. _, It'3 N O't _,
..............
_ •_
--_ ......
L
i
_
=
139
LOANS
GRANTED
BY
THE
Table CENTRAL
(In / (a) i/ Total
1980 1981 1982 1983 1984 1985 1986 1987 1988
(b) Traditional Exports
38,707 46,096 39,121 28,229 14,392 7,040 9,696 5,173 9,582
20,000 19.,571 15,459 8,256 1,568 575 2,251 1,485 2,150
i/ Includes Source:
other
Central
loans. Bank
V.3 BANK
TO
COMMERCIAL
BANKS
M) (c) Non-Traditional Exports
11.,607 13,684 10,833 12,028 10,805 5,787 6,322 3,493 6,959
b
+ c a
0,82 0.73 0.67 0.72 0.86 0.90 0.88 0.96 0.95
140 commercial liquid
banks to export value
situation
2.0
commercial
exporters. Acapulco
It dates trade
commercial
was
Banking
banking
system
Table V.4).
established.
colonial
During
the
exporters
there are 30 omnnercial
discussed
highly
below.
Manila-
colonial
period,
to the US.
two are goverr_ent-
Their
combined
of the financial
are authorized
supporting the
products
of which
banks.
of
when
American
banks
of foreign
banks
period
of primary
of the total assets
Ten commercial
to the
has had a long history
back to the Spanish
about 61 percent
be attributed
Syst_n
and four are subsidiaries
comprise
perhaps
This will be further
banks were supporting
At present, owned
of most banks.
The Commercial
The
could
to operate
assets
system
as a
(see
universal
bank.
Commercial facilities banks
financing
offer
to exporters.
to exporters
acquisition
Line.
banks
in each stage
Under this arrangement, his
collection
collection
not
be
Financing.
paid.
The other
by discounting
Exporters
is
Unfortunately,
the bankers'
material
post-shipment
the Export
Bill
to the exporter to
him
should
Doc_nentary
the bank can immediately
the loan categories
way by which we could determine
through
c(_mercial
from raw
One is through funds
financing
by
may obtain
with recourse
Table V.5 shows the loans outstanding 1987.
operations
the bank provides
documents
post-shipment
loan may be granted
two ways.
Under this arrangement,
to the exporter
and
of business
of goods.
in at least
purchasing
pre-
Pre-snipment
to the shipment from banks
both
by the
Acceptance
provide
funds
acceptance.
of ccn_ercial
banks
are too aggregative.
pre- and post-shipment
from 1980 to There
is no
loans since both are
141
TOTAL
RESOURCES
OF (In
Table V.4 THE PHILIPPINE Million Pesos)
i/ FINANCIAL
SYSTEM
1988 March
2/ Commercial Thrift
Banks
banks
Specialized Rural
318.2 285.0
Government
BanKs
26.5
BanKs
Non-Financial
10.0 Institutions
122.7
1/ Starting December 1986, data of assets/liabilities of one ment bank and one commercial National Government.
reflect the specialized bank to the
2/ As Source:
of
November Central
1987. Bank
of
the
Philippines. w_
transfer govern-
142
_
1"4
,
"_'_,,,D oo
oo 0'_ ,.--I
O'_
o'_ i._
oO r'..,.
,.-4
¢o o_
c'q ,-.*4
_:_ ,-I
_ ,-,.,I
co _:_
_
r'... o'_
,,.o
,--1
',_ t"-
_ _ O_ r.,-I
r'..-
¢_1
O0 _D
C_ _" u'3 i--I
_, _ I",. _
,--I _
¢"D _O
_D _ _ c,3
t.t3 OO _
_,_ _'_
C'_l ',_
,,-4
,_ ¢v1 r'....
._
t_ ,-I
¢'N _O c_l
_ {N
_
r'.--
¢'q co
,-...i
,-I ,-I
o'_ z.,_. ,.-I
CO ,.--I _D
0'_
,-i ',.o
_ .i.-I ¢'N c,3
r,_ _1
C_l CO _ r'..-
,--I
,'-'-I"
,-t
rN ,-4
'_ "_
_:_
Lf'l c,3 _-_
_o oo
i
_, .1._,--0 _'_ ,-_
_ _ ._ o .,-4
4._ U'_
.,_ _ .,_
4J
_,_
,,-..I
_
_
._
Mr",_
4._.
-f=t
,-1
°i
o_.=1 4-= ,_
_ _o _ _ _ _ ,,-, _ _
4J •,,,_
"
143 1_
together
dlscounts."
other
types of loans under
A rough estlmate
Is obtalned dlscussed
wlth
from our survey
of the slze of pre-
the
banks
and
"loans
and post-shliammt
of a sample of ccmmerclal
in the next sectlon
item
whlch
loans
is
belng
.
15__/ 3 0
Speclal
Desplte n_nber
of
Credlt
flnanclal speclal
the Phlllpplnes
st111
There
lacks flnanclal
these
ones, are externally
programs
that
some
sectors
enterprlses) they
is to augment
are
of the economy
are percelved
speclflc
sectors
them to monltor
It should, cc_pletely
as elther
sense
instance
the
agrlcultural credlt
however,
that most
from the myrlad
asslstance
credlt
For one, these programs
Loan
and agro-processlng w_ich are dlrected
Fund
range
(ALF)
industrles, to spec_flc
and
system
it is
Thls
section
partly
draws
because
easler
to for
0
have features launched
by
are less speclallzed
in
of
caters
programs
beneflclarles
For
to
all
In contrast commodlty
from the Lamberte
is
ventures
practlcally to
the
groups
15/ .
of
medlum
thelr asslstance
of these programs
of speclal
reason
buslness
to dlrect
they target a much wlder
Agrlcultural
programs
by the banking
in th_s manner,
of thelr
growth
especlally
Another small
a
thls
one of the purposes
or unprofltable
the effectlveness
government that
because
be noted
programs,
(e g , agrlculture,
too rlsky
for
to support
of the country
low prlorlty
of the economy
credlt
malntalns
reasons
resources
Obvlously,
too have thelr procllvlty
dlfferent
the previous
resources
st111 glven
And donor agencles
funded
st111
are several
should be noted that most of these speclal
the larger
the
hberallzatlon,
credit programs
One is that the country It
Programs
study
(1989).
prevlous Also,
the
144 interest rates of most of these programs have been aligned with the rate,
in contrast to the highly subsidized interest rate of
the
market
previous
credit programs.
The Note
major
that
features of these programs are summarized
Table
V.6.
and
Loan
Fund
we have included here the industrial Guarantee
in
(IGLF) because it is utilized mainly as a lending mechanism, rather than as a
guarantee
mechanism.
oriented
and
oriented
industries.
Some of these programs cater
to
export-oriented industries, while others,
both
only
domesticto
export-
The features and performance of these programs
will
be discussed individually below.
(a) The Agricultural Loan Fund (ALF)
The IBRD
ALF
is managed by the Central Bank with assistance
($100M) and
traditional
USAID
($20M). It
sources of farm credit.
iS
envisioned
to
coming
fr(_n
supplement
Single proprietorship,
the
partnerships,
corporations, or cooperatives may avail of the ALF credit to finance working
their
capital requirements and fixed assets acquisition, excluding
purchase,
for
available
to
their both
agricultural and agro-processing domestic-oriented
and
projects.
export-oriented
land It
is
agricultural
producers through a network of accredited participating banks.
The ALF
is
designed in such a way that the end-user borrowers and banks participate in the
financing of the project.
have
an
below, _5M,
Specifically, an end-user is
equity of 10 percent of total project cost for loans of 15 percent of total project cost for loans over pIM
or
required
20
participating
percent
(referring to
banks total
of total project cost are
required
to
put
for up
loans 10
but
over
percent
cost less borrowers' contribution) of
_IM
to and
exceeding _SM,
of _IM
while
subloans but
not
e_
_: _.,
,
,,, , : L_
LL
!
=_.
_ ==
,_ =,
,.,.,,..., #..1..I
_N
_._
_-_
_.
_ _' "._
_
......
_ _
__
_
•
_ ___ _ ,-,-,
_
___ 4,--1
_
.-._
,=._ - _ ,_=_ -_
_ _, . _ _'_ ._
-_ ,-,-,-
__
-
e,e-_ _
o._ _-_ _ ..,-,
_
_N ,--
¢JU
w
.....
¢_
.... ¢j-'j
m
LLI
_--
....
LLI
_ -_
¢:_
_
_j
"_-
_,
N _
_
N
N
_1:
g
__
_L
_,_
__ _
_
_
_
J,
_
_
147
exceeding the
_5M and 25 percent
loan
amount,
limitation not
inclusive
12 months,
interest
is
based
administrative weighted
Central
while
either
costs,
is
interest
long-term
loans
an element
higher.
This
rate on ALF credit
banana,
coffee,
most of it. industry.
the rediscounting rate.
the Central limited
down
loans
should
15
years
rates
to
of banks.
Bank.
cacao,
Banks
banks
related
risk;
and
time At
or
the
deposits,
present,
is 10.7 percent, rate.
There
the which
is
1988, there
of ALF by investment
no
was
a
47 percent
and commercial
crops
(i.e.,
prawn),
with
sugar
sources
and
Bank despite
prawns
of funds
its relatively
Another
reason
of the project
cost
(net
the Central
Bank.
why banks
higher than
contribution
of
in the case of rediscounts
This could be one of the reasons
for than
maturities
is that banks'
of
sugar,
the ALF facility more attractive
is that ALF loans have longer
with
in 1988.
About
is one of the largest
to 20 percent
area
at ;J799.TM.
and fishery
of the Central
10 percent
their rediscounting
ALF,
exchange
As of December
valued
consider
rediscounts.
compared
the
to
banks.
One reason
only
on its ALF credit to
than the rediscounting
Thus, ALF
window
Bank's
contribution) Central
as to
borrower
exceed
every quarter.
to participating
point higher
on the relending
the export
is
Short-term
system, s savings
the total loan value went to the export
interest
single
should not
of foreign
is reviewed
total of 549 loans were granted
covering
is no limit
the
Bank charges
Table V.? shows the loan availments
ramie,
not exceed
the cost of borrowings
and
total of 83 participating
A
There
Bank regulation.
cost of the banking
0.7 percentage
ceiling
it does
rate that the Central on
average
whichever
is
that
over _5M.
of a grace period.
The banks
provided
under existing
exceed
of subloans
borrower's with
recently
the
slowed
148
Table V.7 • ALFAiD I6LF LOANAUA]LMENTS BYINVESTMEHT AREA (Jan.-Oec. 1968)
] I =....................................... : .............................. )A. Primary ). Fuels I Non-Fuels : Live Animals I.. neat, preparations I Dairy products, birds eggs I Fish, preparations Cereals, preparations Vegetables and Fruits : Sugar, preparations : Coffee, Lea, cocoa| spices I Feeding staff for animals : Hist. Edible Products| Preparations ) Beverages : Fertilizers/Minerals Animals, VegetableOils andFats Processed ) Hoodand HoodProducts ) PaperandPaperProducts
ALF IbLF ............................ _........ ) No. Value No. Value ) (P M) (P M) I - ............ _......................... I .... 134
22B.56e
I I
143 7 15 165 5
18g,44fl 2.131 62.258 213.894 1.688
I.
6
3.85?
1
8.69g
_S. Manufactured Labor Intensive (LI) Hon-Hetallic Hineral Products Furniture and Parts Footwear, Apparel, Barments Misc,Hanufactures Moderately Capital and Skill Intensive (MCSI) LeatherandLeatherManufactures RubberandRubberManufactures Ironand.Steel Electrical _ndNon-Electrical Machineries Transport Equipment HJglyCapitalandSkillIntensive (HCSI) Chemical materials, products NotElsewhere Classified
73
126.562
83 1
216.752 6.866
42 14
116,624 93,U6
27 35
44.897 69.181
136 41
274.453 58.191
9 13 55 13 II
29.856 72,968 179.595 46.966 36.366
39
127.764
43
56.258
_lce_il!ing, F_edwilling, Marketing Facilities, Transport_ _rint£nglPublishing| Other Services) _;mm
Total
Sources: UnpubI£shed _LF andIbLF Reports (February 1989)
_49
mm;_m;mie
799_716
..............
556
1499,886
149 In
its
first two years
1988, hoover, boasts
it realized
of a 100 percent
(b)
Industrial
The
IGLF
between
is
the
collection
and Loan Fund
government •needs
regardless
losses.
In
Up to the present,
ALF
rate.
(IGLF)
a •revolving fund established
financing
enterprises,
ALF incurred Isome
a net income of _43.5M.
Guarantee
the Philippine
meeting
of operation,
in 1952
and the United of
cottage,
of whether
States
a_all,
by
an
agreement
for the purpose and
they are producing
median
for Ithe
of
scale
export I or
16__/ domestic
market.
The fund is administered
The USAID was V.8).
ISince
years,
the
declining last
share from
that IGLF would
the period
($100M), •IBRD
(_40M).
Thus,
Cottage,
s_all, and medium
1989 to 1991.
scale
remainIa
enterprises
IGLF has three main programs,
(2) refinancing popular
and guarantee; among banks.
additional
to
portion
of
the been
started
support
Development source
had
which
$32iM
A major
it
its would
•Assistance
of funds
for
the I
in the future.
namely:
and I(3) straight In fact
Over
counterpart
require
major
(see Table
funds.
The new program
($60M), and ASEAN-Japan
IGLF will
Hank.
to the Fund.
government's
to i5 percent.
1989 projected
Program
least
contributor
of the Philippine
40 percent
during
come from ADB
The
themajor
1975, IBRD has been Iproviding
January
activities
initially
by the Central
(i) straight guarantee.
there are no
takers
refinancing;
The last is the in
this
progra_
16__/ Cottage industries refer to enterprises excluding agriculture whose total • assets are over _50,000 but not more than )_500,000 before financing. Small industries refer to enterprises excluding agriculture whose Itotal assets are over _500,000 but not more than _5M before financing. Medium industries refer to enterprises excluding agriculture whose total assets are over pSM but not more than _20M before financing.
150
IGLF
Table V.8 SOURCES OF FUNDS
Foreign Counterpart Amount (_M)
Government Counterpart %
_mount (PM)
Total %
Amount (_M)
Original: USAID
(1956)
13.04
USAID
(1957)
14.99
USAID
(1964)
1.00
Sub-Total
13.04 19.00
33.99 i._0
29.03
6_%
19.00
40%
48.03
â&#x20AC;˘88.96
75%
3b.00
25%
118.96
Additional: IBRD
1120
PH
(1975)
IBRD
1727
PH
(1979)
189.89
78%
55.00
22%
244.89
IBRD
2169
PH
(1982)
979.9i
85%
171.0_
15%
i15_.92
Source:
Magno
(1988).
ISI since
1973.
required
to
calling
The main reason exhaust
on the
all possible
IGLF guarantee.
Thus, banks have now opted
Loans
obtained
(with a maximum period)
maturity
program
In
March
cottage,
period
it should
developments
should
rate that the Central
is based on the average or
more
during
applied,
if the variable
Banks borrowers charged
may
charge
located a rate
encourages located
the preceding
in
in underdeveloped
areas
IGLF loans to participating 1989 is presented
rate to areas
in Table V.9.
IGLF
of export-
packing
most
to IGLF loans
with maturities
credit, credit
important
to banks
of two
years
interest
rate
is
with maturities
of up
to
end-user
borrowers.
of the country
points
of the country. banks
the
for production
if the fixed
to do it by differentiating
various
period of
rate is applied.
that is two percentage
banks
Bank charges
rate of time deposits
the market
grace
inclusive
in
requirements
while
capital
is concerned.
six months
interest
of 12 years
is one of the
rate of time deposits
or on the average
six months
financing
year.
of two years
For export
180 days, This
working
to include
capital
enterprises.
360 days,
before
than a
(with a maturity
was made
working
not exceed
not exceed
inclusive
and for production
of snort-term
first
borrowers
takes more
(with a maximum
1987, a decision
as far as export
The interest
from
are
program.
of seven years
small and medium
the loan maturities loans,
to collect
And this normally
of fixed assets
the financing
oriented
means
banks
from IGLF may be used for permanent
acquisition
year).
in case of default,
for the first
of three years grace period), one
is that
below
are supposed
the market
its lending
The lending
for the period
However,
rate
23 January
to be
rate.
rate
to
IGLF banks
structure
of
1989 to 30 June
152
Table V.9 INTEREST RATES ON IGLF AVAILMENTS OF PARTICIPATING FINANCIAL INSTITUTIONS (For
the
period
23
January
to
30
June
1989)
Interest Rate Per Annum (%) Location
National
Capital
of
Project
Region
(NCR)
Fixed
Variable
14.1
12.1
Region
I
12.1
10.1
Region
II
12.1
i_.i
ii.i
9.1
14.1
12.1
14.1
12.1
ii.i
9.1
13.1
ii.i
14.1
12.1
Cordillera
Autonomous
Region
III
Region
IV
Region
V
Region
VI
Region
Region
(CAR)
(except Quezon, Aurora, Romblon, Marinduque, Palawan, and Mindoro)
(except Capiz)
VII
Antique,
Aklan
(except Bohol, and Siqui3or)
Negros
and
Oriental
Region
VIII
ii.i
9.1
Region
IX
ii.i
9.1
Region
X
Region
XI
13.1
ii.i
Region
XII
12.1
19.1
12.1
10.1
ii.i
9.1
13.1
ii.i
Quezon,
(except
Palawan,
Camiguin)
Capiz
and
Bohol, Antique, Siquijor, Rombolon, Marinduque, Negros
Source:
CB
13.1
Aklan
Mindoro, Aurora, and Camiguin
Oriental
Circular
No.
89-01
(January
1989).
Ii.i
153 Unlike
the
ALF
ceilings
depending
cottage,
small,
loans,
IGLF loans
are
subjected
on the size of the firm concerned.
and mediumscaleenterprises
to
predetermined
The loan ceiling
are _.4M,
_4,0M,
and
for
_16.0M,
respectively.
In
1988,
Table V.7).
IGL_" granted
The predominantly
non-metallic
mineral
miscellaneous and
••
has increased half
remarkable
and leather products,•• and
parts,
electrical
the
IGLF • will
small
and medium
source of funds
to export-oriented
the
total
future.
history
of bad ••repa_n_entrates.
17 percent •of principal
of principal
performance
and
financing,
to about •57 percent
percent
furniture
footwear,
the new •emphasis •on export
in the near
a
•(i.e.,
(see
of
a very important
a
With
to only
garments,
_1,499M
32 percent
become
amounted
leather
industries
at
about
granted.
IGLF •-has
apparel,
machineries)•received
loans
enterprises
of 577 loans valued
export,oriented
products,
manufactures,
non-electrical
••
a total
In
and interest
in 1986.
and interest
1978,
collections
falling
In 1988, however,
due. only two
falling due are past
of the IGLF in the most recent years
This
due.
and The
augurs
_ii
for
for
1988
are
which
was
its future.
IGLF
realized
not yet available
(C)
Export
Unlike launched
in
Technology institution,
the
a net income of _48.1M
Figures
at this time.
Industry Modernization
ALF
Program
and IGLF, EIMP is a
198_ solely•for•export-oriented Livelihood EIMP
in 1987.
Resource
is designed
Center
to meet
(EIMP)
financing
facility
industries.
(TLRC), a
government
Managed
by
the
non-financial
the needs of non-traditional
export-
154 oriented
industries
technologies market.
and
The
Economic
funds
maximum
maturity
Fund
came from the 짜5B
soft
production
in
loan
the
from
export Overseas
(OECF) of Japan.
loanable
amount
per borrower
The interest
substantially
of their facilities,
so that they can be competitive
mainly
of 10 years. is
percent
services
Cooperation
The
which
for the modernization
below
rate
is
is fixed
the market
rate.
_SM
with
at 10 percent
The service
a
maximt_
per
annum
is
three
fee
of the total amount of the loan.
To
qualify
under
the
program,
the
following
conditions
must
be
satisfied:
i)
The project percent with
must
be resource-based,
for export after EIMP
second
assistance),
substantial
labor through
2)
Assets
3)
There should
year of expansion
labor-intensive linkage
be modernization
_ust
generate
industries; and
in the project
improvement
50
or establishnent
EIMP assistance;
input
cost reduction,
(preferably
or
with other
must not exceed _20M after
to production
export-oriented
which will
in quality
or
lead
expansion
of capacity.
This
facility
contractors their
provided
output
financial Development
at
also
institution,
available
indirect
loans are released
through
Since and
or
50 percent TLRC is a
collected
by
subof nonthe
(DBP).
1988, TLRC granted Ten percent
exporters
that at least
by the final exporter.
Bank of the Philippines
_400M.
to
that they can show proof
will be exported
As of December valued
is
a total of 140 loans under
of it was availed
of
by
the
EIMP
sub-contractors.
155 Most
of
gifts
the loans went
and
houseware
sectors.
percent
of the borrowers
Region.
Loan collection
are re-lent
to the garments,
The average
are located
food
loan size was
in Region
is estimated
to new clients.
furniture,
processing _;3M.
and
About
IV and the National
Capital
to run to _4M to _5M per month
The estimated
default
60
which
rate is alarmingly
high
at 18 percent.
The MSB assistance present,
TLRC
is
from the OECF has already
negotiating
with
been fully disbursed.
O_IF for another
짜5B
to
At
augment
its
resources.
(d)
EDAP
Export
is
Development
another
Assistance
project
capital
to export-oriented
capital
to help exporters
Project
of TLRC.
enterprises, fulfill
(EDAP)
While
EIMP
is
open
producing
non-traditional
The maximum one L/Cs
year
their
contracts
fourth of of
export
loan amount
comes
first
rate is 12 percent one percent
application,
unavailed
both direct
and
and/or
portion
a
per borrower
per annum
exporters
is _2 M with a maturity or expiry
The
who
are
applied
fee of one-fourth
date
fee equivalent
of
one
percent five
of
assigned The
to
for to be paid upon
line, and a one time fee of
per annum based on the availments/drawdown.
of
period
line accommodation.
with a filing
of the 10an amount
of the credit
of credit.
by the government.
indirect
in the case of credit
co_nitment
letters
working
commodities.
for term loans, or upon negotiation
whichever
interest
to serve
long-term
EDAP grants only short-term
it was set up in 1987 with a _20M fund contributed facility
provides
onefiling
on
the
percent
156 To ratio
qualify of
not more
outstanding
loan
project's
cash
payment
of
minimum all
took
1988,
set
not
positive
be
credit
cash
be satisfactorily
December
in contact
in fulfilling
It is the latest in providing
The
facility
export
materials,
wor_ing
small and medium
and other
in
to
must comply
must
have
a
a
with firm,
and
So, in
and
export
that
joined
and
medium
small
from PITC's
April
medium
agency
loan to
exporters, medium-scale
and orders.
government
costs
resources.
the
As
acquisition
of servicing
export
assets do not exceed
above,
t_is facility
The only security
to PITC wit/1 bank's
producer
are being
of orders
of
raw of
_20M.
Unlike
does not
require
requirements
conforme,
Since only those who have valid
favor of the export
Producers
and indirect small
finance
whose
discussed
being assigned
of the borrower.
with
stood at _375M.
to put up hard collateral.
proceeds
after
profitable
for small
capital
entirely
tapped
capital
schemes
facility
short-term
export producers
the four financing borrowers
be
by
contracts
non-financial
total assets
may
with direct
encountered
'I_e _IOM was sourced 1987, PITC's
worthy;
balances
and project and
have any
market.
up a _IOM financing
bandwagon
opened
show
beneficiary
must
and must
and regulations
note of the difficulty
producers it
note
rules
been constantly
exporters.
L/C
program
rate of return of 18 percent;
government
producers. the
due and must
the borrower
to
Philippine International Trading Corporation (PITC) Financing Facility for Small and Medium Scale Export
Having
export
must have a loan
one;
stat_nent must
and reliable
(e)
to
in any KKK lending flow
internal
determined
than _50,000
obligation
existing
PITC
for a loan, the project
and
promissory
and operative
accommodated,
are:
L/Cs
indirect
157
exporters
who
beneficiaries
Loan
evaluation
of
from final exporters
of the L/C, do not have access
takes three days is
closely
minimum
order
application s are processed
normally
have
may have purchase
to approve
by the PITC Special
period
of one year.
of the
The maximum
which
is
based
National
Bank
or
Land Bank,
preceding
weeK.
per
annum.
export
on the prime
loan amount
The current
prime
Loans are supposed
L/C or upon maturity
Unit.
It
However,
is lower
the
during
rate of these banks
to be repaid either
date of the promissory
a
percent
interest
by
must
over
is set at 70
charged
prior
who
concerned
A floating
rates
whichever
not
Association
applicant
the L/C value but not to exceed _200,000.
applied
Credit
the loan application.
performance
are
to this facility.
done by BETP/CIT_M/GTEB/ROG/Industry monitored
but
rate
is
Philippine
t3_e immediately
is about upon
18
percent
negotiation
note,
whichever
of
comes
ear Iier.
In
less than one year,
borrowed loans
three times already
granted
December collection
PITC lent to 21 export producers
1988
already stood
reached at
rate. The main
industry
Association
monitors
productio n
from the same about
_4M, while
around F2M. reason
who
So far,
PITC
the
loan
that shipment
whom
The total amount
loans
for this is that the
evaluates
toensure
facility.
some of
outstanding has
a
100
as
of of
percent
BETP/CIT_V_/GTEB/ROG/
application schedules
also
are
met
closely by
the
borrower-exporter.
(f)
Transactional Financing)
Transactional Corporation
Financing
Financing
(LIVECOR).
(formerly called
Purchase
(TF) is a financingprogram
Its main purpose
is to provide
Order
of the short-term
Livelihood financing
158 to
accredited
producers/suppliers
is
being managed
by the Transactional
full-time
staff
officers.
As of December
who
are mostly
financing
purchase
in 1984.
Then
available
to both domestic-
or
indirect
which
has
supplier
provided
of any retail
apply
specialists resources
budgetary
orders
the financing
the capability
for Transactional
Financing
(TIE) composed and
loan
of
ii
collection
stood at _16.5M
all
of
appropriations.
of irrevocable industries,
that they are a
for at least
It
(POs) held by producers/suppliers L/Cs.
direct
a
regular
six months
to put up a collateral. have
to be accredited
is
enterprise
have been
for at least
It
whether
manufacturing
six months;
store/trader/importer
and have
Center
and export-oriented
been operational
to application; who
in 1986, it added
exporters,
loans
through
stores/traders/importers.
Lending
1988, its total
which came from the government
TF started
of retail
prior
All
first
those by
the
LIVECOR-TLC.
TF grants provided used
that it does
solely
other
working
with fixed end
financing
capital
interest
The maximum
two percent
collateral
of
labor
and/or
six
months
TF charges
a front
loan maturity
of the amount
Also,
of the loan
within
of POs or L/Cs
The loan should be
payment
per annum.
Loans can be released
if all papers
requires
of raw materials,
purposes.
or
of the total value
)_750,000 per borrower.
rate of 14 percent
is higher.
the application
TF
not exceed
for the purchase
fee of _1,0_0
whichever
up to 80 percent
ten days
is
applied after
for,
filing of
are in order.
in the form
personal
properties
and chattel
mortgage.
surrender
all pertinent
loan documents,
with bank
certification
in the case of L/Cs.
of
unencumbered
Moreover,
real
estate,
it asks borrowers
such as POs and deed of
to
assignment
For POs, TF directly
collects
159 repayment
from
collects of
PO issuers
upon delivery
from the bank upon negotiation
the
TF
w_erein
facility
the latter
GFSME Guaranty
of the L/Cs.
is that it enters
graduates
Facility
after
of the goods;
into a
to another
for
L/Cs,
One special
contract
facility
three years,
and
which
with
it
feature
a
borro_r
is called
LIVE_X)R-
or if not to a regular
facility
of banks.
The number
total
value of loans granted
of clients
graduated
already
special TF'S
reached
backed
loans.
up by POs.
anymore 13.3
â&#x20AC;˘loans amount
multiple
defaulted.
Two
their
percent.
considered
All reason directly located
while
to _I5M.
Ninety
of
irrevocable In
L/Cs.
addition,
Accordingly,
others do
not
These come from
(90) percent
them defaulted
was
The
some of
them
r__cd At
15
who
loans
are
did
past
of
not
rate of TF
which are
present,
loan value
the i,aporters
â&#x20AC;˘Thus, the default
anymore
clients
of the outstanding
with a total
because
four loans
_75M.
become bankable.
So far, three borrowers
_2M honor
stands
due
are
at
being
for restructuring.
of TF's borrowers for limiting collects nearby.
to Metro
the loan from issuers
It hopes
discounting
to expand
in Metro Manila.
Manila
borrowers
export-oriented
should
be
in the future so that
it
of
post-dated
enterprises, checks
similar
is
main it
of POs and banks
its resources
The that
in Cebu City and Davao City which
small and medium-size
operation
have their offices
itself only
can open up branches of
program,
since they have already
outstanding
obtained
a peak of 90 in 1987.
to another
assistance
from 1984 to 1988
who
have a large and include to
what
number in PCIB
its is
17/ currently
doing
17__/ See arrangement.
in the Marikina
Lamberte
and Jose
Shoe Industry.
(1988) for a detailed
discussion
of
this
160
(g)
APEX Re-Financing
The APEX Financing for
long-term
the
Central
is open
loan
Bank
Apex
used
buildings,
expansion equity
ranging
meritorious
the
and other
projects.
APEX
it is also available
these projects
have
private in
sector
foreign
resources
cost
locally
must show
and
fundsmust
criteria
imported
goods;
works with direct •or indirect for an APEX
exchange
such
as of
(PFI).
loan ranges
the
In
some
purposes•.
although
by the government
assuming
sector
advantage
projects
optimal
these
from
the
use
of
local
to the program.
(a) 100 percent
(b) 70 percent of locally
exchange
or if
in order tO compete
manner:
component;
foreign
between
industries
the private
(c) 50 percent
civil
period
foreign
upon
On the other hand,
imported;
direct
APEx
for purlooses
capital
for its eligibility
with
disbursement
or indirect
either
and should make
is directly
of an
assets
domestic
be spent in the following
if'the goods
procured
for working
comparative
markets,
export
institution
for projects
impact.
preferably
funds may also be used to finance
linkages with
inherent
domestic
as the primary
APEX the
extensive
program
of capital
for private
to some extent
by
the
The proceeds
equipment
the need
Managed
(CB-ADFU),
enterprises
financial
it may also be used
development
Unit
arrang_m_ent must be agreed
The funds are intended mainly
have substantial
Finance
industrial
participating
cases,
in the country.
the acquisition
machineries,
This
in 198_ to address
from [_4M to @100M.
to finance
investments. and
industries
Development
or for start-up
borrower
was established
and large-scale
with assets
can• be
factory
PrDgram
financing •of viaDle
to medi_
generating
Program
and
of the cost produced
if
goods
(d) 45 percent
component.
of
of
The normal
from one to two years.
•
161 Just program
like
the
intended
refinancing
to replenish
lent
to eligible
to
participating
individual
other
industrial
to
projects.
purpose
is
a
project
mainly
equipment.
for
Actual
equivalent
of the
exchange
rate.
foreign
exchange
The from by
repayments
program's lending
system,
percent option
WB
single
these funds
fund
program's
is
loanable repayable
mixed
turn
make
marKet-determined
rate
underlines
machineries
generally
made
in
of the CB's existing
its
and
other
the
peso-
peso-dollar the
only
lending
which
of foreign
was funded by a
led
in 1981 with a WB fund of $150M
and
of $100M.
Due to the
by the CB-ADFU
nature
to PFIs through
the refinancing funds.
commercial
loan
of a
the
mixed-
is done with a mix of 60
However,
the
PFI
has
the
in any mix it wants.
amount
under
the APEX I program
for 15 to as long as 20 years
life of the assets
good
in
banks
consortium
is given on the principal. loan
which
loan • which
was APF_I
I started
I was relent
to relend
on the economic years
APEX
40 percent
borrower
institutions
normally •the •borrower who will assume
under the system,
maximum
a
imported
(WB) and a consortium
and
The
of
on the basis
counterpart
fund, APEX
relep_ing
for the loan.
of London.
consortium's
at
denominated
first phase of the program
Lloyd's
financial
(PFIs)
are, however,
It is, •therefore, risk
a
by the CB for the funds.
currency
amountdue
is
funds are relent by the CB-ADFU
proponents
the acquisition
the World Bank
the
the
foreign
APEX
institutions
inclusive •of the cost charged
APEX
APEX
funds by participating
financial
subloans
facilities,
to be financed. However
for 12 and a half years.
system,
a two-structured
As
interest
$6M
for
or normally
A grace
the consortium
is
period
banks' a
rate
based
of
portion
result
a
of
four of the
scheme was
182
charged
on
an APEX
percent
on
the
floating
LIBOR
WB component rate
plus
three-fourths
the
loan
to
includes service the
the end-borrower,
charge,
fixed
+ 0.125%)
as service although
plus a reasonable
of the APEX
APEX
I
institution
up
to
on the
to
component
of the APEX
operations.
eventually
spread
be
The cost of essentially the
for the PFI.
CB
Overall,
to the
extent
of the loan.
as of June
I was very slow that briefly for
1988 :.
working
capital
funds by PFIs to the CB is almost very few cases
of delays
with new funds
100
or defaults
for APEX II.
Initially,
in 1984, with
These funds are in turn invested
merged
a
funds
coSt and
largely
9.6
and
consortium
determined,
fluctuated
APEX was open for loans
PFI's encountering
recovery
loan to an end-user
of APEX
spare,
Repayment
re-lending
-
maturity
charge by the CB.
market
had its last loan disbursement
availments
the
reaains
(average of 6 mos.
of one percent
of the consortium's
funds
which
financial
the cost of the funds to the PFI - the interest
cost
loan
loan to a participating
enough
purposes.
percent
with
in their
loan
by the CB which
In
the
interim,
will the
â&#x20AC;˘ -'
program
is not operational
underway. with of
The
with the negotiation
additional
$65M funding
the original
funds of APEX
the Philippines.
However,
loans
under
consorti_n's debt,
APEX
will
counterpart
has already
the program.
I
be
of fresh funds
for APEX
II from the
I will be managed by
the collection undertaken
fund in APEX
been restructured
the
Central
I, a part of the
for re-lending
WB
II
together
the Development
of the remaining by
for APEX
Bank
outstanding Bank.
country's
The foreign
in the second phase
of
4.0
Export
Credit
are
three
There industries, the
namely:
Guarantee
Philippine
guarantee
Fund
and Foreign
facility.
(a)
at
1984.
Kaunlaran
Livelihood A
It is a special
Corporation
representatives
Chart).
Currently,
An
initial
affairs
KKK-PC2%.
At
GFSME Specifically, direct
Center
has it
production
of GFSME
and/or
(KKK-PCA),
now
processing
of
consumption
as well as those projects
which
production,
up to one level of backward
renamed
corporation.
four
government
Managing
C for the Organizational
Support amount
staff.
to about
exclusive
intended
are indirectly
or forward
of
which
Fund and _2M from
are or will be food
sector Director
as seed fund of the GFSME,
which
in
Kabuhayan
All three private
its
loan
operations
to the Kilusan
staff and 16 junior
as
the
(GFSME)
its actual
A full-time
of GFSME
(2)
here.
sector and
(see Annex
agriculture
supportsprojects
(3)
rather than a
is a government-owned
of the Economic
total resources
identified
Authority
bankers.
_302M was allocated
present,
attached
its operations.
GFSME has 16 senior
_300M came from the proceeds
of a financing
1983 and began
(IGLF);
(Philguarantee).
and Mediu_n Enterprises
program
are professional
the day-to-day
Corporation
of three private
oversees
export-oriented
(GFSME); and
not be discussed
(LIVECOR) which
Board composed
representatives manages
in April
(KKK) - Processing
Management
sector
it will
to
and Loan Fund
Enterprises
Loan Guarantee
Fund for Small
GFSME was established
catering
Guarantee
IGLF is more
Hence,
The Guarantee
February
schemes
for Small and Medium
mentioned _above,
guarantee
System
(i) the Industrial
_port
As already
6_arantee
_500M.
market
engaged for
area. in
the
biological
involved
integration
the
or
in food linkage,
184 and
other agri-projects majority of the produce of which is
export.
Thus,
both
export-
and
beneficiaries of the G_'SMEprogram. food
and
domestic-oriented
intended
industries
can
for be
GFSME intends to give more emphasis on
non-food agricultural processing during the period
1989
-
92.
Export-oriented projects will be given high priority.
GFSME
principally operates through a network of accredited
financial
institutions composed of commercial, development, rural, and thrift To encourage banks to lend to small and medium enterprises, GFSME
banks.
operates
the following regular subsystems:
(i) risks
Guarantee Subsystem.
of
agricultural
This is
designed to
mitigate
sector lending by providing lending
perceived
banks
an
85
percent guarantee cover on all types of credit risks.
(2)
Interest Rate Subsidy Subsys+tem.
Under
this
subsystem,
absorbs
the interest rate variabilities in the credit market
ensures
viability of the loan portfolio carried by participating banks
all
times.
This subsystem is now being phased odt in
and
GFSME
favor
of
thereby at
market-
determined interest rate facility.
(3) Liquidity subsystem. with
a
This subsystem provides participating banks
matched
rediscount facility for loan originations under the program maturity
basis.
There is a plan to eliminate this
on
subsystem
a so
that GFSME can concentrate more on its guarantee mechanim,.
(4) Recycling or Mortgage Subsystem. secondary
This is
designed to provide
market for GFSME guaranteed loans and tap available
external to GFSME.
This subsystemwill
a
liquidities
be further developed in the future.
165 As
already
enterprises
mentioned
earlier, both
export-
can qualify for the GFSME Program.
and
domestic-oriented
However, the project
must
qualify under the following minimu_ criteria:
(i) The project mustbe
small-scale (i.e., those projects with assets
of not less than p82,500 but not more than p2.5M after financing) or
medium-scale (i.e., those projects with assets of
more
than
p2.5M but not exceeding _IOM after refinancing); (ii) The project must have a projected rate of return on investment of at (iii)
The project must have a firm, determined and reliable market; and
(iv)
The proponent must have proven managerial capability.
The fixed
least 20 percent per annum;
GFSME Program accommodates loans intended for the acquisition
assets with a maximum maturity period of 10 years inclusive
two-year period
grace
of
period
and for working capital with
five years inclusive of the one-year grace
a
maximum
period.
of
of the
maturity The
loan
ceiling is _2M for the small scale enterprise and p8M for the medium scale. All
loans should be collateralized.
reviews
The Management Board
the interest rate every quarter.
determines
The prevailing interest rate
and on
loans under the GFSME Program is more or less the same as the market rate.
Aside fee
from the interest rate, the borrower has to pay an
which is fixed at three percent of the principal loan
upon
origination
amount
payable
loan approval, a guarantee fee which is two percent per annum of
the
guaranteed portion of outstanding loan amount, documentary stamps and other registration fee, and other charges that may be charged by the banks.
originating
168 A
default
monthly
occurs
amortizations
applicable
fees.
pay the unpaid may
in case the borrower or
The mortgages
balance
bank's
GFSME
notice.
facilities
from
the
regular
Guarantee
liquidity
(ii)
Farm
(iii)
With
Loan Program
non-agricultural
stood
at
commercial
23, down
created
facility
fund
(CALF) from the
interest
loan amount
Line
is
Facility. lines
funded of
much
the
regular
subsidy
Facility.
This
extended
and
higher,
facility
by accredited
dealers.
This
is
an
extension
livelihood
it can be said that GFSME
development
newly
and _2M for single borrowers).
has also
of
projects. its foot on
activities.
of accredited
from a high of 39 in 1985.
and private
once
is a _100M
for non-agricultural
1989, the n_ber
loan documents
are:
to farm machinery
economic
the the
is different
to discount
Guarantee
this program,
of February
Discount
cover
institutions
LIVECOR-GFSME LIV_COR's
It
to
for collection.
Loan
and, the maximum
Dealer
guarantee
financial
Agricultural
for group borrowers
Machinery
provides
These
This
institution
receiving
three
since it does not have an
support
(i.e., _20M
above,
Facility.
of Agriculture.
Program
after
all
fails to
a letter of demand
the defaultees
by GFSME.
including
The lending
30 days
facilities
Comprehensive
Department GFSME
fees.
sending
consecutive
if the borrower
all the pertinent
it can run after
the
CALF-GFSME by
As
10 days after
are now being offered
(i)
amortization,
acts on the claim within
claims,
to pay three
will be foreclosed
Since GFSME possesses
it pays bank's
Aside
quarterly
and other applicable
call on the guarantee
defaultee.
one
fails
banks
The
financial number
substantially
institutions of
declined,
accredited but
was
167
partially Total
offset
number
by
the rise in the number of
of projects
approved
value of )_620M (see Table V.10). percent
of the projects
Loans are heavily
Table
V.II
accounts. fish
shows
these
were
export-oriented
used
The
sector.
for prawn
industry.
such as coffee
substantial
and cacao,
the
recover net
past
(i.e., accounts at 9.9 percent date. has
promptly
other
banks
About
42
enterprises.
GFSME
acti_ went
is
a
GFSME
balance
28,
1989
was able to Thus, rate
definition)
stood
of all accounts
within
provides
default
by collateral.
in their claims
export
_6.6M.
the
to GFSME's
of
industries.
amounting •to while
the
all
non-traditional
So far, GFSME
according
to
non-traditional
40 as of February
its•exposure
loan
that almost
export-oriented
reached
of the total outstanding
loan
the
as of
So far,
that GFSME
stipulated
time
from 1984 to
1987.
earlier.
Table
V.13 presents
Note
that income derived
been
enough
rely more
which
due rate posted •at 10.25 percent,
paid
of
it can be said that
All past due loans are fully• covered
mentioned
its
production
which are in default
is _I.SM.
of active accounts
(see Table V.12).
from five accounts
aggregate
scale
It is to•be noted
of past due accounts
banks.
III, IV, and VI•.
support• to the non-traditional
number
of the small
distribution
then
rural
an
loan size
If we also consider
with a total value of _38.7M fully
in Regions
About half of the total amount
loans
crops,
are those
the sectoral
and fish preparations
is 346 with
The average
approved
concentrated
to date
accredited
from the guarantee
to cover general
on income
liquidity
the income statement
and origination
and administrative
from its investments
subsystem.
of GFSME
expenses.
in government
One large operating
expense
fees GFSME
securities item
is
has has and
not to from
interest
168
OPERATING (As of
Table V.10 HIGHLIGHTS, February,
GFSME 1989)
Items
Total
loans
Figures
approved
Number Amount Average
(_M) Loan
Size
346.0 619.7 1.8
(_M)
z/ Inactive
accounts
Number Amount Active
99 214.9
(%_M)
accounts Number Amount
Loans
247.0 404.7
(_M)
Released Number Amount (_M) Outstanding Balance (_M) Total Contingent Liability
Taken
Out
(Net
Number Amount
of
Repurchases) 43 83.8
(_M)
Purchased/Repurchased Number Amount
(_M)
228 378.8 316.7 191.1
by
Banks 10 24.6
(_M)
i/ Accounts guarantee withdrawn Source:
GFSME
means either of the following: revoked, prepaid, fully paid, or acquired. Report
(February
1989).
169 Table V.II GFSME LOAN AVAILMENTS BY INVESTMENT (As of February
AREA
1989)
GFSME
No.
A. Primary Fuels Non-Fuels Live Animals Meat, preparations Dairy products, birds eggs Fish, preparations Cereals, preparations Vegetables and Fruits Sugar, preparations Coffee, tea, cocoa, spices Feeding staff for animals Misc. Edible Products, Preparations Beverages Ferti I izer s/Minera is Animals, Vegetable Oils and Fats Processed wood and Wood Products Paper B.
value (_M)
-
-
78 2 7 117 5 7
107.214 6.050 1.620 205.297 5.725 20.045
8 7 ii
15.710 14.800 19.442
1
8,000
4
8.035
247
404. 718
and Paper Products
Manufactured Labor Intensive (LI) Non-Metallic Mineral Products Furniture and Parts Footwear, Apparel, Garments Misc. Manufactures Moderately Capital and Skill Intensive (MCSI) Leather and Leather Manufactures Rubber and Rubber Manufactures Iron and Steel Electrical and Non-Electrical Machineries Transport Equipment Higly Capital and Skill Intensive Chemical materials, products
(HCSI)
Not Elsewhere Classified (Ricemilling, Feedwilling, Marketing Facilities, Transport, Printing/Publishing, Other Services) Total
Sources:
Unpublished
ALF and IGLFReports
(February 1989)
170
Table
V.12
PAST DUE ACCOUNTS, GFSME (As of February 28, L989)
Type
Number
Value
., i.
Accounts payment
with
2.
Accounts guarantee
3.
Accouclts a)
b)
delayed
(_0_) 8
637.5
wit_] unpaid fee
16
309.6
witil legal
iI
31,095.8
7
28,880.3
Accounts wit_l on-going negotiations Accounts
under ,,:.
foreclosure 4.
Acquired Net
4
assets Past
(Recoveries)
Due
35
---_
Source:
5
10,215.5 ,.
6,650.0 32,042.1 jo:
GFSME
Unpublished
Report
171
Table V.13 STATEMENT, GFSME Million Pesos)
INCOME (In
0 1984
1985
1986
1987
REVENUES Interest
on:
Investment securities Notes
in
government
receivable
6b.4
87.7
55.8
36.8
-
6.2
5.0
10,2
0.i
_.9
i.i
0.7
0.1
0.6
3.0
4.4
0.1
1.4
2.0
2.6
66.7
96.8
66.9
54.7
-
2.3
7.2
2.4
6.2
3.9
purchased Others Guarantee
fee
Origination
fee
TOTAL EXPENSES Operating: Interest
subsidy
Provision losses
for
probable -
Others General
& Administrative
TOTAL NET
INCOME
Sources:
GFSME
Annual
Reports
(various
-
-
0.9
0.7
0.5
4.1
6.7
8.4
9.6
4.1
9.9
22.5
16.4
62.6
86.8
44.4
38.2
years).
172 subsidy. total is
It
rose to _7.2M
expenses.
therefore
profits.
GFSME's a
step
Another
which
practically
Thus,
without
funds,
the
danger, will
likely
(b)
plan to phase
in the right
large expense
viability
raise
is
virtue
of Presidential
decree
creating
Decree
No. 1080
the Philippine
Foreign
authorized
capital
stock of pIOB.
of
September
1988,
It is functionally
The
Board
representatives the Central
and
president.
1988
Department
Philippine
Development
time
Directors
from the Department
Bank,
Philippines,
of
Authority.
composed
of Finance
Presently,
It has full-time
(see Annex D for the Organizational
The primary
, (a)
To
functions
promote
country
for
development
move
in that
enterprises.
Corporation
in
revised
1977
an earlier
stood
the
It
has
at p3B
Department
seven
by
as of
and one representative
from
Development
Bank of the
Board, and National
complement
is headed of 70 as
Economic
by a of
part-
December
Chart).
of Philguarantee
and facilitate
be
two
Philguarantee
staff
these
members:
and Industry,
Construction
fees.
Corporation.
to of
losses
of
fee, a
capital
attached
operating
will
created
essentially
The Paid-in
is
of Trade
Overseas
corporation
Loan Guarantee
an
Finance.
institution
Loan Guarantee
which
its
manag_nent
to small and medium
a government-owned
the
subsystem
for probable
its guarantee
The Philippine Export and Foreign (Philguarantee)
subsidy
of
and origination
funds and prudent
increases
one-third
improve
from guarantee
of GFSME as a guarantee
the cost of funds
Philguarantee
to
item is the provision
investible
it substantially
about
out the interest
direction
eats up the income
the large
unless
in 1986, representing
are as follows:
the entry of foreign
purposes
having
special
loans regard
into
the
to
the
173 needs the
of export-oriented industries, industries registered Board of Investments, public utilities, and
with
industries
t_e
promotion of which is encouraged by government policy;
(b) To
guarantee loans granted by Philippine banking
institutions
to qualified
exporters,
and
producers
financial of
export
products, and contractors with approved service contracts _road;
(c) To
facilitate
and
service contracts
assist in
the
implementation
abroad entered into by with
approved
Philippine
foreign
entities,
enterprises
or
potentials,
by providing counter-guarantees to Philippine
and
corporations
of
exchange
earning banks
financial institutions issuing standby letters of credit
letters
of
guarantee
for
theperformance
of
said
or
service
contracts;
(d) To
meet
requests
corporations
to
from
entities,
them
the
in
enterprises,
coordination
and
of
their
and expansion plans with a view to achieving
better
development
assist
domestic
utilization of their resources; and
(e) To provide technical assistance in the preparation, financing and execution
of
development or expansion programs,
including
the
formulation of specific project proposals.
In
a
nutshell,
exporters sources. qualified for
on
Philguarantee provides
their
guarantee
borrowings whether obtained
coverage from
local
to or
Filipino foreign
Such coverage is designed to demonstrate the creditworthiness exporters and, thus, enhance their ability_ko
their various requirements.
secure
Its services are available
to
of
financing producers
174
and
traders
of
Philippine
exporters
and contractors.
including
a
liquidity
products
for export
Unlike GFSME
facility,
which
Philgu_&ntee
as
well
as
has a number provides
to
of
only
service
facilities a
guarantee
facility.
At
present,
General
Guarantee
Small and Medium
(i) _5M
Philguarantee Facility
However,
For
must
producer
is for guarantee
the approval
trader
indirect exporters
On the other hand,
to overseas
customers;
such pro3ects
international
of more
of the Board
of
than
Directors.
need approval
for a service
under
peso
from
the
loan Obtained
a
by borrowers
construction
contractor
or other
exporter,
be
and improvement
used
to
services
infrastructure and be
registered
contractor. may
export-
Philguarantee' s
_equirement
if a service if
Bank as
in domestic
and that he/she must be
program,
export products
and/or
projects
foreign-funding
Board
this
to
exporter
or, if involved
Construction
and acquis_iDn,
access
in construction
must have
bidding;
Overseas and
to qualify
can have
Bank or to Board of Invesb_ent
expansion.
below.
or the Central
provided
currency
for
with the Board of Investment
be involved
Philippine
Program
non-traditional
he/she must
capital
This
or a trader
qualify,
Central
Guarantee
of
Thus,
assistance.
to
the
These can either be peso or foreign currency
andor
be a producer
and registered
projects,
namely,
guarantees.
export
oriented.
facilities
of _*50M or more per beneficiary
of the Philippines.
denominated
he/she
Facility.
that requires
guarantees
President
These are discussed
Guarantee
per beneficiary
two major
and the Export Credit
Industries.
General
offers
open
with
the
or with
the
The
foreign
for
working
of fixed assets
for
175 Philguarantee the
case
of
provides
export
70 percent
producer
accommodation
value
in
Philguarantee
charges
and trader and
the a
of the loan accommodation
case of
guarantee
80
service
percent
•exporter
fee of 1.5•percent
value
of
and
per
the
in loan
contractor.
annum
of
the
amount •guaranteed.
(2)
Export Credit O_/arantee Program Industries (ECGP-SMI)
This the
is for guarantees
Board.
President approve
The of
Philguarantee
Association
of
medium-size
exporter
The
maximum
the
approved
assets
are authorized
was• designed
the Philippines.
•and
by the Board
lacking
guarantee
facility.
are those who have assets
collaboration
sufficient
coverage
of at least _50_,000
in
It would enable
revolving •credit
credit
President
approval
from
Executive
of
Vice-
Directors
to
this facility.
facility
and post-shipment
and Medium
of _5M or less that do not n_
•Chairman of the Board,
loans under
This
for Small
provided
Bankers
small-
to obtain
exporters are
but less than _5M, while
and
_)re-shii_ment
from any participating
by Philguarantee
Small-size
the
an eligible
collateral
facilities
with
bank.
is 70 percent those
which
medium-size
of have
exporters
of at least _5M but less than _20M. %
To qualify processing, products;
for the •ECGP-SMI facility,
production must
or
trading
of
have a •t/_ree-year track
record;
margin
of
average
current
ratio of 1.5:1, and an average
themselves
incr_nent)
of 75:5.
of such facility.
average
_riority
profit
valuation
10 percent,
borrowers •must
Both direct
non-traditional
and must
return on debt
be engaged
equity
have of
to equity
an
export average
15
percent,
ratio
and indirect exporters
in the
(net of
can avail
176
Under the BZGP-SMI fee to
of 1.5 percent the
issuance
of the guarantee
of the
filing
of
between
Philguarantee
All
the
credit
in
investigation. participating
some
cases
Thus,
all
However, interests
borrower
for
borrower
is
Agreement
with
the
it
days
required Negative
equally
own for
separate
on
to
already
be do for
case-by-case
assessment
and
submitted
by
by Philguarantee.
share
of
a
guarantee
collaterals
under
in favor
banks
credit
approved
are
from the exporter-
on
all banks
guarantee. Philguarantee
collaterals, against
the
The
exporter-
an
Indemnity
Pledge.
program,
later than the expiry
claims
for guarantees
may be submitted
No claims will be honored
date of the guarantee.
if
submitted
All claims
will be
by 15 paid
30 days.
Philguarantee in
its
applications
to execute
one upon
the application
the application
conducts
accommodation
at the time of default.
within
endorsing
has a proportionate
credit
shared
facility
and claims held by the participating
Under the BCGP-SMI banks
reviews
does not require
of
payable
be
participating
before
banks are not automatically
Philguarantee borrower.
still
to
and guarantee
Although
proc_ure
one-fifth
prior
bank.
credit
banks.
Philguarantee
and
rights,
a
guarantee
payable
of _1,_0
application,
and the lending
for
a minimum
accommodation
with a minimum
and guarantee
loan processing
guarantee,
charges
and a filing fee of
accommodation
to participating
normal
basis,
granted
applications
submitted
Philguarantee
per annum of the guarantee
percent
the
facility,
Middle
currency.
East
has had a poor performance construction
contracts
About _5.5B non-performing
record mainly
which
assets
it
due to failures
guaranteed
of Philguarantee
in are
foreign supposed
177
to
be transferred
to the national
No. 64, but as of September Philguarantee September the to
1988 alone,
interest _174M.
sustain
Facility
The government
related
Government
In
it lost _165M
and financial
view
(see Annex
has been providing
totalled
of
its
inactive
it provided
_unication
system
is mainly
for
assets
to
due
to
amounting
to Philguarantee
1988, advances assets
losses,
has been essentially
creditworthy
advances
January
from
to
the
National
to
National
transfer
_489M.
heavy
exceptionally
E). This
Order
AS a result,
For the period
on the non-performing
As of September
the $40M guarantee
active.
charges
losses.
to the non-performing
already
by virtue of Executive
this has not yet been done.
to suffer huge
its operation.
Treasury
was
continues
1988,
government
and
Philguarantee's today.
One highly
that
it
serves
a
Hoover,
that follows
Guarantee
exceptional
to PLDT in 1987 because
in the Philippines.
Thus, the discussion
General
the company
vital the
case
role
in
ECGP-SMI
is the
r_mlains
will focus on the performance
of
this program.
Between
1980
and
amounted
to
declined
thereafter
crisis. cancelled high
_335.8M
of _80.4
guarantee
(see Table
V.14).
as
As of December guarantees
1988,
the economy
in 1982.
The number
substantially
from
_GP-SMI
1987 resulted
issuances sector,
in in
83 in 1982 to 17
It reached
went
1988, outstanding
and guarantees
issuances
through guarantees
in default
only in a small
to
recover.
a peak a
in
II:GP-SMI 1982,
net of
The effort improvement
One of the reasons
but
balance-of-payments re-availments,
outstanding
1987 and 1988 even as the economy,
started
the
were only _38.4M down
of accounts in 1988.
under
also
from a
declined
to revitalize in
the
particularly is that
the
the
guarantee the
export
number
of
178
CO O_l
* _M P_
('_
I_ _1
("3
P-
I
I r',-
° f--I
! •
I, L_
_ _
i I I
I._ PI
_h
• _ _D
I I
I
I
,_!_
,-4
_
c',,')
,
r_
Cr_ 10% ' _D I P') oo,,_ It",A I r-_
I
"" ,_
•
'I _
• (::0 (_
,,,-I •
I I I
u_
• _D
'_M I
I
,_,
'
_
(_I
Ll')
' O'h I ,A _ '_ I
I ,
I I I _o,_ _,_. _.I_. _ , _
,-4
_. I._ l • _,._ " ' $ _,A "'
I
_,_
U') •
I
'
IC)
,-I
_
I
_
A
,_ ,_
•
= _
_
LF)
r',OD
_-_ ,-_
_ O0
_ i
_
.,._
•
' I
•
I I
r ""
I II
It'"
.,-_
._
i;
--
l
' !
'_<
II_
.,._
_
,--4
l P" lI "
I
I
•
I I
I I I
,
" II
,q4 II
• II _0 II (_ II
II
_,,
I,,l'_ II • II
i " I
_ i_ II II
II
I.n II
<"_ II
_i_ I Cr_ II " _,
I
. ,,
l_il
"'"" I ,, •
I • II" I
l
,_ _-
-,-4
i _"
I l !
_.
_I
r'_ II II • l,
._,_; l C_ _ ,_; I f",-.i d ,I _; _._ _ ,_,, I ',D II _
I"_ i
_
.,-i
l::I
..
° ° ._,.. I::::
._1
_<I _
M
-__
_
0"_
,--I
,-I
Lr_
_._,
_
_0
_ .-, i • .,I_,,_ ' _.,!_,,, ' .,,. " _ _ _ _i' ,,_ _,_ ,,-__,_
,--I
:_ •
I
_M r:_ _
_ _: o
m.
_
CO ,--I
(:_ .10
I
,°
. CO
°
,-4 _(_
M
._ l=
.,-i
179 active
banks
V.15),
considerably
not to mention
new progrma. _CGP-SMI Banks
indicated
those
the fact that
The other
as earlier
declined
reason
discussed
went
are _ch
so
(see
all of them need time to adjust
more
that firms that satisfy
Philguarantee
the last few years
is that the eligibility
that do not need anymore
that
during
rigorous
the newly
assistance
criteria
to
the
of the
new
than the previous
revised
to
one.
requirements
from Philguarantee.
far in an effort
Table
reduce
are
It calls
seems on
its
of
the
guarantees.
Classified guarantee
issuances
This reflects share
of
catching credit
up fast especialiy
TaDle
1984, guarantee V.17).
From
in
among
banks,
total
as shown
(see
Table
financing. guarantee
in the last two years.
issuances
went
1985 onwards,
concentrated
the period
9.2 percent
occurred
distribution were
credit
V.16).
However,
the
issuances
is
Post-shipment
export
in the share of guarantee
in
only
to quite a number
however,
three
the
of industries
guarantee
industries,
namely
issuances garments,
and furniture.
During about
export
proportion
going to it.
more
handicrafts
a greater
for short-term
export credit
is still not popular
beca,ne
rates
preference
comprehensive
Before
is
to type of credits,
was for pre-shipment
the banks'
accommodation
(see
according
in
1980 to 1988, _30.9M of the total guarantees
1982
of default
incurred
by
and
1985.
by year would
guarantees
issued
Accordingly,
banks' misconception
high default
rates.
More
in guarantees issued.
However,
in earlier
closer
years largely
only riskier
This
The highest
show that the highest
of the program
specifically,
a
defaulted.
(see
look
default at
default Table
contributed
the rates V.18). to the
loans were endorsed
by
180
ACTUAL
Year
* ** Source:
NUMBER
Active Banks
Table V.15 OF PARTICIPATING
Participating BanKs
BANKS
Ratio
198H
12
27
44
19dl
16
28
57
1982
23
31
74
1983
20
31
64
1984
16
31
52
1985
10
31
32
1986
8
31
26
1987
5*
31"
16
1988
3*
5**
60
Participating banks in the Old ECGP Selected banks in the New ECGP-SMI Philguarantee
Unpublished
Report
(March
1989).
r,_ CO
un,
d'_
A _
: •
, _
• II
II I _:_ tt I _.-I II I
, II,_,, ;'_ II ,--I II I • II , I,_ ,, _ Ii
A
_ , I
t_
_; , I
I
..I
_I_
, C_I
I
O0 _I_
• CO ,--I
c_"
" I ,--III
• <'_. l'_ i'_.: •
m
,
,--I
I
4
CO Oh ,--I
_
I
_
_ ,-I
I _
II
II II
II
I
I • ii I _ II I I:_ II " I l--III
c_
_o
_._
"
c,,] "
_P _-_
O'_ _-I
I
I _--I II
• ..
._
4.1
_
.,--I
,--I
m O,1
co
_
• II
II
I
P4 ,-4 II
0
0
_
• II
"
I
_
I _ ,,"
I
I
o_ i "_ . _
:_D
_
,-:-i
.,_ ,-.4
_
.,::i', r-'_
.,_ "m
_
r-
>_ I_ _ _j
_
• _
_ m _
,_
Oh..
m
_
o0
_
_
_
kD
JJ
.
-.-
'.C_I
_
0
_
•
U
_
l,,,,I
•_
ii
',,D
,--4
oo
o_
>-_._
,---I
o ;:_ C
_._ _..
• _._
CO
I
i
---co
_
-IJ
._
,.-.I "_
0
181
182
Ll'll .. ...-, I.rio ,i I.-I .,-i
_:l,,...I _
,I_ t.iJ .,-i i_ i_ .r-
1--I
is:
I.
_1 eii
o_
•-i
_
0
=
II ,11 t"i ii
1Q
Q
II_
0
0 , I ®, ...q _" <" ''°" I
U'}
0
0
a
IP
Q
0
_
.-i Q_I.=
_ II) ,
_l--
_=
_
,,,-I
II II
II
P-If • If b'_ll i%iII
l w-Ill
I QII I ,ll
(%i I ii_ _
'11" I 0'_ II • i oil
_
1
U'}
ll")
Q
'_
_
_
t_ Q
_*
, i,l"l li_d
,_1 _
I%-
i%1
,,I _i
iTi
¢_-I-I-- i'r" (._ 0
Q
0
_
i
i_ 1-
I
I b')ll • ii
i%III
I "11_, _, 11 II
I I_,,, 11 I ii
I II I _Ii
i ._,-i ii
I_II
I _ II I • II
I Nil
_1¢_'
',-'
_
_
I i II , I (%ili
_
_
I%1
C}
O i'_ ,-i "l'i _ _
I%-
_1"
o lln
i_ II ill _ _i__i_
ID
"_ _I
O _
,-i
Q _
"l;i_
0 •
_
r_
_
ll't
¢_' ',ii-
i._
_' N
i_
0 "_ "_
(%i
_
,
.,_
¢i I
i_
il. _
_
0
_
'
'_
.l_l _
,l#
ill,, _ O
..i-'
i"
_
"i'_ _ lP
,-t
_ ,_,,
_l
,-I
_
_.
_
IF
f_ _
'_ " <_ ,,.>.o.,II
_
,4,
,,-, _
_
I'--
I _-III
_
rt'i
I'rl
_I
=
I_
_i"
_-I
_
li-i
I
II
" '.i:<>ii IJ_l , i
I Ill
II
ii
I _-I II
i
Iii i ¢_ II I _=ill li'l
,-I
i (%JIi _'i II I
">I_-II
.I
iI
I i_
.I.I
_"
i*
:_
_*
_
i
I
CDII=
<_ UD
G
i .._
°
"
,l_
0 0
I li'l II
,0 _
_*
r,,.
_
_i
I%-
Ill
(%1
"-
,I,
" __ ,-.,. ,,.> _
..IJ _:I.-
t_: 0 I_, 0 "I r._
"11
,-i
_n
ID
.<o="N® -"> _
i" 0 IT'I--
b"i
I'll
i_ 11
.
l%i
(%J
i"
@@
_J
_i
n" 0 I.D
Cl_k-
(%i
". _" '_ _ _
A,
_ "_ "_ "I "_ _ "
ill
II'l
_
I.
_
(_1
g
II Q #.iII _ .ll
_
_'l
IF
,I_ o_,.-.
II _
_1"
"_
_0 l_
0_' .-.l
i_,
•=i
0 ¢0
-
•
°°
c./) _j co E_ _
•H.
_:__ _ ,,-I
,--I
_" l--i
E_ El
::3
I r.:3
r.o
O0 _-_
E_ _L._
oh .,-I
kD _
CO l.fl ,,-,i
< _
_ O0
.-I
_1 O_
CO
r--I
Z;
::3
_ r.,Q
-I
,--4
_
.o
--.-
r_ _ i,
I
I
u'_
I
m
_
II
I
I I
., ii I
¢_I I * t I I
II
.."
tl
" I
II II it
• oh oo ,-.I
4.1
r_
II I _) II I • II
i ,-I _
I _'_ II li
I _1 II II
. I_II
n I _3_ II I * II
I P') II
I o_ II • II
I
, , , , , .,
I
I
I
II
i=l=l
o'j
I
II
fl I
II I
rJ_
}
I I
_ •_ _
tt I _1_ II I . II I P-I II
I
r_
,_;,,
I ii I P_ Ii
I
,
I
I
_1 1"-,,_t
kD _P k_ ' •
I
I
H
r_-,_
I
I
l
I
kl:) _1_ _ • ., I
_--I _
,..;d _ ' ' '
0 _Q
183
184
banks
to
them.
the ECGP-SMI,
while
This practically
Philguarantee
negates
responded
reco_nendation
normally
good accounts
the risk-pooling
by tightening
by banks
and monitoring
the relatively
their
to the point
feature
screening
screening
by
_CGP-SMI.
on
the credit
The tighter
kept
of the
process
of duplicating
done by banks.
were
guarantee evaluation
process
and
!
constant
credit
criteria this
monitoring
all helped
has resulted
in attaining in a smaller
leaner
guarantees
losing
the effectiveness
So
far,
percent the
two
The
years
V.19.
and guarantee
_2.6.
Except
net total
for
huge
eligibility
outstanding
and
thus, almost
But
a
much
completely
Improvement
is
equivalent
in recoveries
started
to
of the HCGP-SMI
1980 to 1987,
one year during
to
17.5
was made
directly
take
in the
in its eight
program
is
from
while expenses
totalled
only
years
fund is required
in
derived
a
positive
of its operation.
for the
shown
revenues
that period,
the program
investible
total
to _5.1M,
in all the years
by
which
after defaultees.
income of _6.8M realized
sufficiently
to _5.4M
defaults.
fees amounted
made
stricter
rate in 1987 and 1988.
of accounts
when Philguarantee
by the program
advances
much
net of reavailments,
the period
filing
realized
number
and loss statement
For
a
a zero default
amounted
of running
profit
with
of the ECGP-SMI.
recoveries
responsibility
Table
outstanding
of total guarantee
last
coupled
of operation same
profit
was
However,
the
cannot
period.
cover
Clearly,
for the ECGP-SMI
to be
a
self-
liquidating.
To improve
the effectiveness
introduce
the so-called
designed
to simplify
of ECGP-SMI,
"Bank Guarantee
and facilitate
Philguarantee
Line" program
the delivery
of
is planning
(see Annex F). financial
to
It is
assistance
i_ _i.
ILl -
..I
le) _.
O_ 1:._'_ •"*_1 ill
-
,,
• _I_:
_-
0-
.J
I--
s,=i
_, ®
.*i
-Q_
_
_D
•
t.
,
•
_
_/_=_ _r
•
....
T(_
I
=
•
.. _"
.... _-_r _ _ ,_
I I
•
I.
.,
_._ _lP
I
I
_1_ I * I
(_ II CO
I _
_._.I _.
" T_D_1" i'_
O(_l - -
I
. _ 0"_,_,_
I_ ,
_
_-_ _-I
_ _ If)
i
_* _
_
_:' .:
"
"
•
*
•
*, a..,
I
.
(_ro
N_,=_ i_1
_
.-.4_
.., IT')
I
_
I
•
•
.
•
•
•
•
m O'r'P'_ .......
_
i
I
I
'
m
_"
•
II_ _
•
*
_l_(n
_
I
" II
• ||
OI
II 0_II
i
'I
.I I
II
®II ,
II II
Nil
II II
_=I II _ ii
II
|l
II
II
II
iN II il II
_,, .11
II
,
II ' II
I
II II
_ _
II
,, II. II" II I_ II
I
_,, II -II
II_II _ II
Ii
I" " II II U_ II _'_ I1
Jl
II
_-II II ,,, _,,
•
II
II
• •
.
I
_'_
II
I_ll _11 Ii n
_/il _11
-
_II,*
I I
I i
I
I.
."
C
='
e,
i _P
°
' " ® l.,I
I I
I
_.iii ,.0 II
II
e • II
,_,, II
•11 II
_ _N _-,, _
_l_t_ _d_
_
._"" _I" {_
_r I_ _
II
_'" _,,II
II II _
II (%1 II N
..J i.d'.
" li n
_
II • II
i_ _
ii II
_
II II N
_
,
,-,5
N
_
_ _ °" _ (I)_ ®® __,,II
It
,-:If_II
t_
g _
_
II
I
l_-_I"iI _ _O _'_II II
_._._ ®_ _ _
N(M_ _i_O
_
i _t_
"
*
I
, ,,
I"
_" _
I
I _1 i _-I'_'_.
I
I¢_I_ ii__
_ _o,_
N
e..i
¢D _1"I_ I_- (M q" _r _5 _ _ ._ d}
_r_ *'II
I
_h_lfl
_
• _ I_'_"_N ('_l _': • _U7
_
I
f_,-
(M"
_°_'_ -.4 _l _ .'_ "_ _
N
_,_8_;P_ _®o_ _ _ _(:_
_
_ _
_° ._
(%1
_'_
_
_
irl, o'_,
_
,.0 .
....
l_
_I'_ =_ . .
b5
_ g ,-"; L,._ _,
r
I:_-
,
.._.,_,._ .._.°
X _. =
•
l:,-I
0
N _
W
U
,.i If) N
°
Q
185
186 and guarantee of
to deserving
_25M per participating
against The
support
irrevocable
eligibility
existing
financing
available
or
assistance
five _times the
_200M
als0planning
to
is
program
and
in
for overseas
selected
program,
Philguaran_ee
advance
payment
or
proposes
a guarantee
Recently,
truly export
B.
export
assets
credit
section
experience
although
sharingCwi%h
capital
the
for now
for
its
pre-
readily
G).
limited
Under
this
on performance
mobilization
the contractor
a technical
guarantee
in lsomewhat
Annex
guarantee
a Dank and
obtained
guarantee
(see
will Prbvide
its operations_ _ Ir_de_
Experience
This
Contractors,
peso working
Philguarantee
to improve
finance
than
guarantees
liquid
granted
this program.
liberal
re-introduce
types of contracts
proposed
Bank
under
are muc_ more
to issue _IB in
credits
line
for i_s use.
Philguarantee
amount
hopes
a guarantee
export
POs are eligible
for borrowers
Philguarantee
by providing
Only pre-shipment
L/Cs or acceptable
criteria
one.
export
bank.
exporters
expenses.
It
concerned.
assistance
it is gearing
bond,
from the World
itself to become
a
institution.
with Export Financing
is divided of banks,
into two parts. and the second,
The first
discusses
the exporters'
export
experience
with
financing.
i. 0 " Banks
Export system. to
transactions
This
transact
exporters
to
normally
is the most convenient
their report
business.
There
to the Central
pass
through
the
commercial
way for both exporters is a
regulation
Bank both the
that
volume
and
banking importers
requires and
value
all of
187 exports. their
In addition,
exporters
banks all export
closely
monitored
are required
proceeds
denominated
by the Export Department
In 1988, the seven sampleâ&#x20AC;˘banks (see Table V.20).
This
is roughly
to immediately
in foreign
currency.
of the Central
had a total 45 percent
surrender
to
This
is
Bank.
of 2,392 export
customers
of the total number
of active
18/ exporters
in
1987.
Except
for one bank,
only a
small
proportion
of
19__/ their
export
export
customers
transactions
Table V.21). average
in 1988 greatly
The lowest
transaction
The
terms
documentary
credit
only
Table,V.22).
while L/Cs
The
banks
merchandise
fully refinance It
se_s
asked
within and
of
among
was _25,700,
is 60 days
exports
transactions
L/Cs,
individual banks
while
(see
the highest
three banks
sight
draft,
mentioned
L/Cs
advising
only
a_e
The ratio of
and the typical
loans granted
is 0nly about
in that same year. loans with
that banks rely on their the banking
cash,
usance
term
to
of
usance
in 1988 by the seven
sample
(see Table V.23).
of export
their export
are
and confirming.
for most banks,
to _5B, which
how liquid
The size
One of the seven sample banks
As regards
small
total amount
banks amounted of
of export
and L/Cs.
relatively
for most
varies
transaction
the rest are both advising is
L/Cs
average
new ones.
was _5M.
typical
(see
in 1988 were
three percent All, except
the Central
own funds
to a
of the total one bank,
Bank
did
(see Table
certain
value
V.24).
degree.
system at present,
all respondent
figure
1988
not
banks
When said
18/ We available.
are
using
1987
19__/ New customers may include bank with the respondent.
since
the
old exporters
figure
who may have
is
not
just
yet
newly
188 Table NUMBER
BanKs
OF
EXPORT
88 I_73 2_ I19 154 188 666
78 34 15 5 3_ 15 7
3 4 5 6 7
Table
1 2 3 4 5 6 7
1988
% New Export Customers
1
Banks
CUSTOMERS,
No. of Export Customers
2
SIZE
V.20
V.21
OE INDIVIDUAL TRANSACTIONS, 1988: BANKS' RESPONSES (In Pesos)
Average 5,0%9,000 25,7_ 200,00_ 1,894,43% 423,50@ 1,2_0,000 39,500
Minimum 28,888 21,_9_ i_,00_ 12,584 8,278 10,_M0 4,278
Maximum 50,_S 63,27_,_00 I_,_00 II_,00%,_0_ 886,696,168 220,%0_,000 64,0_,0%_
189
TERMS
OF
Taole EXPORT
Banks
1 2 3 4 5 6 7
Note:
Terms
-
1 2 3 4 5
Others:
V.22 TRAHSACTIONS
Terms
1245 12345 24 •234 1234 4 2345
- Cash - Sight Draft - Documentary Credit -•Letter of Credit (L/C) - Others for for for
Bank
1 - Cash against Documents Documents Against Acceptance. •Bank • 2 - Open Account DP, DA Bank 7 - Prepaid Exports Documents against Payments
TaDle V.23 LETTERS OF CREDIT
Banks
1 2 3 4 5 6 7
.... _
Letters of Credit ______ ___ _. a .. - ...... ......_ _ _.-_..- .......... . . . Terms of Usance Ratio of Usance (Days) to L/Cs (%)
Advising Advlsing Advising Advlsing Advising Advlsing Advlsing
& confirming & confirming & confirming & confirming
6_ 60 60 3_ 6_ 45 60
0.05 15._0 10._0 2_.00 i_._ 3g.0% 3.00
190 if%at
it is liquid.
This seems to be the prevailing
fact that the economy could
pernaps
Central
up quite
be one of the reasons
despite
the
fast in the last two years.
why rediscounting
availments
This
with
the
Bank are at a lower rate.
Pre-shipment _hus,
loans were the typical
the usual credit
current the
has picked
situation
exporters reported
given
loans is between
by banks
have
loans provided
term was less than 180 days
rate for export
rate
export
access
14 to 18 percent
to their prime
to bank loans.
by the sc3mpie banks most
(see Table
custaners.
probably
applies
The
is close
that
on
banks.
V.25).
which
Note
Hence, the rate
Dy
not
export
t_)exporters
to all
loans
whom
they
Usually,
they
cons ider cred itwor thy.
Banks lend
in
the Philippines
to exporters
exporters the pre-
and
up to 70 percent
on the strength
assigned
post-shipment
c(_nservative.
Of the L/C.
of an L/C even
L/C, the most common
exPorter-borrowers collateral
are extre_ely
if it is irrevocable.
type of collateral
loans are real estate
with
the
ranges between
bank
and
asked
to 125 percent
some
difficulties
lend
Aside
fr_ for
deposit/placements
of
The
by
to
banks
(see Table V.26).
i_0 percent
Banks have been encountering
But they do not
value
of
the
of tt]e loan value.
in extending
financing
9, "
to
local
exporters.
exporters'
products
The mos_ comaon do not appear
This
partly
about
the creditworthiness
The
to be
There
is no mechanism
information
second most
of importers of
common
difficulty
that
Philippine local
the
(s_e
have very
by which
about the credit
is
creditworthy
stuns fr(_n the fact that banks
very big ones. lower cost
of these
buyers Table
little products,
except
banks can obtain
financing
to
V.27).
information
track record of numerous
in extending
of
the at
a
importers.
exporters
is
191
AMOUNT
Table V. 24 OF EXPORT LOANS GRANTED
IN 1988
Sourced Banks
Amount of Export Loans (in Pesos)
1 2 3 4 5
1,544,993,455.94 450,000,000.00 530,518,997.00 314,607,600.00 139,889,100.00
6
7
From
Refinanced through CB Rediscounting %
Special Lending Programs (e.g. ALF, IGLF, etc.)
Own Funds %
83.0 47.0 90.0 80.0 36.0
0 0 0 0 0
17.0 53.0 n.a. n.a. n.a.
80,000,000.00
"100.0.
2,053,000,000.@0
I
0
79.8
1.9
Table V.25 EXPOrt LOANS
.... Distribution of Export Loans by Credit Term (%) Banks < 180 days 180 days to 1 year
1 2 3 4 5 6
i_0.0 90.0 90.0 n.a. 100. _ 100.0
0.0 10._ 10.0 n.a. 0.0 0.0
7
96.6
3.4
Note: n.a. - No Answer a/ ~ Prior to CB Rediscounting b/ -Upon CB Rediscounting
Current Rate on Export Loans (% p.a.)
18.5 14 to 18 15 to 18 n.a. . 16 17 to 19 a 14 to 16 bE 18
Current Rate to Prime Customers (% p.a.)
17 17 20 n.a. 16 17 a/ 14 b/ 16
0
18.3
192 Table V o26 TYPES OF COLLATERAL
Banks
Post-Shi[_uent Loan
Pre-Shigoent/Working Capital Loan
123 45
123 125
nap nap 235 4 15
15 234 235 4 14
1 2 3 4 5 6 7
FOR LOANS
• •
NOTE: Collateral
- I 2 3 4 5
-
L/C Real Estate Mortgage Deposits/Placements Guarantee (Letter ,Corporate,JSS, etc. ) Others
nap - bank did not imve any post-shipment
Table V. 27 IN EXTENDING FINANCING
DIFFICULTIES (By Rank:
i = Most important;
TO LOCAL
7 = Least
loan
EXPORTERS
important)
Banks Difficulties
........... 1 2
3
4
5
6
7
8
n.a.
2
3
6
Export Loan is not profitable to the bank
3
6
n.a.
6
Size of transaction does not meet with bank policy _
5
2
n.a.
5
1
5
6
3
Country of buyer is not believed to be creditworttly
6
5
n.a.
4
4
6
2
2
Required luaturity of credit is believed to be unreasonable
4
4
n.a.
2
2
4
5
5
Buyer does not appear creditwor thy
1
i
n.a.
1
3
1
1
1
2
3
n.a.
3
3
4
4
Required interest rate believed to De low
Note:
n.a. - no answer
is
_ n.a.
that
the required
have
strong
typical and
preference
maturity
most
term
of credit
loans
of export
which
co_ared exporters
to
unwillingness
want
encountered
away
from
to pay a high
the
additiont ..
_enks
as
all, exc?pt ..- ,, .
information
to evaluate
why post-shipment
Only
one bank, • ,.. foreign
imposed
post,shipment
admitted indirect
their
_
mOSt
exporters
common
uncommon
low among
inability
or
admitted _ .
the
problems documents
are encountered . . ,
loan
by
requests.
that they do not have
buyers. • This
restrictions
common
In
sufficient
is one of the major
reasons
by banks.
claimed
that current
in its
lending
Central
that
Bank
affect • its
to the low loan value
and
of rediscounts.
banks
indirect
by these
indicated
exporters.
that they offer domestic But of these
five banks,
two banks were estimated
of the total loans granted
that indirect
most
to pay is
in
to have lent to indirect ••exporters. The aggregate
five percent suggest
of
export
maturity
to support
not
Similar problems • ,
shorter
credit
It is
discrepancies
to lend to exporters..• And these pertain
Five of the sample
other
are willing
ability
period
The
because
loans are least Preferred
have
long-
them.
are
One of •the seven •sample banks
regulations
the
Very rarely do they give
loan requests,
banks
regards
above,
rate.
and insufficient... collateral.
sample
out
Banks
days,
obtain.
banks
export
sample
As pointed
rate exporters
interest
pre-snlpment
by
to
to be unreasonable.
by banks is less than 18_
loans.
bank_ want to charge
turn
As regarus
submitted
exporters
what
loans.
loans extended
is that tile interest to
is believed
for short-term
of these are pre-shipment
difficulty
the
maturity
exporters,
in 1988.
letters only
Most of the sa,ple
who are mostly small
two
loans granted
to be between
producers,
be
of
one
to to
banks given
194 preferential
rate for their export
loans
under
a special government
lending
program.
As
mentioned
guarantee IGLF.
in
facilities
Five
guarantee
of
the
the seven sample
facilities
Table V.29,
total export
Banks
market
using
loan applica£ion
of
the
(see Table
the guaran%ee o_iy a small
existing GFSME,
availed
V.28).
of
and the
But in 1988,
facili{ies.
As _hown
proportion
of exporters •that are
evaluation
pr0je_%,
export _ record
stockholders.
to
their
Investigation
applications
and•icredit
Bureau
being submitted
to find out through
system,
submitted
for
financial
and
quality
of
resources
of
such as
debt-servic_;capacitys
Five of the seven sample
Credit
Of
three
Philguarantee,
have themselves
loans were
their standard
viability
and current
are
loans.
management,
the
banks
banks utilized
the guarante6_
there
namely:
at one time or another
evaluate
guarantee
section,
in the Philippines,
only three of the sample in
earlier
experience,
• and
banks •have ta_ed
(CIB)
in
for guarantee.
CIB the loan applicants'
the services _ of
evaluatfng
_export
More specifically, repayment record,
loan
they
want
court
cases
loans with other banks.
the
•seven sa_ple
banks, only
two had experienced
calling
on
the
!
guarantee
on some of the loans they granted
Both of them said
Numerous stringent problem seven
docunentation
requirements,
criteria
the Philguarantee
sample banks
•(see Table
V.30).
that their claims were paid.
evaluation with
to exporters
suggested
long
were mentioned facility
by
evaluation three
(see Table V.31).
that the existing
process
banks Three
as
and their
of
the
guarantee •programs _should be
195 Table V. 28 BANKS' AVAILMENT OF GUARANTEE FACILITIES
Banks
Guarantee
Facilities
1
2
2 3 4
23 none none
5 6
1 3
7
Note:
123
Guarantee
Facilites:
1 - Philguarantee 2 - GFSME _,3 - IGLF
RATIO EXPORT
TaDle V.29 OF GUARANTEED LOANS GRANTEU
Banks
Ratio
1 2 3 4 5 6 7
Note:
nap
LOANS TO IN 1988
(in
%)
2 nap nap 1 0 < i
- not
applicaDle
CLAIMS
: Banks:
1 2 3 4 5 6 7
Note:
Claims Philguarantee
: : : : : : :
MADE
Table V. 30 UNDER THE
Made
:
GFSME
2 2 2 2 1 2 2
2 2 2 2 2 2 2
nap - not applicable Claims Made : 1 - Yes; Claims Paid: 1 - Yes;
PROBLEMS
WITH
BanKs
Note: 1 2 3 ,4 5 6 -
Table EXPORT
PROGRAMS
Claims
Paid
IGLF:Philguarantee
2 1 2 2 2 2 2
: : : : : : :
GFSME
nap nap nap nap nap nap nap
nap nap nap nap nap nap nap
2 - No 2 - No
V.31 GUARANTEE
Philguarantee
1 2 3 4 5 6 7
GUARANTEE
FACILITIES
GFSME
15 6 6 6 2 6 23
IGLF
6 6 6 6 6 6 1
6 6 6 6 6 6 45
Problems: numerous documentation requirements long, evaluation, process stringent,evaluation criteria limited coverage of collateral snorter maturity of the scheme none
IGLF
nap 1 nap nap nap nap nap
IS7 modified.
Their
procedures, claims,
specific
reducing
higher
for processing
guarantee
is,
indicated
who
as
rate,
follows:
clearer
cover up to 85 percent,
does not have an export
however,
that
exporter
and interest
are
most welcomedby
they will seriously has
secured
credit
banks.
consider
an export credit
insurance
the loan insurance
2.@
Exporters
The
major
such in
exports
which
As
markets
the
have
circuits.
and electronic
All, except
high value-added.
foreign
their products
in one Country.
The
firms
an
However, the
export
to
of
(see
prawns,
to
electronic
two firms
form
by
varied
such as
majority
in finished
markets, •only two
are
are producing
A great
banks
by exporters.
accessories,
products,
their products
exporters
products,
such as toys and toy
•exported/sold
which
are
products
for
the
sample
(see Table V.33).
•have• concentrated
rest have fairly
in
diversified
(see Table V.34).
Table • V.35 sample
lines of the 23 sample
as integrated
garments
regards
marketing
product
accept
for loan application
They range from agricultural
engaged
•exporters
as a collateral
housewares,
products,
refer
policy
This
sample
policy.
insurance
and
period
application
credit
gifts
the
for
scheme.
Five Of the
all of them said that they will not automatically
V.32).
requira_ents
and shortening
almost
Table
simplifying
claims.
The Philippines facility
fees
recommendations
firms.
shows
the total amount
For the five indirect exporters,
to the value of commoditiessold sample
of sales and export
exporters
have export
sales
the export
sales
to final exporters.
Only
sales below
58 percent
of
of
the
reported five
their
of
total
198
Table V. 32 MAJOR PRODUCT LINES
Assets
A.
Export No.
Small-Scale 1 l 1 1
B.
C.
baskets (made from buri and coconut) abaca fabric bags, fashion accessories, garments, worked horn fashion accessories
1 1 1 1 1 1
9 10 11 12 14 17
1 1
28 blankets, clothing, decors, ethnic 21 toys and tolt accessories (buri)
Medium-Scale 2 2 2 3 2 4 1 13 2 15 1 22
Assets:
home decors
baskets, trays fashion accessories, office decor, cermnics cocowood ashtrays and jars home and office accessories (wood) native handicrafts marble slabs and tiles
fashion accessories rattan products rattan products banana chips prawns painted woodcarvings
19 processed foodstuffs 23 integrated circuits,
items
and shell
Large-Scale 2 5 stone in-laid furniture, bamboo, 2 16 natural rubber 2 18 furniture and handicrafts 1 3
NOTE:
i 6 7 8
Products
LED display,
1 - less than P5 million 2 - P5 million to P20 million 3 -more than P28 million
wicker,
leather
disk drives,
photo
detector
Table V. 33 FORM OF PRODUCTS/SERVICES EXPORTk39/SOLD IN 1988 (In Percent)
Products/Services Assets
A.
B.
C.
Exporter No.
Raw Materials
1 1 1 1 1 1 1 1 1 1 1 1
1 6 7 8 9 10 ii 12 14 17 2_ 21
0 0 0 0 0 0 0 0 0 0 0 0
_ 60 0 0 0 0 0 0 30 0 _ 0
0 0 0 0 0 0 0 0 0 0 0 0
10_ 40 100 100 100 100 100 100 100 100 100 100
0 0 0 0 0 0 0 0 0 0 0 0
2 2 2 1 2 1
2 â&#x20AC;˘3 4 13 15 22
0 0. 0 0 0 0
0 100 0 0 100 0
0 0 0 0 0 0
100 0 100 100 0 100
0 0 0 0 0 0
2 2 2 1 3
5 16 18 19 23
0 0 0 0 0
0 100 _ 0 100
0 0 0 0 0
100 0 100 100 0
0 0 0 0 0
F_all-Scale
Semi-Finished
Capital Goods Consumer Goods
Services
......
Medium-Scale
Large-Scale
NOTE: Assets - 1 - less than P5 million 2 - P5 million to P20 million 3 -more than P20 million
200
T_l e V.34 COUNTRIES MHERE FIRfl EXPOR?ED TOIN I988 (In Percent to Total Exports)
Assets Exporter â&#x20AC;˘ No.
USA
Japan _ermanynecnerlanos .ong_ong_stralIa
1 6 7 8 9 II II 12 14 17 20 21
6 0 39 9m 89 lO_ nap 96 n.a. nap 79 15
g 8 0 50 2 _ 0 B 6 8 6 9 nap nap 5 2 n.a. n.a. nap nap 9 6 1D 36
2 3 4 13 15 22
49 nap 75 nap nap 34
29 nap 29 nap nap 33
5 16 1B 19 23
85 6 0 1.5 44
3.75 9 9 8 19
S. Korea France:Others
A. Small-Scale 1 I 1 I 1 l 1 1 1 1 l 1
0 0 9 0 _ 0 nap B nap 9 15
6 0 2 0 26 9 nap 5 n.a. nap $6 6
88 B 6 0 6 g nap 6 n.a, nap 6 6
I 50 6 i 6 6 nap @ n.a. nap 6 6
15 nap 5 nap nap 9
9 nap 9 nap nap 9
15 nap 9 nap nap 33
9 nap 9 nap nap I
9 nap 9 nap nap 9
16 nap ! nap nap I "
9 nap 6 nap nap 0
3,75 9 9 9 2
_,75 19 9 9 B
3.75 9 0 9 9
9 9 9 9 9
6 199 9 9 9
9 9 6 9 9
9 9 99 99.5 l_4
n.a.
21 I O. 6 9 69 I II 8 9 6 i nap nap 0 2 n,a. n.a. nap nap 6 g _0 _.6
D. Hediue-Scale 2 2 2 i 2 I C. Large-ficale 2 2 2 1 3
NOTE:Assets - 1 - less than P5 million 2 - P5 million to P29 million 3 - morethanP29million n.a.- no answer
ANNUAL
Assets
IExporterl
â&#x20AC;˘ A.
Annual
1987
SALES
Sales 1988
I
Total
Export
1987
Sales 1988
Small-Scale 1 6 7 8 9 10 ii 12 14 17 20 21
nap 380,000.00 4_0,000.00 270,000.00 123,000.00 566,020.04 32,000.00 nap 400,00.0.00 2,180,000.00 980,000.00 1,900,000.00
423,475.00 420,800.00 450,000.00 140,000.00 165,000.00 1,698,060.12 48,000.00 200,000.00 200,000.00 2,000,000.00 2,000,000.00 2,400,000.00
2 3 4 13 15 22
9,600,000.00 3,800,000.00 430,499.70 6,500,000._0 1,800,000.00 8.,991,699.77
10,30_,000.00 4,600,000.00 9,944,874.38 8,000,000.00 2,850,000._0 9,541,627.32
nap 380,000.00 300,000.00 91,000.00 50,000.00 452,816.03 8,000.00 nap 400,0_0.00 625,000.00 120,000.00 1,900,000.00
320,000.00 420,000.0_ 350,000.00 21,000.00 35,000.00 1,358,448.10 10,0_0.00 150,000.00 200,_00.00 910,_00.00 400,000.0_ 2,400,000.00
8,500,000.00 3,.800,000.00 353,175.70 6,500,000.00 350,000.00 5,313,638.86
9,708,000.00 4,600,000.00 4,326,981.27 8,000,000.00 1,300,0_0.00 8,122,402.55
Medium-Scale 2 2 2 1 2 1
C.
Total
I 1 1 1 1 1 1 1 1 1 1 1 1
B.
Table V. 35 SALES AND EXPORT (In Pesos)
Large-Scale 2 2 2 1 3
5 16 18 19 23
21,446,000.00 30,900,000.00 60,874,865.30 34,854,000.00 42,400,000._0
NOTE: Assets - 1 - less than P5 million 2 - P5 million to P20 million 3 -more than P20 million nap - not applicable
36,091,000.00 48,600,000.00 58,091,616.10 31,798,000.00 49,300,000.00
21,446,000.00 11,080,000.00 60,266,116.00 34,363,000.00 42,400,000.00
36,091,000.00 34,700_000.00 57,510,699.00 31,665,000.00 49,300,000.00
2O2
annual
sales in 1988.
exporters. highest
The lowest export export
export
sale
transactions
Among
firms,
average
highest
was _40M.
importers.
three
five firms suffered
years, in
the same period
firms realized
excess
of 100 percent.
Almost 1988
earlier
by
varies
of
was
located
The
while
their are
in the
V.36).
varies.
_ii,000,
export goods
the
individual
(see Table
also greatly
the
goods
to
consolidated same
country.
take care of the insurance
rate
because
trading
activities.
It is
sales over
export
prefer
and
Table
V.39,
in
export
that
three
the last three years
the
in
upon
shipment
information
provided
for
at
regarding
do not nave adequate
least
two
palAnents
of
information
is that ti_ey need
most of t_em are self-financing As shown in
noteworthy
this arrangement
The other
over the last
growth
in cash or L/C
the uncertainty
that exporters
of importers.
turnover
in
sales
impressive
This corroborates
is that it reduces
record
a quite
firms usually
Exporters
sold especially
in their export
(see Table V.37).
Table V.38).
banks. One
track
a decline
a growth
all sample (see
reasons.
the
importers
while the rest achieved
small
goods
to importers
transactions,
size
van to deliver
exporters,
sample
or $1,000 while
The
transactions
the
cost.
Only
sale
transactions
use containerized
In the case of saall
all export
to $3M.
firm widely
of individual
typically
vary among
in 1988 was _21,000
by an individual
one van and sent together
freight
in
sale
was _57M or close
size
Exporters
In almost
sales considerably
the size of individual
lowest
into
The export
tl]eir export
high
about sales
production/
15 out of 23 respondent
firms
203
AVERAGE
Table V. 36 SIZE OF TRANSACTIONS
IN 1988
(In Pesos)
Assets A.
B.
C.
Export No.
Average
Size
Lower
Range
Upper
Range
Small-Scale 1 1
1 6
120,000 n.a.
95,000 n.a.
140,000 n.a.
1 1 1 1 1 1 1
7 8 9 10 ii 12 14
175,000 52,500 67,000 300,000 11,000 20,000 n.a.
100,_00 20,000 60,000 50,000 2,0_0 10,000 n.a.
250,00_ 85,000 75,000 350,000 20,000 60,000 n.a.
1 1 1
17 20 21
150,000 60,000 110,006
n.a. 50,000 100,000
n.a. 80,000 120,000
2 2 2 1 2 1
2 3 4 13 15 22
800,000 340,000 250,000 1,200,000 n.a. n.a.
500,000 100,000 70,000 200,000 n.a. n.a.
2,000,0_0 700,000 400,0H0 2,400,000 n.a. n.a.
2 2 2 1 3
5 16 18 19 23
n.a. 2,000,000 n.a. 460,000 40,000,000
n.a. 1,500,000 n.a. 100,000 35,000,000
n.a. 2,500,000 n.a. 950,000 45,000,000
Medium-Scale
Large-Scale
NOq'E:
Assets:
1 - less than P5 million 2 - P5 million to P20 million 3 -more than P20 million
204
•Table V.37 CHANGE OF EXPORT THE LAST 3 YEA_S
PERCENTAGE IN
Assets
Exporter
Increase,
No. A.
B.
C.
NOTE:
SALES
(%)
Decrease
(%)
Small-Scale 1 1 1 1 • 1 1 1 1 1 1 1 1
1 6 7 8 9 10 ii 12 14 17 2_ 21
nap 10 3_ nap nap 150 25 nap• nap 46 120 150
2 2 2 1 2 1
2 3 4 13 15 22
60 20 1225 15 4_ 53
2 2 2 1 3
5 16 18 19 23
68 237 20 nap nap
nap nap nap 76 15 nap nap nap 50 nap nap nap
Medium-Scale nap nap nap nap nap nap
Large-Scale
Assets
- 1 - less than 2 - P5 million 3 - more than
nap
not
-
applicable
nap nap nap 8 10
P5 million to P20 million P20 million
2O5
RATIO OF
Table V. 38 CREDIT JTERMS•TO TOTAL• EXPOR%'_ (In Percent)
Export I cash or L/C Assets
A.
B.
C.
No.
Small-Scale 1 1 • 1 1 1 1
100 100 100 100 100 100
1 1 1
ii 12 14
nap 100 0
1 1 1
17 20 21
nap 100 100
180 days Over to l Year•
1 Year
0 0 0 0 0 _ 0
0 0 0 0 0 0
0 0 0 0 0 0
nap 0 100
nap 0 0
nap 0 0
nap 0 0
nap 0 0
nap 0 0
2
100
0
0
0
•2 2
3 4
nap 100
nap 0
nap 0
nap 0
1 2 i
13 15 22
nap nap 100
nap nap 0
nap nap 0
nap nap 0
5 16 18 19 23
100 100 25 10_ 34
Large-Scale 2 2 2 1 3
Assets: "
Less Than 180 Days
• 1 6 •• 7 8 9 10
Medium-Scale 2
NOTE:
IUpon Shipment
1 - less t/_an-P5 million 2 - P5 million to P20 million 3 - more than P20 million
nap - not applicable
0 0 25 0. 64
0 0 50 0 0
•
0 0 0 0.
206
Table SOURCES
Assets
A.
B.
C.
Export No.
V. 39
OF FINANCING EXPORT (In Percent)
Firm
Factoring House
Local Bank
PRODUCTION,
Foreign Bank
1988
Foreign Buyers/ Customers
Others
Small-Scale 1 1 1 1 1 1 1 1 1 1 1 1
1 6 7 8 9 10 Ii 12 14 17 2_ 21
100 i_ 100 i_0 10_ 0 100 20 100 100 100 40
0 0 0 0 0 0 0 0 _ 0 0 0
_ 0 0 0 0 0 0 30 0 0 0 30
0 0 0 0 0 _ 0 0 0 0 _ 0
0 0 0 0 0 0 0 50 0 0 0 0
0 0 0 0 0 100 0 0 0 0 0 30
Medium-Scale 2 2 2 1 2 1
2 3 4 13 15 22
100 100 100 0 100 100
0 0 x 0 0 0
0 0 0 100 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
Large-Scale 2 2 2 1 3
5 16 18 19 23
100 0 80 i_ 65
0 0 0 0 0
0 60 0 50 35
0 0 20 0 0
0 0 0 0 0
0 0 0 40 0
NOTE:
Assets:
1 - less than P5 million 2 - P5 million to P20 million 3 - more than P2_ million
207
are completely
financing
their export production/trading
activities
most of
the time.
About they
half
have
now
competitors.
especially
started
respondents they
are
Accordingly,
that
at present,
the
term
They noted
credit
increased
better
cash
or
credit
admitted
sight
L/C
of
buyers
about price their
already of
the since
commodities
in the future.
buyers that
competitors
have
competition
-export
competitive
to their
record
A great majority
they
are now
1988, only three out of the 23 sample firms
financing however,
from
a
financing
large orders,
export
local bank
picking
sales/ production
shipment
financing.
financing
has led almost
are It
are
is
worried
offering
was severely
obtained
For
was low.
all exporters
up the smaller
ones only.
constrained
the
better
(see Table V.40).
interviewed
The level
obtained
of financing
pre-shipment
two
exporters,
The lack of interviewed Thus,
access to
turn
the amount
by lack/absence
The same can be said of post-shipment
out of 18 final exports
in 1988
(see Table V.40).
the level of pre-shipment
to pre-shipment
four
have
terms to their buyers.
In
down
foreign
interviewL_d
their
180 days.
and will remain
that some foreign
their
had they offered
some of
the prices
that they offer
arrangement
who have shown good payment
said that they are not worried
competitive
about.
of their buyers
as
could
Many of the firms
for term L/Cs for about
confident
credit
same
said they
30 and 50 percent
customers.
larger.
asking
the
payment
they cannot go on for long demanding
since orders
becoming
that the
is about
a great ma3ority
sales between
definitely
claimed
their buyers
to their present
that
are
with However,
their export terms
of the respondents
of
financing.
post-shi_nent
of preOnly
financing
was low for two of
t21ese
2O8
Table V.40 PERCENTAGE OF EXPORTS IN 1988 WHICH WERE PRE-FINANCED AND RECEIVED POST-SHIPMENT FINANCING
Assets
A.
B.
Export
Small-Scale 1 1 1 1 1 1
No.
Pre-Shipment
Post-Shipment
1 6 7 8 9 10
0 0 0 0 0 0
0 80 0 0 0 0
1 1 1
ii 12 14
0 0 0
nap 0 0
1 1 1
17 20 21
0 0 30
nap 0 0
Medium-Scale 2 2 2 1 2 1
2 3 4 13 15 22
0 0 0 0 _ 0
0 nap 0 nap nap 0
Large-Scale 2 2 2 1 3
5 16 18 19 23
0 0 8_ 0 20
0 60 i_ 0 35
C.
NOTE:
Assets:
nap
-
1 - less than 2 - P5 million 3 - more than not
applicaDle
P5 million to P20 million P20 million
2O9 firms.
The lack of financing
severely
constrained
Respondent financing
the amount
firms
from
were
a local bank answer.
from
High
in 1988.
for not borrowing
four
said
that
adequate; do
not
export ever
the
services.
obtained
an export
services
they can offer;
Twelve of
the
23
sample
that many of them did not
borrow
with the export
inadequate;
financing were
of
asked
services their
to note that half
from local banks
by banks
rate was high;
of his
hank
of
were
just
that
they banks'
of those that
reasons
they
being
who
export
was too high compared
and loan maturity
bank;
local
claimed
The major
cited
respondents,
and the rest said the adequacy
inadequate.
reason
number of
finance
services
It is interesting
collateral
. interest
export
at all regarding
of banks
are the following:
obtained
Of the total
finance
has
ever
rate was the most coa_on
in 1988.
ten said that they were
finance
finance
This means
export
have any knowledge
they
(see Table V.41).
from banks
level of receivables
sales made by exporters.
whether
interest
only one was fully satisfied
a higher
of export
asked
firms gave a positive banks
to finance
cited to what
offered
by
banks was too short.
Of
the
special
23 respondents,
lending
programs
only one was able to borrow
of the government
term loan which was used for the acquisition
Six payment
of
the 18 final
exporters
of t/%e goods already
mentioned instead documents
were: of
cash
payment;
and delayed
payments.
with
The specific
of post-dated
short
It was
of a
the long-
assets.
problems
to i,_orters.
issuance
alleged
of fixed
encountered
delivered
non-payment;
(i.e., EIMP).
from one
shipment;
check
for
regard
to
problems 30
days
non-acceptance
of
210
EXPORT
Export No.
Assets
A.
Gov't Prograa
Processing Time for Loans (days)
Local Banks Export Finance Services
office
ownership
1 6 7 8 9 IM ii 12 14 17 20 21
branch branch nap nap nap nap nap branch nap nap nap branch
gov't private nap nap nap nap nap private nap nap nap private
n.a. nap nap nap nap nap nap nap nap nap nap nap
7 nap nap nap nap nap nap 5 nap nap nap 3
3 4 4 3 3 4 4 2 4 3 4 3
2 3 4 13 15 22
branch nap branch branch nap nap
private nap private private nap nap
nap nap nap nap nap nap
3 nap 7 2 nap nap
2 3 3 1 4 4
gov't private pr ivate private private
TLRC nap nap nap nap
365 3 5 2 7
3 2 3 2 3
Medium-Scale 2 2 2 1 2 1
C.
Bank
BANKS
Small-Scale 1 1 1 1 1 1 1 1 1 1 1 1
B.
Table V. 41 FINANCING FROM LOCAL
Large-Scale 2 2 2 1 3
NOTE:
5 head 16 branch 18 r_ead 19 head/branch 23 branch
Assets:
1 - less than P5 million 2 - P5 million to P20 million 3 - more than P20 million
Service
: 1 2 3 4
-
Fully Satisfactory Adequate Inadequate No Knowledge
nap - not applicable n.a. - no answer
211
Five
of
suddenly
were
their orders
by importers
to _400,000.
cancelled,
problems
18 final exporters
cancelled
L/Cs opened _100,000
the
while
the
of export
and insolvencies
said that exporting
Despite optimistic
various
regards
expected
increase
percen t
over
them are now actively
Table
The
But
already
ranged
from
tithe el_ment,
of the exporter
orders
financial
as the
reasons
period
that there
is a high
Six of these
level
of
respondents
for the next
new products
three
are
very
years.
The
firms ranges between
(see Table V.43).
new export
they
markets
A great
300
majority
of
for their products.
to be marketed
'limited or lack of
60 and
in specific
financing
could
Some
countries douse
the
of exporters.
Inter-Agency
Projections
Foreign
Study
Group
Operations
on
Committee
External which
Bank has been making
dialogues
with exporters
years.
presents
a c_nprehensive
Table
bottlenecks
involved
now facing exporters,
by individual
pursuing
V.44).
had
the reason why export
industry.
export prospects
of them plan to introduce
buyers
to these problems.
problems
a three-year
Four of them
cited
indicated
in their
in exports
wherein
orders.
has contributed
the as
firms
and labor problems
of the 23 respondents
bankruptcies
enthusiasm
three
cases
The value
Two firms did not know
for the cancellation
(see
(Table V.42).
for their orders.
of the importer
Eight
experienced
V.45
related
recommendations
to financial
to ease/eliminate
matters
Trade
Statistics
is chaired
twice a year summary
encountered
the bottlenecks.
of
by
the
and Central
for the last two the
by exporters
problems/ and
some
212
CANCELLATION
Export No.
Assets
A.
C.
BY BUYERS
Value (In Pesos)
ReasOns
Payment Terms
Small-Scale 1 1 1 1 i 1 1 1 i 1 1 1
B.
Table V. 42 OF ORDERS
1 nap 6 time element 7 nap 8 financial problems of importer 9 nap 10 nap ii nap 12 nap 14 none 17 nap 20 labor problems of the exporter 21 nap
nap 400,000 nap n.a. nap nap nap nap 100,000 nap 250,0_0 nap
nap
Media-Scale 2 2 2 1 2 1
_ 3 4 13 15 22
nap nap nap nap nap none
nap nap nap nap nap n.a.
nap nap nap nap nap 145
Large-Scale 2 2 2 1 3
5 16 18 19 23
nap nap nap nap nap
nap nap nap nap nap
nap nap nap nap nap
NOTE:
Assets:
napn.a.
1 - less than P5 million 2 - P5 million to P20 million 3 - more than P20 million
not applicable - no answer
Payment
Terms:
1 2 3 4 5
-
L/C Document against Docuaent against Sight draft others
payment acceptance
1 nap 1 nap nap nap nap 5 nap 1 nap
213
EXPORT
Assets
A.
B.
C.
NOTE:
Table V.43 PROSPECTS FOR THE NEXT THREE AND PROSPECTIVE MARKETS
YEARS
Export
Countries
No.
% Increase
Small-Scale 1 1 1 1 1 1 1 1 1
1 6 7 8 9 10 Ii 12 14
120 60 80 100 10_ 100 100 200-300 60-70
12 1234 1235 5 nap n.a. nap 1234 7
1 1 1
17 20 21
nap 100 280
nap 123 3
Medium-Scale 2 2 2
2 3 4
150 nap 300
3 123 123
1 2 1
13 15 22
nap nap 100
nap nap 123
Large-Scale 2 2 2 1 â&#x20AC;˘3
5 16 18 19 23
n .a. 200 60 90 60
1 - less than 2 - P5 million 3 - more than
P5 million tu P20 million P20 million
Assets:
Countries:
1 2 3 4 5 6
-
USA Japan Europe Australia Hongkong others (Korea, Taiwan, Papua New Guinea, Middle East)
7 - no nap - not n.a. - no
pursuing answer
new
country export
in mind markets
n .a. 56 3 16 126
214
Table NEW EXPORT
Assets
A.
Export
No.
Countries
1 charcoal briquets & coconut husk 6 n.a. 7 carabao horn & bone accessories handscreened dresses & beach wear
1 1 1
8 9 baskets I_ ceramics
i 1 1 1 1
ii nap 12 handpainted wooden jars 14 a/ 17 nap 20 ladies & children wear (with ethnic design), bags 21 furnitures (buri)
1
C.
Products
Small-Scale 1 1 1
B.
V. 44 PRODUCTS
Med ium-Sca le 2 2 2 1 2 1
2 stonecraft 3 4 13 15 22
Large-Scale 2
5
2 2 1
Assets:
fashion nap nap nap nap nap
nap 56 1
accessories
n.a.
16 latex, steel 18 b/ 19 sacks for sugar work clothes 23 FAX, numeric
3
N_gE:
n.a.
3
3 nap nap nap nap nap
56 3 6 26
1 - less than P5 million 2 - P5 million to P20 million 3 - more than P20 million
- would
Countries:
nap 134 n.a. nap 12
n.a.
and coffee,
nap - not considering new products n.a. - no answer a/ - same handicrafts but with different and made from different ,materials b/
2 n.a. 1235
design
like to know
1 - USA 2 - Japan 3 - Europe 4 - Australia 5 - Hongkong 6 - others (Korea, Taiwan,
Papua New Guinea,
Middle
East)
TableV.45
215
SUI_ARY OFSELECTED FINANCE-RELATED PROBLEMS, RECO_ENDATIONS AND P_PECTS, DECEIVER INDUSTRY DIALOGUES CONDUCTED BYTHE IASG
INDUSTRY SECTOR
BOTTLENECKS
RECONNENDATIONS
ABENGY INVOLVED
A, Proble_/Recomndetione Common toAllIndustry Sectors High financing cost.
Provide necessary financing andcredit CB facilities atrelatively easy terr_ to Cautious moodinthefinancial market beusedintheprocurement ofneeded ingiving credit access tosmall-and rawmaterials intheshort term, and medium-scale industries which results in additional purchase ofcapita] equipment inadequate financial assistance for andexpansion projects inthe]ong term. theiroperations andexpansion, Review ofCBrediscounting policy with CB Collatera} requirement isoveremphasized theendinview oflowering rediscount rather than giving more weight topast rate tostimulate borrowings and performance andeconomic viability of including s_llandmedium-scale firs theproject, inexport packing credits. â&#x20AC;˘Work towards thereduction ofthe{BCB imposed reserve requirements oncommercial banks' liquid portfolio, particularly if acertain percentage ofthese funds is forexport, Theinterest spread slapped bycommercial banks onrediscount loans borrowed from CBshould be.examined. Ease upthestrin_bnt requirement on collaterals, particularly forsmall-and medium-scale enterprises toenable _hem tnavail themselves ofthenecessary financing andgive them opportunity to grow anddevelop. Size exporters preferential rates of interest andcollateral-free loans.
Problems/Reco_ndation ofSpecific Industries (I)Sugar andMolasses Inadequate financial assistance to planters,
Give deserving planters preferentialCB/SRA rates ofinterest andco}]atera)-firm ]oans,
(2} Coffee High financing costimpedes thegrowth Facilitate credit andfinancing require-CB/DTI ofinvestment intheindustry, merits ofgrowers inorder toimprove â&#x20AC;˘production.
216
INDUSTRY SECTOR
BOTTLENECKS
RECOM_)ATIONS
ABENCY INVOLVED
(3}Tobacco Inadequate funding which affects the â&#x20AC;˘operations oftheNational Tobacco Administration.
Provide easy credit andfinancing CB/DF packages togrowers, specifically those geared towards theexport market.
(4)Fish andFish Products Limited andhigh cost offinancing hinders efficiency inoperation,
Provide preferential interest rates and CB/DF financial pack_les toboost production.
(5)Furniture andFixtures Limited financial support, especiallyGive preferential interest rates andlow-CB/DOF tosmall-and medium-sized producers cost financial packages toexporters to inhibits thegrowth oftheindustry, boost operations.
(B)Handicrafts Inadequate financing andcredit facili-Give preferential interest rates andeasyCB/DF tiescoupled with high interest chargesfinancial terms toenhance productien forinvestment andoperational purposes, andexportation
(7) G_rmentslTextiles Cautious attitude inthefinancial Develop small-and n_dium-scale garment CB market ingiving credit access tosmall fires bygiving them access topacking andmedium scale industries fortheir credits andother financial packages at operations andexpansion, lower interest rates andeasy collateral requirements. High financing cost,
(8)Processed Food andBeverages. Highlending rates charged bylocal livepreferential support toexportersOB banks which make exporters uncompetitive with regard totheir financial intheworld market relative toother requirements. Asian exporters, Discrimination intheextension ofbank credit agains smallandmedium-scale enterprises forinvestment and operational purposes.
Source: Inter-Agency Group onExternal Trade Statistics andProjections Foreign Operations Committee, Central Bank ofthe Philippines, Annual Report 1987.
217 VI.
OVERALL
This system
chapter
in
export
EVALUATION
provides
system
Theoretical
export
syst_n
financing
presented systems
Financing
schemes
in the Philippines.
of the
export
the evaluation,
out at the outset below
of helping
the presentation,
working
IN THE PHILIPPINES
a
financing theoretical
System
capital
that the theoretical
is not necessarily
that we could
for the purpose
shipment
evaluation
To facilitate
to point
devised
To simplify
SYST_
is first presented.
Export
It is important financing
a general
the Philippines.
finance
A.
OF THE EXPORT FINANCING
think
requirement
best
one
among
of for the Philippines.
us analyze
we will
the
export
the existing
export
limit ourselves of
It is
financing
only to the pre-
exporters.
We
assume
the
following:
(i)
the economy
has an active
(2)
the economy
has both export
(3)
the
economy
has
a
c_amercial
banking
and d_estic
well-functioning
system;
L/Cs; Export
Credit
Guarantee
Corporation; (4)
the Central
(5)
the
Central
Bank refinances Bank considers
for rediscounting; (6)
all raw materials
From purely instead
the demand
traders)
who
side,
export
loans of commercial
banks;
loans of indirect exporters
eligible
and are available
locally.
the key players
do not manufacture
from local manufacturers,
this case the indirect exporters
are:
the direct
exportable
goods
and the local manufacturers since
exporters but
buy
who
they do not sell directly
are
(or them in
to foreign
218
buyers.
From
the Central
the supply
Bank, and the Export
Thetransaction Step
1 -
process
Exporter (L/C)
date
Exporter to
proceeds
receives
•preparation 2 -
Credit
to
I
assigns
L/C to local Bank
a Back-to-Back
obtains
Guarantee Step 4 -
Inland
Against the
If):
Letter
of
terms to
adequate
Credit include
period
for
assigned
I as support
for his
Letter of Credit Exporter
guarantee
request
(BB L/C)
in
(IE).
from
Export
Credit
(ECGC) i ar_ export L/C
opens
through
Bank
II a BB L/C in
favor of the IE in local currency
up to a certain
percent
of
value
of
L/C, available
for
shorter
period
than the export
the
IE • assigns loan
equal
purchase Step
6 -
Step
7 -• Grants
Step 8 -
(see Figure
an
or Indirect
a pre-shipment
Corporation
and shipment Step 5 -
Corporation.
an immediate
provide
banks,
and shipment.
establish
Bank
the commercial
under pre-determined
favor of the manufacturer, Step 3"-
Guarantee
in his favor
sufficient
are:
as follows
at sight in dollars
expiry
Step
side, the key players
Bank
underlying
export
L/C to allow
receipt
of product,
a
the
packing,
by exporter. the BB L/C to Bank up
to a certain
of raw material
II obtains
II and requests percent
and working
pre-shipment
a
of BB L/C to
local be
currency used
for
capital.
guarantee
from •BCGC;
loan to IE; and
Refinances
loan with the Central
Bank;
2H/T_s-- is drawn frcm the hand-out provided by during the Commencement Workshop for the study of Selected DMCs, Manila, 22 - 23 September 1988. •
Mr. Bruce Nicholson Export Financing in
219
Figure
[xporterlTradi_g
Co.
----
II
Local
Manufacl:urer-.---Lo¢al
Suaplie.,
•
-
-
n
"
n nn
I -
|
•
l "
I ,
s,,j,_:L,c/ • , _
t_
,
_
iEXPORTE_]
I
l 4.
.I
.Ss slt_,t
l l I
. I
'., I t l
I
:I.
, I
i,-,,_,,-,'J " • | _.
1
|
IEXPQR'rER
: --
!
I
Et
._ ' I "'Pur_h_l'e
I I
'
• _ GOad,
,
l '
;;
;
I
_'
I
_--IPRoouc¢"sl'
"
:
I Loan 7.
I
i :.o
: '
;: : ;
. I
L/C I
2. A_gt _n t./C
I
I
,. :,._zo, = _l '/ '
,
='='"'='""'"="'""""" Cr,P=l:ton o_ OeO¢
;
,
I euve,I ,
••
'
:
,
"
.
I Z.. F'x
L
I . ..
,
L. 11 ] _,..L
.,
Ouar'an_ee P,'e_h I amen_ I 'I _. Pregl_t
"
): ''-1_ l_mle._ll:
_CG_
Guarantee
l
8. Re_ t nar_¢ed l.Oan
!
. EXPORT
:
OEVELOFMENr ........ .... iFX --
lI I ! l
F'U.N,D . , •
:l t
_RI'
E:T I
'=
;
220 Step 9 -
IE
uses cash to purchase raw material from local
suppliers
and
begins the manufacturing process.
It
is
important
to
point out
that
under
this
system,
indirect
exporters WhO may be small producers have ready access to the rediscounting window of the Central Bank. guarantee
scheme
Moreover, the existence of a
encourages banks to provide loans to
well-functioning small
and
medium
exporters.
B.
EValuation of the Export Financin9 System
AS may be gathered from Chapter V, the export financing system in Philippines scheme,
consists
financing
of
three
scheme,
and
major the
components, guarantee
namely:
scheme.
the
refinancing
Each
of
these
Bank
has
been
particular,
non-
components will be evaluated below.
1.0
As pursuing
Befinancing Scheme of the Central Bank
indicated an
traditional eligible
in
the preceding chapter, the Central
export-oriented rediscounting policy. exports
In
are preferred over traditional exports.
Like
other
papers, export loans (whether pre-shipment or post-shipment)
can
be rediscounted at 8[_percen.tof the loan value with a rediscount rate that varies with the market rate. for another 90 days.
The maturity period is 90 days and
renewable
Rediscounting can be processed within one day if
papers
are
in order and are submitted before noon to the main
branch
office of the Central Bank.
office
With the open market operation of
Central Bank, rediscounts on export loans will not be severely affected any change in monetary policy.
all or the by
All these ensure quick and automatic access
of exports to the rediscounting facility of the Central Bank.
221
the
However,
the facility
context
of the framework
underdeveloped
he rediscounted
At present, is
because
alternative
the banking of
facility
rediscounting
availment
started the
to pick up.
a certain
rate.
and post,shipment
terms
depreciation
implications
by
on reserve
money.
1990 is I_86'4B, whereas the same year
four percent
the Central
is only _26.4B.
while the forecasted
pre-
pre- and post-shipment
in 1982 at 68 percent.
direct
This
those to
the
the
low
that
assuming
very
well
without
and post-shipment
financing
exceeded
suggest
the reserve money
money
liquid
on an outstanding
This can facility
target
a be
serious
target
for
financing is
for
_IIOB,
is only _41B.
to co_%_ercial banks Since
of
has already
in 1988 III
of
In the
to reserve
then it _went down to
only
in 1987.
The effectiveness
only
low.
and _167.2B,
In 1992, the reserve
money was achieved
a wide
exports
_72.8B
For instance,
ratio of total rediscount
reaching
they
The economy
a year.
1980s, the highest
about seven percent
because
that the generally
requirements
Bank rediscounting
the forecasted
moment,
availability
than
in Chapter
financing
peso
accommodated
better
presented
in 1990, 1995 and 2000 will be _29.4B, of
The
degree has contributed
basis
rate
in
remain
As of this by banks
liquid.
is only temporary.
Our forecasts
will
rate is relatively
But it is believed
system
L/Cs
THUS,
Bank.
availment
with
policy.
less preference
is generally
loans
exporters.
domestic
In fact, actual merchandise
level.
the pre-shipment
system
to
of the banking
targeted
are given
with the Central
rediscounting
situation
rediscounting
the rediscounting
sources
only to direct
laid out earlier,
under the present
loans of indirect exporters cannot
is limited
of the rediscounting
range of exporters
exporters.
But even
facility
is weakened
of the Central
by its policy
its effectiveness
in
Bank
in
to accommodate
supporting
direct
222 exporters
is
exporters.
of
undermined by banks _ attitude towards
credit
to
This will be discussed below.
2.0
Financing Scheme
The
commercial banking syst_
funds
for
international Philippines processing The
extending
the export sector.
is the most important potential
banking
are
at
varying
basically
procedure
All ccmaercial degree.
conservative.
banks
are
Commercial
Table VI.I
source
engaged
banks
outlines
commonly followed by banks and the
in
in
the
the
loan
approval
rates.
information contained in this table is based on an empirical study
Lapar are
and Graham (1988). Note that not all those who approached the given
prospective
a
On
loan application form.
The branch
manager
who
bank
interviews
borrowers determines who should be given an application
form.
the average, 58 out of 100 loan applicants who approached the bank
given loan applications.
by
are
Some of these loan applications are processed and
approved by the branch manager while others are sent to the main office for approval.
Banks
The overall approval rate is 53 percent.
have strong preference for short-term loans and
collateral-oriented. collateral with
the
As
reported
by
sample
banks,
are
commonly-accepted
are real estate mortgage and deposits/placements bank.
Some
collateral-short.
of the exporters did borrow
from
of
banks
obtained
wit_
banks simply means that the borrowers can easily obtain a
were relatively small.
Having a good credit
yet they are still required to present a collateral.
with
exporters but
So, they selected only _nall export orders since
they
exporters
basically
are loans
track
record
loan,â&#x20AC;˘ but
When new orders come,
either ask their customers to wait until such time
they
comply
the prior order and pay the bank so that they can use again the
same
223
Table VI.I BANKS' APPROVAL RATES APPLICAITONS RECEIVED
COMMERCIAL 10Z LOAN
FOR EVERY IN 1986
Screening i.
No.
of
2.
No. of (total
loan
applicants
who
approached
the
bank
loan applicants given and submitted no. of loan applications received).
loan
for
a
loan
108
applications 58
Processing 3a.
No. of loan applications total loan applications Approval
rate
No. of loan approval Dy head office received•from
at•the
approved received
manager's
level,
applications recommended the Board of Directors (for PDBs and KBs) out loanapplicants.
No. of loan applications approved or head office out of total loan the manager. Approval respect Approval
6.
rate by BOD•or to the manager's rate
in
Lapar
and
Graham
in
in of
stage
%
of 35
(3.a/2).
by the manager for (for RBs) or the area or of total loan applications
60
• 18
by the BOD applications
or at the area recommended by 18
at the area or •recommendation,
processing
Overall approval rate, approved *3a + 4b)/no. the bank for a loan.
Source:
by the manager out from loan applicants.
(3a
head in +
office _ with (4b/4a)
4b/2)
% = total no. o£ loan applications
loan who
100 91
applications approached 53
(19_8).
224 collateral exporters
for borrowing, we
intervie_t_d admitted
loan requests the
or simply turn down the order.
because
that hanks
they cannot present
collateral
has constrained
exporters
exporters
not borrow
turned down
additional
fact that they had valid L/Cs or l_)s.
Not few
Indeed,
to raise
their
of
additional
collateral
inspite
the lack of or
funds
the
to finance
of
limited
production
for exports.
Other present rate
an acceptable
very high
products. export of
_0.80
collateral.
This
Accordingly,
Other charges
per transaction.
therefore
Still others
is over and above what banks
transaction.
lower
from banks
because
they
could
find the prevailing
that would have an impact on the competitiveness
their L/Cs.
_2,000
did
than
the
a transaction
banks
charge
including
Since exporters B&P reference worth $5,000
normally
etc.,
are usually
rate for
lending of
their
for
every
_500 for advising
telex, mail,
implies
charge
exporters
could go up
paid between
every
a total
not
dollar
to
_0.50
they
cost of _5,000
-
earn, to
an
exporter.
There regulations example
is
a
tend
general to
of this which
perception
reward banks
among
exporters
and penalize
is taken from PHILFOODEX
that
exporters.
NEWS
Central Below
Bank is
(January 1989).
"Do you know how much you are losing because of the Bank ruling that requires us to pay our freight in pesos of dollars?
Central instead
Take a very recent example. Two Philfoodex members recently shipped their products abroad, incurring a freight cost of $1,350. But instead of allowing the exporters to just deduct the freight cost from the dollar proceeds of the sale, which could have been simpler, the rules required them instead to first get the peso proceeds of their dollar earnings at _21.25.
an
225 And then, they were made to turn around and, using the pesos that they got, to buy dollars to be used to pay for the freight. There, s nothing wrong about that, except•that when they bought the dollars these •cost _21.94. So from this transaction alone, the two exporters• lost _931.50. And this happened without even leaving the same bank from which they collected the dollar payments of their foreign buyers. Apparently, the CB wants But at what cost?"
This directly
is
of
the reasons
pay the freight
Thus,
in
bottlenecks whole.
one
the
seems
the banks
why
to earn extra
exporters
from • this.
prefer
that
importers
cost.
context
of our framework
to lie on the attitude
Even if tl_e Central
Bank
such loans are not forthcoming
is ready
then
above,
of banks
one
of
towards
the
lending
to •refinance export
its rediscounting
greatest as
loans,
facility
is
a
but if
rendered
ineffective.
The
special
bottleneck. been
More
left
out
enterprises. merely banks
the
the
to do.
case of
introduced
they have been addressed
banking
the point
system,
such
as
of the export
and export-oriented
that almost •all •of these programs study
ease
up
this
to those
who
have
small
and
to •partly
sector. however,
enterprises.
medium
institutions
of these programs
(i.e., ALF and IGLF} are well-endowed,
IGLF and ALF, a project
to
by non-financial
the resources
requirements
adds to the cost of borrowing
the
that they were designed
However,
d_aestic-oriented
noteworthy
have been
most of them are managed
to the financing
two programs
the
by
That
failed
programs
specifically,
underscores
relative
both
lending
do are
what small
Admittedly, they cater is
also
require hard collateral.
In
is required
from these programs.
which
It
to
unnecessarily
226 In these
the
programs
clientele been the
preceding
is
noted.
check whether
whom we
interviewed
their borrowers
of their criteria
can present
of the L/Cs, exporters
special
credit
While however
who probably
said
from other
loan applications.
as collateral
are concerned.
it is also worthwhile lending
could
of
at all
to
special
have catered
the
unnecessarily
raise
aS
a certain these
programs,
same
small
it
financing
credit
to
since
Thus,
insofar as the
to note that obtaining
institutions
of some
So long
from these programs.
out that these
exceeded
and can assign
range of exporters
could
have
credit programs
of a wider
fragmented,
programs
Officers
impact
and
wider
have already
program.
of
a
that they do not bother
can borrow
has been pointed
rates
reached
could have limited
small
different
_ave
programs
it
borrowers,
be that these
borrowed
assets
portion
requirements
It could
for approving
unincumbered
availment
they
loan limit from a particular
programs
high
Whether
the same set of borrowers
individual
is not part
been
the impressively
indeed questionable.
serving
these
they
have
chapter,
set
loans the
of from
cost
of
of
the
borrowing.
Recently, guarantee
programs,
(QGFB). while
have
the ratio of agricultural during
guaranteed
(1988) evaluated
namely GFSME,
All three programs
declined
the period
This
programs
did
agricultural
suggests not
result
sector.
negligible
in
Table
loans of
the ratio of
loans granted
funds
net
to
additions
Board
VI.2 shows
that banks
agricultural
loans
during
from
loans
and non-participating
Fund
commercial
increased
the additional
Participating
difference
window.
loans to total
1981 to 1986,
that
the effectiveness
IGLF, and Quedan Guarantee
liquidity
to total agricultural
period.
showed
Magno and Meyer
the granted
_ercial
in the ratio of their agricultural
the
same
guarantee to
the banks
loans
to
227
Table RATIO OF AGRICULTURAL LOANS AGRICULTURAL LOANS GUARANTEED GRANTED, COMMERCIAL
VI.2 TO TOTAL LOANS AND RATIO OF TO TOTAL AGRICULTURAL LOANS BANKS, 1981-1986
Ave rage
Ratio
(%7 i.
i.
Ratio •total
of agricultural loans
loans
Ratio of agricultural loans guaranteed to total agricultural loans granted
Source:
Magno
and
Meyer
(1988)
Average Growth
Annual Rate
(%)
to 7.3
-3.0
2.9
29.8
to
228 total
loan portfolio,
again suggesting
the ineffectiveness
of the guarantee
programs.
The 0._8
gearing
in
1984,
guarantee
In
our
in 1988.
Moreover,
that
the guarantee
it
one
implies
(i.e.,
that
the
sanple banks
of
the
the ratio
Philguarantee' s
effectiveness
facilities
availed
of guarantee_
have
for
been
loans
these
to
banks.
considered
less
to banks.
and
medium
is highly
provided
tb overseas
is compounded
outstanding total
of
SMI program
losses
export
desire
virtually
gearing because
incurred
have practically qualification
of
in
lack the
of
which
its
of
to attain a zero default
Central
it
Thus,
accounts
Meanwhile,
the
funds.
capital. in
for only
guarantees
which, is only two percent
rediscounts
to
guarantee
requirements.
exporters.
to _38.4M
by
facilities
dissipated
only 15 exporters
the total number
as of 1988 amounted
Philguarantee's
determined
contractors
was servicing
outstanding
The
capitalized,
guarantee
has been weakened
by its stringent
1988, Philguarantee percent
in providing
scale enterprises
it
0.3
below
loans had not been more than two percent
Although
This
1986).
only three out of seven
facilities
suggests
useful
small
in 1985 and 0.34 in
survey,
export
This
0.30
of GFSME has been substantially
fund had not been fully utilized.
guarantee total
ratio
Bank.
rate has rendered
of
the Thus,
the EGCP-
useless.
ratio of Philguarantee's it does not have
base
it on its readily
will
arrive at a gearing
available
EGCP-SMI program
a separate
liquid
fund.
resources
ratio of less than one.
But
of about
could
not
be
if we
were
to
_2_0M,
t_en
we
229 In
general,
example, loan
it
have
and
banks
is
requirements
loan
consuming.
and
to
and
guarantee
involve
of credit
a
Meyer
programs
more
paperwork.
institution
the possibility
For
service
(see Magno
First,
by the guaranteeing
loans to reduce
. .
time
more man-hours
than an ordinary
cumbersome
are • mandated
guaranteed
..
loan
is due to the •following reasons:
numerous
solely to
the GFSME program
This
Second,
a guaranteed
takes an average• of 308 percent
under
1988).
servicing
to
monitor
being
diverted
,...
other uses.
And lastly,••banks spend
so much
time in seeing
to it
that
.. _..
borrowers
would
not •default for fear of being . ,
concerned. program
As noted by Magno
brings
extra
value
•
not
program
consider
This
program,
one must
limited
no matter
suggests
inescapable
they
to
a
do
agency
guarantee
not
actually
stands
ready to provide
ineffectiveness
of the special
bottleneck.
of the existing
export
financing
autcmatic
lending
so
any
banks
do
long
as
of
a
severely
limited.
should
directly
system
frc_ our
programs
evaluation
While
the
refinancing
of• commercial
system.
othat
the effectiveness
to finance.
and quick
Indirect exporters financing
a strong•
on the part of exporters.
access
collateral-orientedness
Thus,
funded, will be
that can be drawn
Bank
of the fact
In the Philippines,
•to offer,
collateral
conclusion
of having
to collateral.
that an export
do not have automatic
the
of banks.
how well
exports
as a major
even if
ithe importance
collateral
that
loans,
accredited
not lose sight
as a substitute
the lack of or limited
The
being
to the banks
needs the support
guarantee
somehow
address
however,
lack or have
guarantee
and Meyer,
there is a consensus regarding program,
exporters
the
in the program.
While
guarantee
by
. ..
participate
guarantee
blacklisted
.,..
banks
and guarantee
suffer most
and
Central
of
export relative
schemes
from the
•is
serve
weaknesses
230 VII.
CONCLUSIONS AND AGENDA FOR POLICY AND INSTITUTIONAL RE_)I_MS
After a two-year recession (i.e., 1984-85) the Philippine economy resumed 1988.
its
growth path.
It achieved a solid growth of
6.7
has
percent
More importantly, the level of exports increased to $7.1B in
slightly
exceeding
remarkable Asian
the
targeted
level
for
that
year.
1988,
Despite
this
performance, the Philippines has been lagging way behind
countries.
merchandise
For
instance,
in
1970,
the
in
value
of
other
Philippine
exports was $1.1B, much higher than Korea's $835M exports
Thailand's
$?10M exports.
and
Thailand
were
biased
performance
In 1988, however, merchandise exports of
reached $59.5B and $16B, respectively. against
and
Past
exports had largely contributed
of Philippine exports.
to
Korea
policies the
that
lackluster
Definitely, the Philippines has a
lot
of catching up to do in the next few years.
The new government has increased its intensity in pushing further development
of
the
export sector.
The export drive se_ms
to
be
the
well-
coordinated by the International _Yade Group of the Department of Trade and Industry.
Gains realized in the past, such as the increasing share of
non-traditional diversification,
exports
various
been
exports
incentives
and
greater
maintained and improved
government programs designed to promote
Significant
reforms,
have
to â&#x20AC;˘ total
as
included
like
in
the Omnibus Investment
market
demonstrated
non-traditional
policy changes, like trade liberalization and the
the
in
exports.
new
fiscal
Code,
and
ingtitutional
licensing more common bonded warehouses
and
the
processing center for exports, have been introduced.
one-stop
Notwithstanding these
new developments, serious obstacles to the rapid develolm_nt of the sector still remain.
export
231 First of all, Philippine
exports
competitors,
imported
are
exports
substitute
and above the more
seem to be not accorded For instance,
for the imported general
Another
the Philippines,
the procedural
other schemes.
countries
the
is
protection
not
system
of
those
for intermediate
to compensate
in
to submit a the
inputs
for the anti-export
.import In
relative
than those
In general,
over
of _;s.
for HMWs are simpler
these are more stringent
of
is
complete
to the administration
bond.
located
non-availability
on imports pending
requirements
syst_
except
as regards
This condition
using H_4_s are not required
not enough
the
export
In particular, provide
system
an equal
is generally
credit programs
other
"formula
combination and
BOI/EPZA
bias
some policy
the export
financing
system
the refinancing status
seems
facility
to
of
the
weak
and
of the Central
to indirect exporters.
conservative
be
The
The
guarantee
ineffective.
and institutional
sector.
Bank
commercial
and is collateral-oriented.
are fra%_nented and small. And the credit
has been generally
Thus, support
all exporters
relates
and to post a re-export
lastly,
ineffective.
special
their
system.
And
banking
However,
exemptiondrawback
incentives
does
example
where exporters
of manufacture"
The
vis-a-vis
a free trade status
raw material.
restrictions
liberalization.
of
competitiveness
EPZ are asked to get a BOI certification
domestic
to
their
r_--cdsto be reconsidered.
Thailand.
raw materials.
the
rate policy
losing
specifically
Second,
in
the exchange
reforms
should be
introduced
to
232
A.
Reforms
Many status (1988) (i)
of
the recommendations
for the export and
Rhee
abolish
free imports;
for accessing
currently the
facilities
where
of
input
electronics,
NIST shall regularly
coefficients
update and widely where
requirement
should
be dispensed
countries
wherein
imported. using
certificates otherwise
the
to all
indirect exporters
should
B_s
However, a
thorny
This
to
their
is most
In
such
as
coefficients.
arrive
at
input
trade secrets, in
of manufacture"
food
some
require as
such
the
input mix,
it is even better not to
to submit a "formula
to
issue.
apparent
"item has different
other
may be maintained.
the input
difficult
future.
than
obtained,
the requirement
disseminate
with.
in the
the requirement
easily
have to divulge
almost every Perhaps,
to increase
at
what
of all
other
are doing.
Finally, exporters
All are:
should be provided
remains
it is extremely
all exporters
exporters
tax
is a lot simpler
can be
furniture,
unless
sector
is expected
manufacture"
rattan
commodities
are
in
non-availability
to exporters,
Hence,
to exporters.
coefficients
which
trade
recommendations
(3) replace
such facilities
available
"formula
commodities
export
added.
free
in detail
abolish
These privileges
export value
procedure
in
(2)
a
to enjoy such privileges.
mechanisms
But
discussed
the policy
for exporters;
to zero.
for BMWs
garments,
have been already
to duty
The demand
submit
here to achieve
(4) limit duty exemption
be reduced
that generate
be allowed
The
and
advanced
In particular,
licenses
access
with cash rebates; duty should
sector
(1984).
import
test for gaining
firms
Achie, vin9 a Free Trade Status on the Ex_ort Sector
for
it
be widely
is
imperative
disseminated.
that
incentives/privileges
In our survey,
results
given
to
show that several
233
exporters regard,
were not a_re
â&#x20AC;˘ s_inars/workshops
offices
of
the
exporters' indirect
There
the
exports' is the
financing
share
policy
institutional
â&#x20AC;˘and
to financing.
not prescribed, entire
a generally
economy. policy
external
debt
overhang
domestic
domestic exports
currency
interest
on two counts.
interest
rates
exports.
As
because
of
of competitors shown
the
dc_stic
currency
compared
with
exporters
First,
prevailing makes
could have plowed
percent
given
in
interest
currency.
back to finance
issue
of
loans for
is
the
In
using
view
of
the
the
pressure
pressure
exists,
This adversely
affects
this
rates
many exporters Second,
relatively
higher
export
desirable
reserves,
interest
and also reduces
Chapter
rate for export
Bank
of
2000.
the
is certainly
rate.
moment,
total
up to the year
While
exports
the
to
the c_titiveness
results,
Philippine
those of competitors
five
to remain high.
lessens
high
include
only about
'international
a high domestic
in our survey
to
with
At
the Central
remains strong.
rates are likely
regional
financing.
a preferential
the domestic
and !owgross
be taken
should address
lower interest
to defend
the
to Export Financing
10 percent
As of this moment,
rate
In this
collaboration
requirement
reforms
While
in
by
In our forecast
financing
will not exceed
access
the
comprises
requirements
conducted
however,
Access
requirements.
of post-shipment
to exports.
program.
Automatic
requir_nent
financing
interest
on
should,
in the dissemination
for Assuring
the total export
â&#x20AC;˘ The
Measures
given
Industry
is a need to focus on pre-shipment
post-shipment
financing
of Trade and
associations.
exporters
incentives
should be regularly
Department
B. Reforms.
III,
at all about
export volume
vis-a-vis of
did an more
Philippine not
borrow
overvalued expensive
earnings of
the
which
production.
234 There
is therefore
policies.
It
should
competitiveness
direct
to reconsider
be
noted
the Central
exporters.
It is desirable
to such facility.
would
provide
financing.
For this policy
modernize
the export
elements export
to
purchase
into
domestically intermediate
which
produced inputs
that
(FIL), and
its
access only be
it is expected
exporters
financing
access
to
necessary
to
One of t_e
key
is
value
inputs
disaggregating
added
(DIL),
(iv) purchase
given
that banks
equal
it is however
generate
intermediate
lost
exporters
in the Philippines. export
(i)
has
provides
indirect
and indirect
pre-shipment
those
facility
this policy,
system
peso
rate
1984.
to be effective,
financing
modernizing
loans
imported
With
both direct
rate and exchange
that the Philippine
Bank refinancing
equal access also
the interest
â&#x20AC;˘against the Thai baht since
At present, to
a need
(VAL),
(ii)
(iii)
purchase
domestically
produced
2_V finished
goods
production
financing
for domestic in
(DOL). makes
purchase
the preceding
The separation it possible
two chapters,
The development
automatic
availability
of short-term
VAL
makes
outputs
exporters.
it possible
financed
mechanisms. export banks
It
financing are
overly
Moreover, to make
by export
loans through
(1984).
L/C
L/C
noted have
system
collateral,
with
loan
is the the
fact
status
to from
inputs
or
disbursement
that
creation
a
assures
that one of the main bottlenecks
With
system
of FIL, DIL and DOL
the automatic
in the Philippines
from
As
does not
loans and free trade
the separation
collateral-oriented.
21__/ See Rhee
export
DOL
inputs.
virtually
of the domestic
a quasi-physical
should be noted system
for imported
the Philippines
L/C system.
and
to i_{olement a domestic
and import L/C system
domestic
all indirect
of DIL from FIL
of
in
the
commercial a
quasi-
235 physical credit
collateral, needs
indirect
of
it
all
is hoped
qualified
modernization
of pre-shipment
allay fears of the Central
Bank
its
could
rediscounting As pointed
actual
export
of
window
out by All
order
performance. exceed
The
The
credit
financial
Bank
programs.
of
function,
to
the
direct
or
refinancing
branches
loans
either made
mentioned
small
and
government
export
gone
Philippines
by
credits
banks
of
of export
order.
he
based on FIL,
A loan given
to
monetary
loans would
order
also
access
the
loans, VAL + DIL +
its
an past
cannot
for purchase
export
taxation,
be
responsibility transferred
order.
it
of
would
to
and the Agricultural
government
Loan
to
the
Fund to
the
IGLF should do away
with
anyway,
concentrate
facility
on-lend
managing
IGLF should he transferred
and instead
DBP is in a better position
directly
system could
indirect exporters
into value-added
should
Specifically,
production
can
categories
Such
is not utilized
function.
and
financing
this scheme.
the Philippines.
which
product
should relinquish
Bank of the
Bank
financial
are
the value of the associated
has already
institutions.
Development
The
they
(backed by an L/C) or an expected
easy to implenent
Central
special
export
respond
in losing control
(1988), the basis
DOL cannot exceed
be relatively
export
result
sum of export
Since the Philippines
packing
whether
that providing
the value of the associated
domestic
Land
exporters,
banks
exporters.
The
base.
that cona_rcial
for
its
to implement
exporters.
to exporters
or
falling
in any
of
the
export
credit
programs
guarantee
the
Its
quickly four
on
its
export regional
refinance
export
loan
above.
fragmented agencies
should
not be continued.
managed For
by
non-
efficiency,
236 they
should
be
institution
consolidated
which
has
and
transferred
the comparative
to
advantage
a
regular
in
financial
managing
a
credit
program.
One system
of the key elements
is a strong pre-shipment
in
the preceding
and
ineffective.
all, the
chapter, There
there should main guarantee
define
their
noted
in
oriented
Chapter
plan
provision
of
withdraw
its
converted the
this
to abandon
any
and has plans
it.
sit down
GFSME
First
of
guarantee
to expand
as
together
overlapping.
It to
to was
export-
its exposure
to
••
and interest
should
should be extended
rate subsidy
all its resources
it has been proposed
function,
weak
and Philguarantee
both should
to prevent
its liquidity
Since
earlier
should to
that
pick
the IGLF
be ready
to
up
to both
agricultural
the and
loans.
GFSME
is
view• of
into a regular for greater
only
through,
a
its huge
government autonomy
difficul_t though since
pushes
GFSME
As noted
se_n to be
should be supported.
its guarantee
In
President
relatively
However,
industries
guarantee
present,
corporation.
making
finance
schemes.
to strengthen
right away so that it •can direct
non-agricultural
At
a need
export
programs
V that GFSME has been providing
guarantee.
Thus,
guarantee
guarantee
statement
institutions.
This plan
impl_nented
slack.
is therefore
pre-shipment
finance
the existing
be a policy
agro-processing
•GFSME's
export
own areas of coverage
this sector.
be
of an effective
program
of
LIVHCOR,
responsibilities, corporation
it needs
it is desirable
GFSME
attached
and flexibility.
be
to the Office
of
This
ratio
mother
should
a congressional
that the
•the
is going action.
of
to
be
If ever
government
to
237 private
sector
incorporated
should
of
risks.
GFSME
are
For
the
implement
proposed
of 85 percent
bank
guarantee
small
the
on
all
and
large
(i .e.,
small
size
of the outstanding
principal
Philguarantee
The
task
is to finally which
in
its resources
first
transfer
firms
are
effect
sufficient
finance
for exporters
is a mere
should be
to support
credit earlier
includes
the _165.5M
growth
government
being negotiated
now by the government
used
Philguarantee's
capital.
than
financially
to the
of
National
E.O.
of First
No.
which
and that
is
insured resources
agencies
which
to Philguarantee. from TF.
of EIMP should
64.
Washington
of _400M
from EI)AP and _16.5M in behalf
guarantee
Philguarantee
assets
It is recommended
to
interest.
is
of guaranteed
out be transferred
from EIMP, _20M
it
capital
should
position
rehabilitating
The study
of non-financial
to be phased
and accrued
However,
an additional
a _ealthy
maximum
implementation
increased.
from 1989 to 1993.
programs
suggested
in
a
GFSME
bank similar
is in a better
its non-performing
(1988) has recommended
deemed
industries,
line with
GFSME.
to increase
of
percent
line of _25M per participating
than
export
85
than _5M and medium
incorporated.
Associates
of
Board.
Philguarantee 's definition
is already
Second,
Management
its definition
it
Government
Directors
coverage of
because
therefore
of
agro-processing
terms of flexibility,
weaker
of
Board
of _5M but less than _20M).
export-or.iented
Philguarantee's
In
As regards
should adopt
a bank guarantee
coverage
the
its guarantee
those with assets of less
those with assets
GFSME
maintain
credit
enterprises, firms
in
GFSME be the same as the present
GFSME types
representatives
we This
The 짜5B
instead
be
238
The from
maximum
guarantee
70 percent
coverage
of outstanding
of Philguarantee
should
be
increased
credit
to 85 percent
to align
it with
that
was given
the authority
to grant
guarantees
of GFSME's.
Recently, less
than
President
to
_50M
per
beneficiary
of the Philippines.
Annexes credit
Philguarantee
D
and E.
guarantee
institution,
commercial
exporters.
It have
has been
two private
president
recovering
strengthened
further
collections.
GFSME should
Whether
be
be
and
of Directors
it
from
should
to do away
be
open
division
This
is important
exporters exporters,
of
along
the lines
loan default,
association particularly
especially
GFSME
in building
with
reduced
preferably
one
association
of
loan
recoveries
directly be
take
the
continued
to manage
and
claims
accredftation
to endorse
an
a profile
and
medium-size
the
banks.
To
should
Bank,
facility
loan
financing
above.
of
guarantee
export
if the export
and Philguarantee
of
of the Central
the export
suggested
the small-and
has
such division.
InStead,
to all banks who wish
modernized
occurrence
institutions.
export
should be
that
This
likewise maintain
in
desirable.
to
a separate
the
structure
the
started
loans.
truly
representatives, one
of
as shown
a
organizational
banks are stable or not should be the concern
guarantee. to
by having
worthwhile
not that of guarantee should
up new initiatives
is definitely
when
approval
towards becoming
sector
system
tremendously of
would
itself
the
shown in the case of Philguarantee
improved
It
lined
Philguarantee's
banking
A full-time
responsibility
seeking
The number of the Board
from seven to five, with the
Ithas
As it prepares
be overhauled.
from
without
of
for
system
minimize link
up
creditworthiness exporters.
a is the
with of
Exporters
239 know
very
well
exporters
As
be
recommendations
gathered
have
improving
focused
the guarantee
financing does
reproduced
the figures
also estimated
1989
to
2000
â&#x20AC;˘depreciation these
system.
These
assigning
a
At
is
that
the
problem.
banks'
becoming
direct
them through
14 percent
suggests
cover the d_nand such resources
collateral
and are considered
above,
growth
sub-
national
as well
level,
as to
export we
have
requirement.
We
loans and discounts
for
financing
rate
and
a 22/
four A
that the
resources
for export
financing. the
who typically
risky
the
bottlenecks
tDe U.S. dollar.
and medium-exporters
of
reforms
major
have not flowed to
highly
most
In Table VII.l,
outstanding
rate of the pesoâ&#x20AC;˘ vis-a-vis
the small-
percent
comparison
of
_rcial
The
problem,
export
sector,
have
insufficient
the country
in its export
by banks.â&#x20AC;˘
Scoi_e for ADB Assistance
There are some areas by which ADB can assist One
Goverr_nent. is
with
are the
for pre- and post-export
especially
drive.
for
and institutional
earlier.
co_aercial
can very well
C.
contact
discussion
on policy
two sets of figures
however,
the
not seem to be a major
have
banks
potential
in constant
from
identified
financing
of
the
or other means.
may
export
who have
since they have been
contracting
on
producers
hostile
is
to
continue
The export towards
it.
its
policy
sector cannot
dialogue
thrive well
The discussions
should
with
the
if the policy
Philippine environment
focus on the ways by
which
22__/ The 14 percent was the average growth rate of loans and discounts during the period 1980-84 (see Table V.5). The years 1985-87 were excluded because of the abnormal drop in loans and discounts during this period that was mainly brought about by the transfer of non-performing assets of the Philippine National Bank to the National Government.
240 Table VII.I BANKS' LOANS AND DISCOUNT, AND POST-EXPURT FINANCING
PROJECTED AND PRE-
Pro3ected Exchange Rate (P/US$) i/
Year
1989 1990 1991 1992 1993 •1994 1995 1996 1997 1998 199_ 2000
Banks' Loans and Discounts
21.93 22.81 23.72 24.b7 25.66 26.69 27.75 28.86 30.02 31.22 32.47 33.77
2/
4.7 5.1 5.6 6.1 •6.7 7.4 8.1 8._ 9.7 10.6 £1.7 12.8
Pre- and Post Export Financing Requirement 3/
1.15 1.29 1.45 1.65 1.92 2.26 •2.62 2.97 3.40 3.85 4.37 4.95
i/ The
assumed
depreciation
rate
is
the
rate
4 percent
per
2/ Assumed
to
De
growing
3/ From
Table
VI.9.
at
of
14
percent.
year.
241 exports
can
provide the
be given
the Philippine
pre-shipment
directed
to
private
export
_echanisms
committee
who
pre-shipment
Still
desire
financial
another
assistance.
export
The technical
assistance
know-how
of the staff of these guarantee
would
include
procedures regards
improvement
for applications
financial
long-term
soft
assistance,
privatized.
development
aimed
in
and claims,
ADB may either
and Philguarantee.
Investigation
Bureau
and
involved
in the the
in
its
with technical
and
country
directed
at
involves
programs.
This
processing
and litigation. invest
in or
is now
As
provide
Additionally,
(CIB) which
two
the technical
The other
dissemination,
directly
be
agencies
formulate
at improving
and collection
to
of
the guarantee
{nformation
should
the progress
may be
institutions.
for delivering
loans to both GFSME
may buy shares of the Credit
and monitor
and Philguarantee
One is human resource
in the procedure
system,
ADB can assist the
levels.
improvement
issues
is
modernizing
assistance
the
financing
area
in
government
study
such program,
both GFSME
The
various
will
Another
assistance
system.
way by which
is toprovide
status."
with technical
representing
associations
the
neutral
financing
for implementing
program. export
Government
export
a
modernizing
an "extended
ADB being
243 REFERENCES
Ali,
Ifzal. "Manufactured Exports from the Philippines: A Sector Profile and an Agenda for Reform." Asian Develoi:rnentBank Economic Staff Paper No.4,
September
1988.
Balassa, Bela. "Exports and Economic Growth: •Further •Development." Journal of Development Economics. Amsterdam, Netherlands: Elsevier Science • Publishers •,June 1978. Bnagwati, Jagdish. Anatomy and Consequences of Exchange Control Cambridge, Massachusettes: Ballinger Publishing, 1978. Department of Trade and Industry. 4), 1988. First
Philippine
Exporters'
Manual
Washington Associates. "Report on Philippine Structure." Prepared for the Industry and Energy Region, the World Bank, September 1988.
Regimes.
(Vol_aes
i-
Export Finance Operatlon Asia
Gregorio, Rosario G. "An Economic Analysis of the Effects of Philippine Fiscal Incentives in the Philippines." Industrial Promotion Policies in the Philippines. Makati: Philippine Institute for Development
•Studies, 1979.
Krueger, Anne. • FOreign Trade Re_imes and Economic Development: zation Attempts and Consecluences. Cambridge, Massachusettes: Publishing, 1978. Lamberte, Mari0 B. "The Impact of Special Credit Programs for •h_loyment and Productivity." Unpublished Monograph, 1989.
LiberaliBallinger
SMEs
on
Lapar, Ma. Lucila A. and Douglas H. Graham. "Credit Rationing Under a• Deregulated Financial System." PIDS Working Paper Series No. 88-19. Makati: Philippine Institute for Development Studies, October 1988. Magno, Marife and Richard L. Meyer. "Guarantee Sche_nes: An Alternative to the Supervised Credit Program." PIDS Working Paper Series No. 88-23. Makati: Philippine Institute for Development Studies, October 1988. Manasan, Rosario G. "Impact of BOI Incentives on Rate of Prices and Relative Factor Use: A Comparative•Analysis Under the Omnibus Investments Code of 1981 (P.D.
Return, Factor of Incentives 1789) and the
Investment Policy Act (B.P. 391)." PIDS Staff Paper Series No. 86-01. Makati: Philippine Institute for Development Studies, 1986. . "A Review of Investment Incentives in ASEAN (A paper presented at the Federation of ASEAN Econallic Conference, Penang, Malaysia, November 17-19, 1988).
Countries." Associations
Medalla, Erlinda. "Assessment of the Tariff Reform Program and Trade Liberalization. PIDS -Tariff Commission Staff Paper Series No. 86-01. Makati: Philippine Institute for Development Studies, 1986.
244 t, Michaely, M. Expotr and Growth: An Empirical Investigation." Journal of Development Econ_nics. Amsterdam, Netherlands: Elsevie_ Science Publishers , March 1977.
National Statistlcs Offlce. Forg_gn 1975_1987. Manila, 1975-1987.
Trade
Philfoodex
Food Exporters
News.
Manila:
Philippine
Statistics
of the
January
Philippines
1989.
Power, John H. and Erlinda M. MedaIia. "Trade Liberaliza_onoin the Philippines: Assessment of Progress and Agenda for Future Reform." PIDS-Tariff Commission Staff Paper Series No. 86-01. Makati: Phiiipplne Institute for_Deveiopme_tudies, 1986. _' ........ Power, John H. and Gerardo Sicat. Trade Policies". New York:ISf0rd Presidential
Action
Center
for Trade
The Philippine Industrial_zgtion and Union Press," 1971_ ..........
Facilitation,
Export Credit Insurance: A. Dynami_ Approach the Philippines. Manzfa,i5 September 1988.
Office
of the President.
to Ex_ort
Development ....
in
Rl_ee, Yung Wee. Framework for Export Policy and Admiqi@tration: Lessons from the East Asian Experience. WaShington: The World Bank, 1984. Tan,
Norma. "The Philippines." Makati:
Structure of PrOtection and Resource Flows in the Industrial Promotion Policies in the Philippines.
Philippine
The World Bank.
Institut e for Development
The Philippines_
Fina.ncial Sector
Studies,
1979.
Study. August 23, 1978.
245 Annex
LIST
I.
2.
3.
4.
5.
6.
7.
8.
9.
10.
ii.
12.
13.
14.
15.
OF
PERSONS/INSTITUTIONS
Mr. Armando Tetangco Director, DER-International Central Bank of the Philippines Ms. Purita Neri Director, DER-Domestic Central Bank of the Philippines Ms. Cecilia Arguelles Director, Loans and Discounts Central Bank of the Philippines Mr. Jose Tirona Director
VISITED
Department
Export Department Central Bank of the Philippines Mr. Jesus Ta_edo Executive Vice-President Philippine Mr. Manuel
Export and Batallones
Manager, Export Credit Philippine Export and Ms. Evanor Palac Assistant Director
Foreign
Loan
Guarantee
Corporation
Guarantee Corporation Foreign Loan Guarantee
CorpOration
.
Business Development and Marketing Group : Guarantee Fund for Small and Medium Enterprises Dr. Gloria Arroyo Undersecretary Department of Trade and Industry Mr. Victor Lim Vice-President Financial Executive Institute of thePhilippines Atty. Jose Hisamoto Officer-in-Charge Philippine Exporters Ms. Clara Lapus President Philippine Federation Mr. ReynaldQ Vergara President
Foundation
of
Food
Exporters
Philippine Chamber of Handicraft Ms. Dalisay Director Purchase Order Financing Mr. Manuel Colayco Executive Vice-President
Industries
Philippine International Trading Mr. Tony Honrado Assistant Managing Director Export Industrial Modernization Tecnnology & Livelihood Resource
Corporation
Program Center
A
246 16.
17.
18.
Mr. Nestor Director NEDA Region Mr. Ernesto Director
Mijares VII Balangue
NEDA Region XI Mr. Arnel Salva Division Chief Trade
Promotion
Bureau of Export Trade Ms. Minerva Franco Executive Director
Promotion
20.
21.
Product Development and Mr. Alfonso Villaverde Executive Director
19.
22. 23.
24. 25.
26. 27. 28.
29.
30.
Bureau of Export Ms. Ria Ramirez
Philippine Ms. Lina
Shippers' Batallones
Design
Center
of
the
Philippines
Council
investment One-Stop Action Ms. Becky Estalilla Marketing Manager Credit Information Bureau, Mr. Conrado San Juan APEX Financing Ms. Zeny Galatera Director
Center ,_ Inc.
Export Development Assistance Program Technology and Resource Livelihood Center Ms. Leny Abe!la Exponet Ms. Helen Alvarez International Coffee Organization Ms. Ma. Angelina Angeles Deputy Executive Director Philippine Trade Training Center Ms. Gigi Quiazon Office of Policy Research Department of Trade and InduStry Ms. Plavia Tan Assistant Director Loans and Credit Central Bank of
Department the Philippines
- Certifying
Agency
247 "
Annex
B
Organizational Chart D_.,_,,_To__D_._,DZ,_USTR_
----1 .................. I
I
-- m_ RELATIOI_IMOI IFICE@RO) -- _R._OliANDIRDkll1'1_yINFOPI44?IOM _ImlR _'Ii¢1 -- H_ ml_l,l_E I_mVELOFL_EMT ImmVllmB+'lm
I..... I ....... i ..... I l.................... I..................... ji .... -==-_r I ....................., 11..... -==o_,J 1
I
BUREAUOF PATENTBTIAB8_
I
I
--IWRI_AUOF EMRr.m T TRADEPslmm_':4:m Ilh|'_t) _ _i_, fWmIIE_tF%T.Cl
NE I'_L_INU
I_
-- INTIRNATIONA_._FPE_ _I|ATI_q _RTI _y IN0 _,GXIRC%, itCO._jk ) -- PI_IL_INE lU4IPl_II(pI_R_N_IL_
--_'_W-EOF_'I,_TIONALP_,NINa
- _#p_.a oF m_¢mk C_*_Cln NI _(X_I
L,ii_ll_l_lFI_QN_
I IIU
- I_REAt) _ IMI_T I|_VICEB (BI_ -- hL4T_At. INNT RIAL MANAI:_|R t R-I+LN III0 _'q*_CIL 1Nibi'rc)
<:.J
248
Z
,+=+
e'r
_ I
,
I
_, "-I
t_l I
i
¢:1
f.r_l
P"'¢;
.--, _._
C_l "-
'_=C_
i
I
Z:,CEL,
--"'
ql=_,',",-, _: i
I I
_
e,,ILl r,,, I..,3 7 ILl (Z: ILl "1
_
''
,0_ __ i,-'--,, tdJ ,'-,
-Z L£r'2 "='3=
,ol (--',','a
,-i
_
+___+
I '-"I
r.,_
,m,_
._,-,, t
I
u_
_
I..,,L_
,+,
p.,-
"--, ,-,,,.
I
i
,_ .--I
,,,
_
__.., ,,, I=3 1
,'-,, ,'Y" t,---_ t *,,O,. I.,-
,r-. __ "Jr_
Li,J
G.
I,bJ
_
-
.03 _ -_ ,E
..L,_.
n-. ,r'-i LLi "J ,'-',
L+--
,,
! _
¢_
+'1
c
;7 [_
"
•
P,,"
--
..
L.
I
"
-'J
I
"_ I
_ I
,,K:l
=¢1
"_
_'.
. 2 _'c
='_
l
__ ,,v., I _, old- I ewe I
c--,u_ _ r.=,. I,-_ ,--i _'_::
_
I
zcn
_
_ -0,,. L,,,+I J_;
"" I"_'-"-
m
i
nr -..-,,
,=.. 14.1
J _
.
=_
•
•
_
I
-
1 I'+ +i
I
I I
,,
z=_i
'--' 1
(._ L* "_" I -
l I
t+J (_.'1 "_"u J_, II LI,. i..+_
,-,---,l • o,
-C , Z C "¢
I- i
_..._ t.+.l-- (-'-,-
l
,¢:1
_ -JL._ ILl
Lr_ I
n"l .2: I e'_l
Lr3
_ --,
I
:).'".
:
V,l_ Cl
3 r+-'¢: ", I,--
;I r''
_,
I
:
-,',"
Ll.,I X 3;_
L._]
_
Z
,_
C._
_,, ,"d
L".)
-'r-4
"01:1 "¢I
L_ L+,.,I U_
'7 ILl "C
LI.I +3&
.--I
" u_
rr. I.+J_-_J
7 I_
L-,+') _
+". (Z'_ _,.
c,,,
C,
.+"_ t,J
,"v"
_ i--
" _
_
t"-, "_
--
,,,
I-.. ,,.v,.--,, e..,,,_l o I,=+,_ l,.,,(.3 _-0. I.l,.II.t,JLI, J O_ ,"', --i,--
u_
--
=-,' _
(.r3 ,o"J r,.,,. -._ I,_,,I (j t,,, Zh --I._
ct"J
t/')
I°l
°
=
0
L+J I,-Z .%: .,-
C's '+-'( ,._ ._
,%:
_..
III _
° _
'
_.1 u_l
,,,
°'
_
I h
,
[__ I---I --_
.J
-- , "Jr[ .2:]
L_I
_-
LL
"
-
_:
'J
-
L._|
i
,I
_-
T
I_
_J
"
I..._j
_..
_
.
,Z: --
W
_-,
_
Q_
W
• _
IL
_-
F,
•
_
_
_-_.
249
.
250 _nnex .1PHIL_PPll_E 5th
Tloor,
£xec_tlve
EXPOrt
_
Building
Center, T_n. Gil _. )takati, Metro Man£1a
FOREIGm LO_
_
E
CZ)RPO_TIOI_ l_yat
STATEMENT O_ _O_ME ARD _SES For The Three _uarters Ending _ept-_her {Unau_Lited}
Cozier
ttaka_
&venue
_0, 1988
INCOME Guarantee and Commitment Fees Interest on Investments an8 Deposits Processing and other Fees ana Charges Lease Income GFI-Linked NPAs GROSS
P I0,344,553._5 20,841,.5.52.70 13,693,588.55 I_,205,391.68 17,549,596.62
INCOM_
P 77,634,682.80
OPERATING EXPENSES Salaries and Other Vtilities Professional Fees
Personnel
Expenses
P
Depreciation - Equipment Other Operating Expenses GFI-Linked NPAs TOTAL OPERATZNG
OPERATING INCOME EXTRAORDINARY Foreign
106,5%3.89 84¢,079.42 .15,017,845.65 21_,922,621_-46_
EXPENSES
(LOSS) BEFORE ITEMS
Exchange
P 55,712,061.34
Gains
Interest and Financial Regula_ GFI-Linked NPAs
NET I4_OME
3,515,992.83 1,692,778 _84 742,410.83
256,489.18 Chax_es P 4_,712,420.25 _74,_95,222.95
220 [907 _643.20
(P164,939,092.68)
(LOSS)
Executive
Vice
President
251
Annex PHILIPPINE 5th
Floor,
EXPORT
Executive
AND
Building
As
_OREIGN
LOAN
GUARANTEE
Center, Sen. Gil J. Makati, Metro Manila
of
BALANCE SHEET September 30, (Unaudited)
Puyat
E
(Cont'd.)
CORPORATION Corner
Makati
Avenue
1988
ASSETS Current
Assets
Cash and Due From Banks Short Term Investments Guarantee Fees Receivable Accounts Receivable (Net) Prepaid Expenses Total
Current
Investment Fixed
in
_ (Net)
Assets
Government
_ Securities
347,348.38
Other
Receivables
on Guaranteed Loans Other Advances Acquired Assets Contract Mortgage Receivable Debenture Bonds Notes Receivable Miscellaneous Assets Assets for Transfer to National Government Total
Other
ASSETS
246,222,057.18 31,471,283.56
Assets
Other Assets Advances and
TOTAL
6,734,126.18 220,711,787.99 5,248,590.39 1,280,305.28 12,247,247.34
_
328,308,249.42 947,908.97 521,598,570.21 163,100.00 194,296,135.87 94,123,000.00 522,902.85 5,493,233,137.56
Assets
6,633,193,004.88
/6,911,233,694.00
252 Annex LIABILITIES
AND
Liabilities Current Liabilities Liabilities for
STOCKHOLDERS'
Transfer
National Government Income Tax Payable Interest PayaDle Accounts Payable and Liabilities Total Advances
Current from
National
Long
Term
132,015,544.14 89,149,205.31 24,541,312.14
Other 11,631,878.91
National
_
Treasury
257,337,940.50
_
332,442,039.87
_
488,918,160.99
Treasury Transfer
Government)
Liabilities
National
_
816,891,711.30
Transfer
Government
Total
Long
Total
Liabilities
Deferred
to
Liabilities
Loans Payable Liabilities for to
Term
2,653,951,588.81
Liabilities
23,470,843,300.11 _4,549,541,441.47
Credits
10,746,594.02
Deferred Credits (related for Transfer to National
to
NPAs
Government
149,801,525.03
Stockholders' Equity Capital Stock (Authorized and Subscribed - PI0._B) Retained Earnings (Deficit) Profit (Loss) Total
TOTAL
(Cont'd.)
E_UITY
_
Advances fromNational (related to NPAs for to
E
Stockholders'
LIABILITIES
AND
_3,230,438,657.00 ( 864,355,430.84) ( 164,939,092.68)
Equity
STOCKHOLDERS'
2,2_i,144,133.48
E_UITY
_6,911_233,694.00
253 Annex EXPORT CREDIT FOR SMALL AND
GUARANTEE PROGRAM MEDIUM INDUST•_IES
BANK.GUARANTEE
PURPOSE
:
F ••
LINE
To raise the level of preshipment financing available and accessible to creditwortny but collateraldeficient small and medium-size export enterprises. To simplify and facilitate the delivery of financial assistance guarantee support to deserving
CONCEPT
:
and exporters.
Philguarantee shall, in addition to •the existing Individual Account Guarantee Facility, extend Bank Guarantee Lines in favor of private banks participating under the ECGP-SMI. Subject to conditions embodied in a new agreement, Philguarantee shall delegate authority to participating banks to •• approve and grant preshipment credits to small and medium-size exporters secured • by the guarantee of the corporation.
ACCREDITED ••
BANKS
:
Citytrust Banklng Corporation Far East Bank and Trust Company Philippine Commercial International Pi!ipinas Bank Rizal COmmercial Banking Corporation SolidbanK Corporation•
Bank
GUARANTEE•LINE
:
2"25 Million per participating bank renewable annually for the same amount based on the bank's overall performance in the ECGP-SMI.
GUARANTEE
COVERAGE
:
Maximum of 70% of the principal and accrued
GUARANTEE
FEE
:
1.5%
PERFORMANCE STANDARDS SANCTIONS
AND
:
per
Past due Otherwise, matically A default Otherwise, matically
outstanding interest
annum ratio must not the facility suspended.
exceed shall
20%. be auto-
ratio must not exceed the 10%. the facility shall be autoterminated.
254 Annex ELIGIBLE
GUARANTEE
LOAN
CEILING
UTILIZATION
MINIMUM COLLATERAL REQUIREMENT
Preshipment Export Credit granted against irrevocable letter of credit or acceptable confirmed purchase order
:
Small
enterprise
- maximum thousand
enterprise
BORROWERS
:
Purchase of inventories, other operating expenses export orders
:
Assignment credit or
:
OWNERSHIP BUSINESS
TRACK
RECORD
FINANCIAL
CREDIT
STANDING
RECORD
of
ivl.5
payroll and to service
of irrevocable letter of confirmed purchase order in
their
personal
A small or medium-size export enterprise with total assets of at least P500 thousand but not exceeding _w'i0 million Majority-owned
ACTIVITY
of _6500
- maximum million
JSS of principals capacity QUALIFIED
(Cont'd.)
:
Medium
LOAN
F
Filipino
firm
:
Processing, production or manufacturing and marketing of non-traditional products directly for exports
:
At least one (i) or 4-5 negotiated a total value of
:
a.
Unimpafred capital of (net of pre-operating
b.
Debt-Equity financing
:
year export performance shipments with at least $100 thousand
ratio
of
_250 thousand expenses) 80:2_
after
Satisfactory credit dealing as certified by past/present creditors for the enterprise and its principals No derogatory prise and its
findings principals
for
the
enter-
255 Annex PROPOSED
OBJECTIVE
:
GUARANTEE FOR OVERSEAS
To facilitate contractors their
CONCEPT
:
in
ASSISTANCE CONTRACTORS
bonding order
G
PROGRAM
for POCB-accredited for tBese firms to
competitiveness
in
service
maintain
exports.
Pnilguarantee shall provide guarantees to a pool of selected/pre-qualified POCBregistered overseas contractors who are encountering difficulties due to the rather stringent collateralpolicy of most banks. These contractors have been successful in their ensure
undertakings that these
and the program accomplishments
aims to continue.
PROPOSED SCHemE
:
i.
2.
Project
Qualified
under
tne
Program:
*
Labor Subcontracts to established foreign contractors (i.e. Japanese, U.S., Italian, Korean) as determined by POCB;
*
Officer (OrCC)
Ou_ified
In Charge Projects.
of
Construction
Contractors:
Some ten (10) qualified firms shall be chosen among the "surviving" POCB registered contractors. The selection process to be undertaken in close coordination with POCB shall be based on the following factors: *
Historical per POCB
*
Accreditation
*
Contracting Ability based on Net Worth, Finished/Ongoing
*
Dollar to be
*
Credit
Net FX Records with
Remittance generated Record
by
Remittance
POCB of the firms Projects
and Employment the Project
256
Annex 3.
Types
of
Guarantee
G
(Cont'd.)
Available:
Performance Bond, Advance Payment or Peso Working Capital for Mobilization Expenses 4.
Guarantee Ceiling: $5_0 Thousand maximum exposure to each qualified contractor; P100.0 Million ceiling on all issuances under this program.
5.
Guarantee
Coverage:
The total guarantee requirement of the firm shall be shared proportionately among Philguarantee, Bank and the Contractor in the following manner:
6.
*
50%
Philguarantee
*
25%
Bank
*
25%
Contractor's Contribution
Collateral
Equity
Requirement:
Pnilguarantee's exposure shall be secured by the assignment of_.contract proceeds plus the JSS of company's principals. Any other collateral held by the bank shall be shared par ri-passu with Philguarantee. 7.
Fees: Commitment
Guarantee
Fee
Fee
-
1/4 of 1% p.a. commencing on the 90th day upon approval.
- Minimum p.a.
of
2.0%