approved_pedp_2011-2013.pdf

PEDP 2011-2013 for LIMITED CIRCULATION only

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I. EXECUTIVE SUMMARY The global export environment is evolving opportunities for the Philippines (PHL) to grow exports of merchandise and services by forty percent (+40) in the next three years (2011-2013) and double the prior-period average in 2016. By 2016, total Philippine exports will exceed one hundred twenty billion U.S. dollars (US$ 120B). This is achieved by building on the current business for the period 2011-2013 and developing Key Export Sectors that have high potential for growth. In the subsequent three years (2014-2016), growth is attained by implementing an agro-industrial resource-base export development program. The characteristics of exports and global trade are radically changing as the world recovers from the recent global financial crisis and the natural disasters in Japan. Moreover, the unfolding political events in the Middle East and North Africa (MENA) will contribute to volatile market conditions. The key features are the faster growth of emerging economies with large consumer populations and the slower single-digit growth of developed markets. This is resulting to a re-balancing of consumption, export market size and supply chain configurations in relation to pre-crises periods. Free trade agreements and international trade negotiations become important factors in this changed environment as these elements are significant determinants in re-deploying resources of global export products and services. Further influencing these changes are emerging economies that are moving up the value chain like China, India and ASEAN among others. The immediate consequence of these developments is the re-migration of certain supply chain components to strategic locations that can access large consumer base markets and at the same time provide a deep pool of cost-effective manufacturing and knowledge workers. The situation presents an opportunity for the Philippines to capture export-oriented investments considering that sixty-eight percent (68%) of PHL merchandise exports are intermediate goods. This means that the main drivers of Philippine exports today are global supply and value chains as well as direct investments. Equally, the emergence of new middle class consumers in developing countries and the recovery of mature economies offer Philippine finished goods renewed opportunities for growth. However, income mobility and improved technological capabilities have created intense competition in the marketing of finished goods necessitating investments in innovative consumer-capture activities. The key elements defining opportunities in this new world order are: a) supply and value chain management; b) international trade negotiations; and c) innovations in finished goods marketing. In this context, the Philippine Export Development Plan (PEDP) 2011-2013 identifies Key Export Sectors controlling eighty-seven (87%) of current business to drive export growth. These are: IT-BPO and other services; electronics; agribusiness products (food, coconut and other resource-based products); minerals; shipbuilding; motor vehicle parts; garments and textiles; homestyle products (furniture, furnishings, decors); and wearables (fashion accessories, shoes, bags, jewelry).


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These products and services belong to large categories in growing markets. Importantly, they have a reasonable probability of continued success based on current volumes, supply chain attributes, local value-added and total employment. Also, these sectors are consistent with the priorities of the Philippine Development Plan 2011-2016 and significantly contribute to inclusive growth. Organic and natural products, as well as “green exports”, shall be managed as a continuing product strategy. It will be linked with tourism, trade and investment promotions to expand its application on a wide product and service spectrum according to opportunities presented by a rapidly growing consumer base worldwide. Based on these global market opportunities and the capabilities of the Philippine exporting community, the PEDP formulated core strategies designed to achieve target revenues. These core strategies are applicable to all export sectors. Sector-specific strategies are defined in their individual roadmaps. The core product strategies are:

1. Move up the value chain. 2. Capture higher-value processes in the global supply chain. 3. Develop product linkages for natural, organic and certification-enabled products.

The core market strategies are:

1. Maximize benefits of Free Trade Agreements. 2. Target high-growth emerging markets. 3. Attract the migration of supply chain nodes to the Philippines.

The key export promotion strategy is integrating tourism, services and merchandise trade not only to maximize returns on promotional spending but also to achieve market share growth and the capacity to sustain it. Furthermore, export promotions shall focus on precision (quality) rather than profusion (quantity). To be able to implement the PEDP strategies, the Export Development Council shall be strengthened and the Export Development Act revised to conform to changing realities. Through these renewals, a legislative agenda will be pursued to arrive at a more cohesive domestic and international policy environment. A National Export Development and Competitiveness Fund (NEDAC Fund) shall finance integrated promotional efforts, SME assistance in finished goods marketing and continuous training for workers in the exporting community. The source of the fund will initially come from the Office of the President (OP) amounting to P100 million per year starting 2011 until it is subsequently included in the budget of the DTI. The DBM will facilitate transfer of the initial funds from the OP to a DTI line budget item. Finally, the exporting community believes that the key to the success of Philippine exports is the President of the Philippines. The PEDP reaffirms the President as the champion of Philippine exports. Through his inspired and inspiring leadership, the EDC partnership will be strengthened, motivated and empowered to grow exports through 2013 and double it by 2016.


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II. THE PLANNING PROCESS The Philippine Export Development Plan (PEDP) 2011-2013 builds on the achievements attained and lessons learned in the implementation of previous PEDPs.

As stated in the Export Development Act (EDA), the role of the private sector in export development is driving business to achieve export targets. The role of the public sector is creating an enabling environment by formulating and implementing policies based on operating realities and the imperatives of public governance. The mechanism for developing achievable export targets and formulating enabling policies is the Export Development Council (EDC). The method is consultations. Based on these consultations, what the private sector needs to do to drive exports and what the public sector needs to do to enable it, are fused in a three-year strategic plan - the PEDP. A. Objective of the Plan The objective of the PEDP is specified in the Export Development Act:

ARTICLE 2 INSTITUTIONAL STRUCTURES AND STRATEGIES

SEC. 5. Philippine Export Development Plan (PEDP). - The President of the Republic of the Philippines shall approve a rolling three-year Philippine Export Development Plan prepared by the Department of Trade and Industry (DTI) which shall form part of the Medium-Term Philippine Development Plan (MTPDP). It shall be formulated in consultation with the private sector, validated and updated semestrally.

The PEDP shall define the country's annual and medium-term export thrusts, strategies, programs and projects and shall be jointly implemented by the government, export and other concerned sectors.

B. Consultations on Export Targets and Strategies The consultations started in February 2010 and continued until December. The scope was nationwide involving the entire network of the EDC and all sector representative groups. Consultations in February began with the Export Development Council Visioning Workshop where directions were set for the PEDP and indicative strategies formulated. A strategic outcome of the workshop is the decision of stakeholders to update the EDA making it relevant to changes in the global environment fifteen years since the law was enacted. The goal is to establish lasting solutions to recurring export problems. While the EDA review is on-going, measures that can be taken immediately to remedy urgent export development issues are being done through the EDC. Another strategic outcome is the EDC’s Legislative Agenda designed to enshrine in the law lasting solutions to chronic difficulties in export development. These are in the areas of Fiscal Incentives, the Tariff and Customs Code, the Philippine Marine Act, the National Internal Revenue Code and the Anti-Trust Law. Also during the workshop, an expert economist (Dr. Cayetano Paderanga) presented a global economic outlook with emphasis on the impact of the recent global financial crisis. His diagnosis


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and prognosis became part of the basis of the strategies in the PEDP and the industry roadmaps. Sector representatives likewise presented market and export performance updates to form part of the strategy basis. A key activity in the workshop was a needs-assessment by the private and public sectors to determine what needs to be done to achieve export goals. One of the outcomes of this activity is the agreement to revise the vision and mission of the EDC making innovation, transformation and continuous improvement a focal point of export development. After the EDC Strategic workshop, more consultations were conducted with the Council, its Executive Committee, sector groups and government agencies. More than thirty consultation meetings took place including regional conferences involving broad-base representation from the exporting community in the National Capital Region, Luzon, Visayas and Mindanao. Strategies were discussed, revised and finalized. Targets by sector were agreed. C. Consultations on Export Policies As stated, a needs-assessment was conducted during the consultations to identify targets and strategies, issues on the export policy environment and priorities in policy requirements. It became apparent from the discussions that many of the policy needs and challenges in export development appear to be either recurring difficulties, persistent hurdles or both. These multi-sectoral and cross-cutting concerns for example are:

1. Harmonizing local, national and international trade policies to support exports. 2. Aligning policies, promotional initiatives and market intelligence consistent with

export strategies among government agencies (DA, DTI, DFA, DOT) and among organizations within the agency.

3. Reducing costs of doing business through simplified approval of permits and improved infrastructure.

4. Simplifying application and enabling exporters to have a more meaningful access to credit.

5. Re-tooling of the labor force through human capital interventions such as education and skills training compatible with business needs to increase their productivity.

6. Providing access to raw materials, updated technology and innovation. 7. Formulating foreign exchange policies supportive of exports. 8. Reforming labor laws on legislated wages, apprenticeships and unions. 9. Involving the exporting community in conducting international trade negotiations. 10. Maximizing benefits from trade agreements through knowledge and implementation

services. Crucially, there are two other serious concerns which consistently surfaced in all the meetings:

1. Persistent corruption in some national government agencies and local government units.

2. The need for funding support for export promotions and other export development initiatives especially for SMEs.


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There are also sector-specific concerns that continue to persist. A few examples are:

1. Food and Organic Products- implementing the Agriculture and Fisheries Modernization Act, increasing investments in agriculture, establishing a Food Safety Law

2. IT/BPO- international advertising promoting the Philippines 3. Coconut Products- assistance on geotextiles machines and technology,

implementation of a coconut tree replanting program 4. Mining- implementation of the Mining Act 5. Automotives- issues on pertinent Executive Orders and the Motor Vehicle Industry

Development Plan 6. Garments- support for the U.S. “Save Our Industries Act” 7. Homestyle Products- implementation of a resource-based export development

program Equally, the view that many, if not all, of these concerns are continuously being addressed by government with an appreciable level of success has to be considered to be able to identify measures necessary to sustain the effort effectively. A number of these concerns have been resolved at some point but resurfaced subsequently. Others were taken through an earnest process for resolution but stalled along the way. As such, the issue does not seem to be one of neglect but sustainability, not one of competency but continuity. The effort to maintain policy cohesion in an environment of constant change and the endeavor to incessantly improve the bureaucracy through progressive reforms do not seem to suffer from any lack of dedication from the majority of professionals in the government sector. What may be needed are sustained encouragement, motivation and cooperation from the private sector. This is especially with reference to corruption in public and private governance. The President encourages cooperation between government and private enterprise to identify individuals, groups and “structural environments” engaged in corruption so that these elements are corrected accordingly while ensuring continued protection of the citizenry and promulgation of good values, efficiency and effectiveness in business and in government. D. Outcome: PEDP Targets, Strategies and Policy Initiatives From these consultations, the export targets, strategies and policy agenda were finalized and incorporated in the plan. The plan contains solutions to both policy and public-private governance issues. It defines strategic guideposts designed to exploit export market opportunities and improve in-country capacities. Importantly, these targets, strategies and policy concerns were discussed with the DTI Secretary, the Chairperson of the EDC. His advice and perspective were solicited to ensure the PEDP is aligned with the priorities of the Philippine Development Plan (PDP) 2011-2016, the Cabinet Economic Managers, and the President.


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III. EXPORT REVENUES: 2011-2013 Targets & 2014-2016 Forecasts vs. Prior PEDP Periods

Given unfolding global market conditions, the Philippines will grow exports of merchandise and services by forty percent (+40%) in 2011-2013 versus 2008-2010.

By 2016, total exports will double versus the 2008-2010 average exceeding one hundred twenty billion US dollars (US$ 120B). Exports will grow in the coming three-years (2011-2013) by building on our current business. It will double in the next three years (2014-2016) through an export development program anchored on our agro-industrial resource-base. Merchandise exports are targeted to grow by thirty-five percent (+35%) while total services by sixty percent (+60%) for 2011-2013. In the following three-year PEDP cycle (2014-2016), merchandise exports are forecasted to grow by another thirty-four percent (+34%) and services by forty percent (+40%). In US dollar values, merchandise exports will continue to be the primary revenue stream at seventy-seven percent (77%) of total Philippine exports by 2016. Table 1: EXPORT PERFORMANCE ACCORDING TO PEDP PERIODS

PEDP PERIOD: MERCHANDISE

EXPORTS MER.

GRWTH SERVICES EXPORTS

SERV. GRWTH.

TOTAL EXPORTS

TOTAL GRWTH.

MER. SHARE

SERV. SHARE

US$ Million % US$ Million % US$ Million % % % PEDP 1999-2001 105,300 40 9,872 NA 115,172 40 91 9 PEDP 2002-2004

2002 35,208 10 3,428 12 38,636 12 91 9 2003 36,231 3 3,389 -1 39,620 3 91 9 2004 39,680 10 4,043 19 43,723 10 91 9

Total (vs. Prior 3-Yrs.) 111,119 6 10,860 10 121,979 6 91 9 PEDP 2005-07

2005 41,254 4 4,525 12 45,779 5 90 10 2006 47,027 14 6,444 42 53,471 17 88 12 2007 50,276 7 9,766 52 60,042 12 84 16

Total (vs. Prior 3-Yrs.) 138,557 25 20,735 91 159,292 31 87 13 PEDP 2008-2010

2008 49,023 -2 9,717 -1 58,740 -2 83 17 2009 38,436 -22 11,014 13 49,450 -16 78 22 2010 51,498 34 13,243 20 64,741 31 80 20

Total (vs. Prior 3-Yrs.) 138,957 0 33,974 64 172,931 9 80 20 Ave. 2008-2010 46,319 11,325 57,644


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Table 1. (cont.)

PEDP PERIOD: MERCHANDISE

EXPORTS MER.

GRWTH SERVICES EXPORTS

SERV. GRWTH.

TOTAL EXPORTS

TOTAL GRWTH.

MER. SHARE

SERV. SHARE

US$ Million % US$ Million % US$ Million % % % PEDP 2011-13 TARGETS

2011 56,619 10 15,503 17 72,123 11 79 21 2012 62,262 10 17,967 16 80,229 11 78 22 2013 68,480 10 20,735 15 89,215 11 77 23

Total (vs. Prior 3-Yrs.) 187,362 35 54,205 60 241,567 40 78 22 PEDP 2014-16 FORECAST

2014 75,594 10 22,895 10 98,490 10 77 23 2015 83,466 10 25,266 10 108,732 10 77 23 2016 92,179 10 27,884 10 120,063 10 77 23

Total (vs. Prior 3-Yrs.) 251,240 34 76,045 40 327,285 35 77 23 % 2016 VS. 2008-10 AVG. 199 208 Sources: BETP for Merchandise Exports; BSP for Services Exports


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IV. KEY EXPORT SECTORS AND REVENUE STREAMS The business in the first three years will come from Key Export Sectors controlling eighty-seven percent (87%) of Philippine exports.

Table 2: EXPORT PERFORMANCE OF KEY SECTOR GROUPINGS: PEDP ALIGNED WITH PDP

PDP Key Export Sector PEDP Revenue Streams

AVE PAST 3 YRS

EXPORTS 2006-2008

SHARE OF

BUSINESS vs. AVE. 3

YRS.

2010 ACTUAL

EXPORTS

2010 GRWTH

vs. AVE 3 YRS.

2009 EXPORTS

2010 GRWTH

vs. 2009

US$ Million % US$

Million % US$ Million %

TOTAL EXPORTS 57,418 100 64,741 13 49,450 31 TOTAL SERVICES 8,642 15 13,243 53 11,014 20 TOTAL MERCHANDISE 48,775 85 51,498 6 38,436 34 TOTAL KEY SECTORS: 50,005 87 57,937 16 43,545 33 SERVICES IT-BPO & Other Services 8,642 15 13,243 53 11,014 20 ELECTRONICS Electronics 30,173 53 31,080 3 22,098 41 AGRIBUSINESS Food & Other Resource-

Based Products 2,856 5 3,625 27 3,191 14

MINERALS Minerals 2,437 4 1,870 -23 1,615 16 TRANSPORT Shipbuilding 236 0.4 1,543 554 586 163 HIGH POTENTIAL GROWTH SECTORS: 5,661 6,576 16 5,041 30 Motor Vehicle Parts 2,974 5 3,679 24 2,605 41 Garments /Textile 1,682 3 1,871 11 1,671 12 Homestyle: Furniture /

Decors/Giftware 528 1 427 -19 324 32

Wearables: Fashion Accessories/ Bags/ Shoes/Jewelry

477 1 599 26 441 36

OTHER SECTORS Others 7,413 13 6,804 -8 5,905 15 Raw Data Sources: BETP for Merchandise Exports; BSP for Services NOTE: Benchmark Average 3 years cover 2006-2008 "normal" market conditions.

These sectors belong to large categories in growing markets. They have reasonable probability of continued success based on current volumes, supply chain attributes, local value-added and total employment. Also, these sectors are consistent with the priorities of the Philippine Development Plan (PDP) 2011-2016. From a business perspective, current volumes refer to having attained the critical mass to allow re-investment for growth. Supply chain attributes mean that these export sectors are in activities that enable them to move up the value chain in manufacturing and designing service offers or in capturing high-income consumers. Local value-added pertains to the ability and potential of these sectors to cultivate indigenous innovation. Total employment is the capability to contribute to economic and human development essential for businesses to prosper in the long-term.


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More importantly, because of changes in the global trading environment, these export sectors are in a natural position to grow. This “natural positioning” comes from their merchandise-mix and product-market combination relative to supply chains, distribution channels and disposable income levels of their current and potential consumers. From a public governance perspective, these export sectors engender inclusive growth.

Table 3: KEY SECTOR ANALYSIS ACCORDING TO BUSINESS SIZE & GROWTH, LVA, EMPLOYMENT

REVENUE STREAM/ PRODUCT GROUP

2010 ACTUAL

EXPORTS US$ Million

2010 GROWTH vs. AVE 3 YRS 2006-2008

%

INDIC. MARKET

SIZE US$ Million

MARKET SHARE

%

MARKET GROWTH

%

LVA %

LVA AMT. at 2010

ACTUAL EXPORTS

US$ Million

ESTIMATED NO. OF

WORKERS

IT-BPO 11,041 21 62,000 18 30 90 9,937 526,000 Other Services 2,202 42 30,800 7 8 90 1,982 1,131,000 ELECTRONICS 31,080 3 1,900,000 2 5 30 9,324 520,000 AGRIBUSINESS 3,625 27 1,369,000 0.26 10 80 2,900 10,764,000 Food: Fresh/ Processed/Marine 2,116 35 769,000 0.28 10 80 1,693 75,583 Coconut Products 1,508 93 7,500 20 10 95 1,433 3,400,000 MINERALS 1,870 -23 12,650,000 0.01 15 80 1,496 180,000 SHIPBUILDING 1,543 554 83,000 2 16 20 308 33,045 HIGH POTENTIAL GROWTH SECTORS: 6,576 16 Motor Vehicle Parts 3,679 24 420,000 1 8 65 2,391 70,000 Garments/Textile 1,871 11 600,000 0.31 5 30 561 150,000 Homestyle: Furniture/ Decors/Giftware 427 -19 469,000 0.09 7 80 342 2,100,000 Wearables: Fashion Accessories/Bags/ Shoes/Jewelry

599 26 400,000 0.15 10 70 419 140,000

Raw Data Sources: BETP for Merchandise Exports; BSP for Services NOTE: Benchmark Average 3 years cover 2006-2008 "normal" market conditions.

Value-Enhanced Categories There are certain products in the Philippine export portfolio whose features are different from the common characteristics of the Key Export Sectors. These products compete in rapidly growing export markets where the Philippines is capturing shares meaningfully. For purposes of this Plan, these products are called Value-enhanced Categories. In prior PEDPs, Organic and Natural Products (ONP) were included among the Revenue Streams. ONPs are still a priority considering the growing size of this business around the world. One estimate is that the global revenue stream of ONP-related businesses is more than one trillion U.S. dollars. Additionally, there is an expanding sector in the Philippine exporting community engaged in ONP and related enterprises successfully promoting Filipino talent and natural resources. ONPs and related services have a wide range of business applications embracing virtually every product and service category. From tourism to medical services; leisure sports to health and wellness; food to textile products; and green cell-phones to hybrid cars. In fact, because of


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climate change and global warming, there are indicators that NOPs and related services can be the biggest export enterprise in the future. Moreover, Green Exports (or the “greening of exports”) is a strategy to achieve incremental growth on top of the mainstream key export sectors while boosting the growth and diversification of generic 0NPs. The EDC and the BETP will continue to work with the ONP sector in achieving broad application of this strategy and in developing metrics to measure progress. Similarly, Halal and Kosher products deserve equal attention considering the size and growth of this category and the wide application of its performance attributes. BETP reports that the market for Halal and Kosher food is over six hundred billion dollars (US$ 600B) around the world growing by at least ten percent yearly. Expanding the scope of the support and accreditation services of DTI for Halal and Kosher products will help increase Philippine market shares in these growing market segments. To this end, the PEDP shall prioritize on accelerating the on-going initiative of establishing the Philippine Halal Certification Body through the efforts of the DA and the DTI. The objective is to achieve this within the current PEDP cycle (2011-2013).


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V. SECTOR TARGETS The PEDP total export targets are the sum of the targets of the Key Export Sectors plus forecasts for the rest of the export product categories. The sector targets, on the other hand, are a function of the roadmaps and business strategies of the firms comprising the sector. Based on extensive consultations earlier described, targets were assessed and agreed utilizing, among others, conventional benchmarks to ascertain achievability. Table 4 shows the PEDP growth targets for 2011 according to Key Export Sectors in the context of historical sales and market growth indicators.

Table 4: KEY SECTOR TARGETS 2011 IN CONTEXT OF HISTORICAL SALES AND MARKET GROWTH INDICATORS

2011 TARGETS BY KEY EXPORT

SECTORS REVENUE STREAM/ PRODUCT GROUP

2010 ACTUAL

EXPORTS

2010 GROWTH vs. 2009

%

2010 GROWTH vs. 2006-2008 AVE

%

ESTIMATED MARKET

SIZE

2010 EST. MARKET SHARE

%

EST. ANNUAL MARKET GROWTH

%

2011 GROWTH TARGET

%

2011 TARGET

EXPORTS

TOTAL EXPORTS

64,741 31 13 11

72,123

TOTAL SERVICES

13,243 20 53 17

15,503

IT-BPO SERVICES

11,041 17

12,962

TOURISM & OTHERS

2,202 15

2,541

TOTAL MERCHANDISE

51,498 34 6 10

56,619

TOTAL KEY SECTORS:

57,937 34 16 12

64,734

SERVICES EXPORT SECTOR

IT-BPO AND OTHER SERVICES

13,243 20 53

62,000 15 30 18

15,627

ELECTRONICS EXPORT SECTOR:

TOTAL ELECTRONICS

31,080 41 3

1,900,000 2 5 10

34,188

AGRIBUSINESS EXPORT SECTOR:

TOTAL AGRIBUSINESS

3,625 14 27

1,369,000 0.3 10 10

3,987

FOOD: Processed & Beverages

930 15 -7

769,000

0.1 10

1,023

FOOD: Fresh

648 -7 32 0.1 10

713

FOOD: Marine & Aquaculture

538 5 -11 0.1 10

592

COCONUT PRODUCTS

1,508 54 93

7,500 20 10

1,659

MINERALS EXPORT SECTOR

MINERALS: Metallic/Non-Metallic & Others

1,870 16 -23

12,650,000 0.01 15 5

1,964

TRANSPORT EXPORT SECTOR SHIPBUILDING

1,543 163 554

83,000 2 16 12

1,728


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Table 4. (Cont.)

2011 TARGETS BY KEY EXPORT

SECTORS REVENUE STREAM/ PRODUCT GROUP

2010 ACTUAL

EXPORTS

2010 GROWTH vs. 2009

%

2010 GROWTH vs. 2006-2008 AVE

%

ESTIMATED MARKET

SIZE

2010 EST. MARKET SHARE

%

EST. ANNUAL MARKET GROWTH

%

2011 GROWTH TARGET

%

2011 TARGET

EXPORTS

HIGH POTENTIAL GROWTH SECTORS:

6,576 17 -3

7,241

MOTOR VEHICLE PARTS

3,679 41 24

420,000 1 8 8

3,973

GARMENTS / TEXTILE

1,871 12 11

600,000 0.31 5 15

2,152

HOMESTYLE: Furniture/Decors/ Giftware

427 32 -19

469,000 0.09 7 7

457

WEARABLES: Bags/Shoes/ Accessories/ Jewelry

599 36 26

400,000 0.15 10 10

659

OTHER PRODUCTS TOTAL OTHERS

6,804 6 -8 10

7,512

New Sectors for Assessment: ELECTRICALS

1,510 26 10 10

1,661

CHEMICALS

1,172 51 45 10

1,289


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The “New Sectors for Assessment” are product groups that will be examined closely based on the size of their business and progress through the performance period. The idea is to continue to identify high-success probability export sectors where public-private-partnership involvement will yield the highest export revenues. Table 5 shows the PEDP targets for the period 2011-2013.

Table 5: EXPORT TARGETS OF KEY EXPORT SECTORS, 2011–2013

REVENUE STREAM

2011 2012 2013 GROWTH

% VALUE in US$ Million

GROWTH %

VALUE in US$ Million

GROWTH %

VALUE in US$ Million

TOTAL EXPORTS 11 72,123 11 80,229 11 89,215 TOTAL SERVICES 17 15,503 16 17,967 15 20,735 IT-BPO SERVICES 17 12,962 15 14,958 14 17,112 OTHER SERVICES 15 2,541 18 3,009 20 3,622 TOTAL MERCHANDISE 10 56,619 10 62,262 10 68,480 TOTAL KEY SECTORS: 12 64,611 11 71,936 11 80,060 IT-BPO AND OTHER SERVICES 17 15,503 16 17,967 15 20,735 ELECTRONICS 10 34,188 10 37,607 10 41,367 AGRIBUSINESS 10 3,987 10 4,386 10 4,825 FOOD: Processed & Beverages 10 1,023 10 1,126 10 1,238 FOOD: Fresh 10 713 10 785 10 863 FOOD: Marine & Aquaculture 10 592 10 651 10 716 COCONUT PRODUCTS 10 1,659 10 1,825 10 2,007 MINERALS 5 1,964 5 2,062 5 2,165 SHIPBUILDING 12 1,728 12 1,936 12 2,168 HIGH POTENTIAL GROWTH SECTORS: 7 7,241 10 7,979 10 8,800 MOTOR VEHICLE PARTS 8 3,973 8 4,291 8 4,634 GARMENTS/TEXTILE 15 2,152 15 2,474 15 2,846 HOMESTYLE: Furniture/Decors/Giftware 7 457 7 489 7 523 WEARABLES: Fashion Accessories/Bags/Shoes/ Jewelry

10 659 10 725 10 797

OTHER PRODUCTS 10 7,512 10 8,293 10 9,155

Global Environment: Six-Year View

During the consultations, stakeholders recognized that many of the things needed to be done to restart sustainable export growth in the aftermath of the global financial crisis will take more than three years to accomplish. This is with respect to both private business and government. The global export market is changing radically compared to the past three years because of the varying degrees of the crisis-impact between developed and developing economies. While the global economy is forecasted to grow by three percent (+3%) year-on-year (YOY) in the next three years, advanced economies will grow by only two percent YOY (+2%). The U.S. will have a YOY growth of two percent (+2%) and EU will grow by only one percent (+1%) given continuing challenges with what appears to be a delayed impact of the crisis on some EU countries (Source: Paderanga Global Outlook, Feb. 2010).


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Importantly, the earthquake, tsunami and nuclear-reactor disasters in Japan last March 11, 2011 coupled with the unfolding socio-political events in the Middle East and North Africa (MENA) which started in February 2011 will have global economic consequences. While the immediate outlook is one of dramatic contraction in Japan’s exports and overall contribution to the world economy and oil-price instability because of conflicts in the MENA Region, rebuilding Japan and prospects in a democratized MENA will have their positive outcomes. The world’s experience with natural calamities and man-made crises illustrate this point. Hurricane Katrina, the Kobe earthquake, the Indian Ocean tsunami and many more similar disasters in the past twenty years demonstrate how affected countries and the international community can work together to quickly recover from these tragic events. Equally, the British Petroleum oil-rig explosion in the Gulf of Mexico and other oil-spills, the Three-Mile Island and Chernobyl nuclear plant accidents, and the recent 2008 global financial crisis, are profound examples of how nations and governments find effective solutions to problems that appear insurmountable at the onset. In the case of Japan, its expected massive disaster-recovery efforts will generate opportunities considering its global financial resources, technological capabilities, supply chain model and export market shares. In the case of the MENA region, the experience of many countries transitioning from centrally-controlled economies to market-based democracies, whether or not these political transformations result to replacements in leaders and personalities, demonstrate that economic growth inevitably follows these changes. Moreover, the obvious importance of oil to the world has always compelled the community of nations to collaborate in swiftly re-establishing supply and price stability during episodes of volatility. The world is united in emphasizing that human development, restoring and improving quality of life, and securing the future are the priorities in Japan and the MENA Region. In fact, everyone in general recognizes that the welfare of people is the priority in responding to natural calamities or armed conflicts. It is precisely these priorities that create international trade and investment opportunities. On the other hand, emerging economies are expected to grow YOY by six percent (+6%) in the next three years. Crucially, regions with the largest consumer base will grow year-on-year at an average of more than three times that of developed nations: China by eight-and-a-half percent (+8.5%), India by seven-and-a-half percent (+7.5%) and ASEAN by four percent (+4%). For the private sector, the implications of this situation on export sales, market development investments, consumer market size, supply chain dynamics, and a host of other strategic business determinants are profound. This is especially true for multinational corporations which are driving Philippine exports. Re-setting the plans and operations of these companies will take more than three years to complete. Importantly, the assessment is higher and sustainable export growth will come from agricultural (food) and resource-based products (homestyle, construction materials, natural & organic industrial and finished goods) given the local value-added of these categories, the global market size where they compete and the product differentiation features of Philippine design and functionality. Given the scope of this activity, an export development program anchored on our agro-industrial resource-base must be formulated in the next three years and implemented in the next PEDP cycle (2014-2016).


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For the public sector, while there is optimism and trust in the newly-elected leadership, the total package of government reforms and support needed to enable sustained export growth is viewed to take more than three years to accomplish. This is especially considering the requirements of an agro-industrial resource-base export development program. Table 6 shows how Philippine exports might unfold beyond 2011-2013 into 2014-2016, assuming that the private sector can harness the opportunities these changes bring and the public sector is able to actualize reforms. Table 6: EXPORT FORECASTS OF REVENUE STREAMS, 2014–2016

REVENUE STREAM/ PRODUCT GROUP

2014 2015 2016 GROWTH VALUE GROWTH VALUE GROWTH VALUE

% in US$ Million

% in US$ Million

% in US$ Million

TOTAL EXPORTS 10 98,490 10 108,732 10 120,063 TOTAL SERVICES 10 22,895 10 25,266 10 27,884 IT-BPO SERVICES 10 18,824 10 20,706 10 22,776 OTHER SERVICE 12 4,072 12 4,560 12 5,107 TOTAL MERCHANDISE 10 75,594 10 83,466 10 92,179 TOTAL KEY SECTORS: 11 88,748 11 98,176 11 108,624 IT-BPO AND OTHER SERVICES 10 23,078 10 25,467 10 28,106 ELECTRONICS 10 45,504 10 50,055 10 55,060 AGRIBUSINESS 12 5,404 12 6,052 12 6,778 FOOD: Processed & Beverages 12 1,387 12 1,553 12 1,740 FOOD: Fresh 12 967 12 1,083 12 1,212 FOOD: Marine & Aqualculture 12 802 12 898 12 1,006 COCONUT PRODUCTS 12 2,248 12 2,518 12 2,820 MINERALS 8 2,338 8 2,525 8 2,727 SHIPBUILDING 15 2,493 15 2,867 15 3,297 HIGH POTENTIAL GROWTH SECTORS: 13 9,931 13 11,210 13 12,655 MOTOR VEHICLE PARTS 12 5,191 12 5,813 12 6,511 GARMENTS/TEXTILE 15 3,272 15 3,763 15 4,328 HOMESTYLE: Furniture/ Furnishings/Decors 10 575 10 633 10 696 WEARABLES: Fashion Accessories/ Bags/Shoes/ /Jewelry 12 893 12 1,000 12 1,120 OTHERS 8 9,924 8 10,758 8 11,662

Forecasts based on PEDP consultations


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SUMMARY OF EXPORT TARGETS & FORECASTS Table 7-A: SUMMARY OF EXPORT TARGETS, 2011- 2013

SECTOR:

2010 2011 2012 2013

Average Share

ACTUAL EXPORTS

Growth

EXPORT Value Growth

EXPORT Value Growth

EXPORT Value

in US$ M % in US$ M % in US$ M % in US$ M % MERCHANDISE 51,498 10 56,619 10 62,262 10 68,480 78 SERVICES 13,243 17 15,503 16 17,967 15 20,735 22 TOTAL 64,741 11 72,123 11 80,229 11 89,215 100 Table 7-B: SUMMARY OF EXPORT FORECASTS, PEDP 2014 – 2016

SECTOR:

2014 2015 2016

Average Share Growth

EXPORT Value Growth

EXPORT Value Growth

EXPORT Value

% in US$ M % in US$ M % in US$ M % MERCHANDISE 10 75,594 10 83,466 10 92,179 77 SERVICES 10 22,895 10 25,266 10 27,884 23 TOTAL 10 98,490 10 108,732 10 120,063 100


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VI. OVERVIEW OF PRODUCT & MARKET BEHAVIOR Given the strategic direction to build on current business in the next three years, it is important to understand the following:

Where the business is coming from (products and services).

Table 2 shows that from the 2006-2008 average, fifty-three percent (53%) of total exports and sixty-two percent (62%) of merchandise exports come from electronics. Nine percent (9%) of total exports come from motor vehicle parts and mineral products. These exports are largely intermediate goods and raw materials going to export destinations where they are assembled as finished goods for re-export to consumer markets or partly sold to domestic consumers. In the case of mineral products they are to a certain extent utilized to fuel exports of the country of destination. Seventy-five percent (75%) of merchandise exports are for re-export to consumer markets. Less than twenty-five percent (25%) of merchandise exports go directly to consumers or end-users. It is less because portions of food, garments and textile, coconut products and wearables are also intermediate goods. This means that the greater majority of our exports today are influenced by the dynamics of the global supply chain of their respective consumer product categories. This also means that the main driver of Philippine exports is direct investments. Additionally, services being largely contact centers of foreign companies, form part of the overall global value chain and are investment driven. For finished goods exports, relating their marginal shares versus total sales and their equally marginal market shares in their growing markets suggest that finished goods exports need consumer research-based advertising and promotions to capture share-of-mind and share-of-pocket in their competitive operating environment. The pie-chart below further illustrates the characteristics of Philippine exports product-mix by comparing 2001 and 2010.

Chart 1: COMPARATIVE PRODUCT MIX, 2001 vs. 2010


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From 2001 to 2010, a significant portion of Philippine exports is still in intermediate goods. However, finished goods have shrunk in terms of share in the product-mix which indicate loss of competitiveness in the marketplace (see Chart 2: Markets of Philippine Exports).

Where the business is going (markets).

From 2006-2010, majority of Philippine merchandise exports go to North and Southeast Asia (60%) of which, twenty-three percent (23%) go to China and twenty percent (20%) to Japan and Korea.

The second major market is the Americas with nineteen percent (19%), followed by Europe with eighteen percent (18%). For the remainder of market, one percent (1%) each goes to Middle East-Africa and to ANZ-Oceania. And less than one percent (0.8%) goes to Central-South Asia and Russia.

Table 8 shows the regional distribution of Philippine Exports from 2006-2010. Table 8: MARKETS OF PHILIPPINE EXPORTS

AVE. PAST 5 YRS. 2006-2010

SHARE % FOB Value

TOTAL PHL MERCHANDISE EXPORTS 46,755,135,398 100 NORTH & SE ASIA 27,845,060,107 60 TOTAL CHINA (MAINLAND, HK, TAIWAN, MACAU) 10,751,480,669 23.0 TOTAL NORTH ASIA (JAPAN & KOREA) 9,296,638,817 19.9 TOTAL ASEAN (9 MEMBER STATES) 7,796,940,621 16.7 AMERICAS 8,696,490,797 19 TOTAL NORTH AMERICA (USA & CANADA) 8,304,457,661 17.8 BRAZIL, CENTRAL & SOUTH AMERICA (21) 373,938,025 0.8 CARIBBEAN (23) 17,408,868 0.04 GREENLAND & BERMUDA 686,243 0.0 EUROPE 8,518,622,660 18 TOTAL EU (27) 8,384,644,373 17.9 BAL. WESTERN, EASTERN & CENTRAL EUROPE (17) 133,978,287 0.3 MENA 675,161,838 1.4 MIDDLE EAST (14) 505,335,500 1.1 AFRICA (51) 169,826,338 0.4 OCEANIA & SOUTH PACIFIC 663,003,574 1.4 AUSTRALIA & NEW ZEALAND 474,658,400 1.0 SOUTH PACIFIC ISLANDS (23) 188,345,174 0.4 CENTRAL & SOUTH ASIA 326,044,784 0.7 GREATER INDIA (INDIA, PAK, SL, BDESH, NEPAL, BTN) 320,259,881 0.7 CENTRAL ASIA (10) 4,363,343 0.01 INDIAN OCEAN ISLANDS (5) 1,421,559 0.003 RUSSIA 30,751,638 0.1

Source: Tradeline Philippines, BETP This is in contrast to ten years ago (2001), where fifty percent (50%) of PHL exports went to the US and EU and forty-eight (48%) to North and Southeast Asia. The pie-chart below shows the shift in the market for Philippine exports.


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Chart 2: MARKETS OF PHILIPPINE EXPORTS, 2001 vs. 2006-2010 (Average)

2001 2006-2010 AVE

The shift of our export business from North America and Europe to North and Southeast Asia is a result of the combined effects of increased consumer incomes in the larger populations of the developing economies in Asia and changes in the global supply chains enabled by Free Trade Agreements. Most notable are the ASEAN Free Trade Agreements (FTAs) and the regional-bilateral trade agreement initiatives being phased-in by the US and the EU. On the part of Asian economies, Philippine exports of intermediate goods achieved incremental growth as consumers in global manufacturing bases began buying export branded finished goods made up of components coming from the Philippines. This is further enhanced by emerging distribution channels being established among Asian countries. On the part of the US and the EU, their phased trade agreement initiatives expand multi-country manufacturing and distribution facilities as global and regional companies set up multi-platform supply chains for branded products and services. This is done to provide for peaks and valleys in the demand of branded products in rapidly emerging consumer markets with varying levels of development and consumption behavior, while at the same time ensuring a steady, predictable and reliable supply of inventories to developed markets. Central to this unfolding reality is China. China as a major manufacturing base and consumer market is moving up the value chain. As it does, it sustains its rapid economic growth creating large numbers of Chinese consumers with high disposable incomes and rapid consumption behavior for quality branded products. Moving up the chain increases the cost of manufacturing in China while evolving new types of production processes that accrue to higher economic value for Chinese companies. This is resulting to a shift in the global chains characterized by the re-migration of certain manufacturing facilities to alternative locations in Asia. Key considerations to the re-migration are speed-to-market and cost-effectiveness rather than manufacturing costs alone. Prime candidates for this re-migration are strategically located countries which can cost-effectively access as many of the developed and developing mass consumer markets possible. Countries that at the same time possess a deep pool of skilled and trainable workers, professional managers and knowledge employees. Countries like the Philippines. This explains the shift of our exports to Asia. At the same time, similar changes are taking place in similarly situated countries and regions around the world explaining the growth of our


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exports to the Middle East and the ANZ region; and the spawning of our business in greater India, Brazil, South America and even Africa. This also partly explains the sense of urgency among many countries to engage in free trade agreements, be it bilateral or multilateral. And this suggests expectations in the near future. In terms of international trade and investments, India is expected to become like China in relation to the rest of the world. Brazil is viewed to become like China in relation to the Americas and Europe. The Middle East appears to have begun behaving like China in relation to Africa and Central Asia. Australia and New Zealand have likewise begun to behave like China in relation to China, India and Brazil. And Russia is anticipated to influence supply chains and global consumer marketing following the same pattern when its time comes. Japan can only be a contributing factor to the re-balancing of resources and supply chains resulting to export opportunities. Given Japan’s inherent capabilities and current international business model, its recovery efforts can lead to an expansion of export markets. Therefore, the key elements defining opportunities in this new world order are: a) supply and value chain management; b) international trade negotiations; and c) innovations in finished goods marketing.


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VII. CORE STRATEGIES

In the context of new realities where global supply chain management, international negotiations and innovation in finished goods marketing are the strategic opportunities, the PEDP defines its core strategies applicable to all sectors. A. Product Strategies:

1. Move up the Value Chain

Move up the value chain according to the status of the sector. Building value-added by moving up the value chain will bring immediate incremental revenues while new sectors are being cultivated. The key is to secure foreign and local investments to enable sectors to move up the value chain considering that many of the supply chain attributes of our export products and services are already present in-country. Additionally, the strategic location of the Philippines makes it an ideal site to access large consumer markets like China, Japan, Korea, Indonesia and the rest of ASEAN.

2. Capture Higher-value Processes in the Global Supply Chain

Sell Filipino supply and value chain participation as a quality and cost-effective component to finished goods and services. This is in particular reference to export sectors whose global supply chain is characterized by multi-country manufacturing such as electronics, garments, automotives, and shipbuilding.

Participation in value chain endeavors to capture as many of the chain components possible. Moving up the value chain develops chain components that derive the highest value. The idea is for the Philippines to achieve both through foreign and local investments and innovation.

3. Develop Product Linkages for Organic, Natural and Certification-enabled

Products

Develop organic and natural product linkages in tourism services and expand product applications. The abundant natural resources and human capital in the Philippines make it ideal for ONPs to prosper given what is arguably the largest rapidly growing product and service category in the world. The first step is to leverage tourism as a natural distribution channel for existing products and services. Subsequently, establish research centers to expand ONP applications and set up manufacturing facilities through local and foreign investments motivated by the growth in Philippine NOP in-country capabilities.

B. Market Strategies:

1. Maximize Benefits of Free-Trade-Agreements (FTAs)

Maximize FTA gains and engage the US and EU according to mutually acceptable modalities. Maximizing existing FTAs means launching information campaigns that are broad-based and meaningful. A broad-based campaign means a nationwide effort covering as many business sectors possible, especially SMEs. Meaningfulness does not only refer to informing the exporting community about tariff schedules and other FTA features. It also refers to establishing and improving mechanisms that will


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motivate the private sector to utilize FTAs in their business. These are Information Help-Desks, Document Facilitation, Interactive Websites and similar others.

2. Target High-Growth Emerging Markets

Emerging markets with high economic growth for finished goods exports include China, India and ASEAN for direct exports. The faster growth of developing economies is creating large consumer segments with high disposable incomes. Philippine export products and services should focus on these consumer groups not only because of their new-found capability to purchase, but more importantly, because it is at this emerging stage that consumers develop product and brand loyalty through trial usage. Reaching these consumers ahead of other brands as they explore their purchasing power establishes a strong franchise for the Philippines. Philippine exports of intermediate goods will realize incremental sales as the brands these sectors supply will promote themselves aggressively in these emerging markets. The indicated action is to have our finished goods export sector move in this direction as well through promotions and selling missions.

Brazil and Russia are viable target markets for Philippine finished goods through distribution channels in strategic locations including those in the Middle East and EU. The Philippines must also engage in pre-emptive market intelligence activities to identify opportunities and establish presence in other big emerging markets like South Africa and Turkey and in “pre-emerging” markets, specifically those high-growth areas and cities in China (CHAMPS*).

3. Attract the Migration of Supply Chain Nodes to the Philippines

Capture export-oriented FDI’s from China, Malaysia and Singapore, as these economies move up the value chain. Also, target Japan, Korea, ANZ, US, and EU as these industrialized nations continue to re-balance the supply chains of their products and services to pursue opportunities in emerging markets and respond to recovering mature markets.

Equally, the recovery of mature markets and the rapid growth of emerging markets with large consumer populations are compelling developed exporting nations (Japan, Korea, ANZ, US, EU) to activate more multi-platform supply chains to address the different consumption needs of emerging and mature markets. The result is a re-migration of supply-chain components from these locations to strategic points in the chain.

C. Promotions Strategies:

1. Undertake Focused Promotions with Emphasis on Precision Rather than

Profusion

Focus on precision (quality) rather than profusion (quantity) in conducting promotions. Identify and participate in select high-impact, high-level trade events. On-premise traffic of consumers and companies in these events must be consistent with target audience.

Equal emphasis must be given to investments-capture and tourism promotion given the character and needs of the overall export portfolio. This will drive investments in

*as identified by the Economic Intelligence Unit (EIU): Chongqing, Hefei, Anshan, Maanshan, Pingdingshan and Shenyang


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research and development and in-country capacity for merchandise and services exports.

Tourism is a cost-effective awareness and trial-usage channel for Philippine exports while generating significant revenues. Integrating these elements in out-bound trade events maximizes results. Market selection should also be consistent with product and market strategies. An additional consideration in selecting geographical markets is the presence of existing or unfolding free trade agreements.

2. Launch More High-Impact and High-Level In-Bound Fairs and Missions

Linked with Tourism Opportunities

Strengthen existing Philippine trade events and develop new and innovative ones focusing on the total Philippine experience. “Philippine Experience” refers to the emotional aspect of the encounter with target consumers. The tactile elements of consumer-contact, like features and benefits of products and services, are available to consumers virtually anywhere around the world. But an experience, the emotional high achieved through consumer contact, can be made unique and worth re-experiencing again and again. Similar to out-bound missions, in-country events must integrate investment, tourism and merchandise trade missions.

Frequency and timing of these integrated activities can be aligned with key tourism occasions year-round. In the case of in-country events, the more of these integrated promotions are launched, the broader the base for Philippine exposure and the higher the probability of investments-capture and merchandise/services exports.

3. Embark on a Comprehensive and Unified Country Branding

It is time to brand the Philippines and launch thematic sectoral events and above-the-line promotions. Consultations must be started immediately to arrive at the brand essence, brand values and brand features necessary to define the Philippines’ brand name and promise. From there, an international campaign will immediately follow. Sectoral generic branding, or “The Philippines” must continue to be promoted attaching the strong positive attributes of each sector as the case may apply in the event or promotion channel. A key feature in the branding process is to include a brand device (or sub-label) from a government export-standards agency certifying product integrity and performance.


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VIII. GOVERNANCE: KEY TO IMPLEMENTATION To be able to implement the strategies of the PEDP and consequently achieve its targets, government policies and promotional assistance enabling exports are necessary. A. Immediate: Executive Action

1. The President, as Chair of the EDC, should preside over the Quarterly EDC meetings. This would also ensure Cabinet-level participation in the Council so that immediate policy action is taken on export development issues.

2. The DTI shall utilize Honorary Trade Representatives in target export markets as soon as may be appropriate. The necessary deployment plan in context of the FTSC operations shall be designed and implemented accordingly by the DTI.

B. Mid-Term: Legislative Agenda

1. Prioritize amendment of the Export Development Act with emphasis on provisions pertaining to export financial assistance, privatization of promotional agencies, and the enforcement authority of the Council.

2. Passage of the Customs Modernization and Tariff Bill to address the issue of

simplification of procedures and the cost of doing business.

C. Institutionalize a Funding Source for Export Development and Promotion

1. To be able to execute the strategies of the PEDP, financial resources must continuously be made available to fund promotional activities. On the part of government agencies, the plan is to consolidate the promotion budgets of the DOT, DA, DTI, BOI, and the economic zones through inter-agency coordination of out-bound missions and in-bound activities

2. Establish a National Export Development and Competitiveness Fund (NEDAC Fund) to be

used in launching integrated promotional efforts, SME financial assistance and continuous training for workers in the exporting community. The fund shall initially come from the Office of the President and subsequently included in the annual DTI Budget from the General Appropriations Act.

D. Build on the Strengths of the Export Development Council The solution to all the challenges in the implementation of this Plan is in the mechanism established in the Export Development Act. That mechanism is the Export Development Council. The Council is designed to resolve export development issues through the representation of export sectors and the involvement of Cabinet Secretaries and The President. Policy issues requiring extensive study and consultation are addressed through the networking committees while situations requiring immediate actions are managed by the Council itself.

1. Revitalize the networking committees to strengthen presence in the countryside and so

that relevant issues are thoroughly evaluated and recommendations carefully assessed before being presented for resolution to the Council. Activate new committees as appropriate to address all Key Export Sectors.


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2. Link with other business councils to strengthen and unify advocacies.

3. Develop and implement an anti-corruption mechanism in the EDC and its networking

committees. Utilizing appropriate measures to protect the citizenry, this mechanism shall enable sources to identify individuals, groups and structural environments engaged in corruption to enable government to correct situations and prosecute where necessary.

4. Ensure appropriate representation of the service sector in the EDC particularly BPO to

enable this rapidly growing sector to contribute to continuous development of comprehensive export policies. This is particularly in reference to worker welfare which is a key factor to export competitiveness in services.

5. Strengthen the EDC Secretariat by increasing the number of technical staff necessary to fulfill all secretariat functions. Engage the staff in Continuous Education and Training (CET) on convener management.

The President as Export Champion Finally, the exporting community believes that the key to the success of Philippine exports is The President of the Philippines. The PEDP reaffirms The President as the champion of Philippine exports. Through his inspired and inspiring leadership, the EDC partnership will be strengthened, motivated and empowered to level-up exports through 2013 and double-up by 2016.

-oOo-


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27

ANNEX 1:

Sectoral Strategies and

Activities


28


29

SECTORAL STRATEGIES AND ACTIVITIES

A. FOOD

Priority Products

Fresh Fruits/Vegetables: mango, banana, papaya, okra Processed Food Marine Products

Priority Markets

Korea, Hong Kong, China (Fresh Fruits/Vegetables) USA, China, Hong Kong, EU, Japan (Processed Food)

o Emerging markets: ASEAN, ME, India, Australia USA, EU, Hong Kong (Marine Products)

Export Growth Targets

2011 – 10%

2012 – 10% 2013 – 10 % Baseline US$ 2.11B

Major Policy Concerns/ Policy Support Needed

Tedious documentation procedures (e.g. certificate of origin,

phytosanitary requirements and product registration, etc.) Lack of government assistance/support re: organic

certification of raw material sources and compliance for Good Manufacturing Practice (GMP) and Hazard Analysis Critical Control Point (HACCP) implementation

Review of the existing Free Trade Agreements (FTAs) with partner countries and renegotiate the inclusion of products excluded from the agreements such as the high duties of marine products, dried fruits, and purees which is now 30-40% in Korea

Export Strategies and Activities

Promotion

Strengthen and synchronize the export and investment promotion programs/projects such as inbound and outbound missions and trade fair participations of DA, DTI and DFA and link the promotional initiatives with the tourism programs of DOT.

Identify other niche “Blue Ocean” markets for Philippine food products by foreign Posts.

Capacity Building Strengthen the market intelligence initiatives of Foreign Posts Establish standards for product processes and quality and

develop packaging and design at par with international standards

Strengthen and upgrade existing laboratory equipment of DOST and DA focusing on the product/s inherent per region such as the analysis for pesticide residue of tropical fruits and vegetables and other technical requirements

Government support/ incentives for capital expenditures and tax credits for the importation of equipment for MSME’s and non-pioneer industries


30

Strengthen the certification system for HACCP, ISO 2200, and GMP and provision of government support in the compliance and implementation of these systems.

DA to establish programs to ensure the sustainability of the production of agricultural raw materials such as tropical fruits (calamansi, jackfruit etc.); coconut and palm fruit (Kaong); vegetables and rootcrops.

Provide MSMEs access to low interest/long term financing to improve facilities and business capital

Implement the Halal Development Project


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B. GARMENTS/ TEXTILE

Priority Products

High-end Gowns/Dresses Ethnic Natural Fiber Barong Lingerie/ Night Wear

Priority Markets

USA EU Japan


2011 – 15% 2012 – 15% 2013 – 15% Baseline – US$ 599 M More than 15% if “Save Our Industry Act” is passed by the

US Congress


Lack of technology support Inadequate basic skills training on international standards Lack of raw materials due to demise of the textile industry


Promotion Campaign for the approval of the SAVE ACT in US Congress Expand and improve market access Work for preferential regimes (EU-GSP) Intensify market access (re-negotiate ROO for PJEPA) Maximize benefits of existing free trade agreements (FTAs) Develop brands for emerging markets Conduct strategic selling missions for SMEs to target EU

countries Create new markets in ASEAN and China Capacity Building Implement industry accreditation and tracking of social

compliance program Investment promotion to revive the textile industry Industry mapping, accreditation and tracking program Synchronize (CHED, TESDA) efforts in skills training Upgrade technology Disseminate incentives for investors


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C. WEARABLES

Priority Products

Costume/Fine Jewelry Bags Footwear/Slippers/Shoes

Priority Markets

Asia (Hong Kong, China, Japan) Europe (France, Germany, Italy) Australia/ USA (Indirect Export)


2011 – 10% 2012 – 10% 2013 – 10% Baseline – US$ 599 M.


Unsustainable financial assistance to export promotion Tedious procedures / requirements for imported raw materials High power/ electricity cost Unclear policies on duties / taxation for raw materials,

returned shipments Lack of skilled labor force


Promotion Integrate promotional efforts Promote via international media Mount showrooms in Philippine embassies and airports Subsidize participation in trade fairs abroad Develop an iconic tourist retail center Capacity Building Upgrade technology Prepare impressive brochures/catalogues Intensify gathering of commercial intelligence in US, EU,HK

and Japan Provide information on market requirements and trends Develop/update designs of products Provide financing assistance (non-collateral loans)


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D. HOMESTYLE PRODUCTS

Priority Products

Furniture – mixed media furniture, wood/plastic/stone

furniture, outdoor furniture Furnishings Holiday Decors

Priority Markets

Europe US Asia (China & India)


2011 – 7% 2012 – 7% 2013 – 7% Baseline – US$ 427M


Conflicting policies of national and local agencies on raw

materials and taxation Lack of access to financing (special program for distressed

companies) Overlapping of projects Unscrupulous customs officers High cost of doing business


Promotion Integrate promotional efforts (Manila FAME, Manila NOW,

CebuNext) Build brands based on green approach Provide financial support for selling missions and trade fairs

to identified markets Advertise in foreign media Maximize benefits from free trade agreements Capacity Building Re-energize and sustain industry clusters Continue to develop designs using mixed media Implement productivity enhancement programs Link up furniture and furnishings/decor industries with the

tourism industry Conduct market intelligence with the private sector/ hire the

best foreign consultants for market intelligence and design Simplify shipment documentation procedures


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E. IT – BPO

Priority Services

Voice Services:

Contact center Non Voice Services :

Back-office/KPO IT (software development, application,

maintenance) ESO/Engineering and design processes Health Information Management Transcription (Legal & Medical) Animation Game Development

Priority Markets

USA/ North America Europe ( UK ) Asia-Pacific (APAC)


2011 – 18% 2012 – 16% 2013 – 14%

Baseline: 2010 – US$ 11.041B


Talent scalability, particularly to meet sizeable voice demand Mismatch of educational system and language with global

standard Limited growth capital for scale-up of small-to-medium firms Lack of distinguishing branding against India and near-shore

geographies Fine-tune labor laws and practices to meet industry

requirements (e.g., issues related to absenteeism, termination)

Legislation on data privacy and cyber-crime to improve risk perception


Promotion Consolidate dominance in the US and aggressively promote /

grow footprint in the UK and APAC Create a more interactive website/ International promotion

(Multimedia) Capacity Building Rapidly demonstrate capability and scalability outside of

voice, with a focus on high-growth segments for the future Accelerate scale-up of talent, while sustaining or improving

cost competitiveness, regulatory environment, capital availability and risk perceptions

Retain momentum in developing Next Wave Cities


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F. ELECTRONICS

Priority Products

Semiconductors Electronic Data Processing Automotive Electronics and Solar Power/ Photovoltaic

Cells

Priority Markets

USA Europe Japan and China


2011 – 10% 2012 – 10% 2013 – 10% Baseline: 2010 – US$ 31.080B


High cost and availability of power Philippine Technology Roadmap Development of quality allied and support industries


Pursue aggressive export sales and investments

promotion of parts and components manufacturers Conduct international communication / marketing

campaign Develop and expand linkages with allied support

industries: metal, plastics and chemicals industries Generate up-to-date market intelligence on target

markets Identify and define future technology needs, and

forecast future product attributes


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G. COCONUT (NON-FOOD)

Priority Products

Coconut fiber, coir Coconut peat/dust Geotextiles Coconut oil

Priority Markets

Coconut fiber – China Coconut peat/dust – China, Korea and Japan Geotextiles – China Coconut oil – Netherlands, USA, China, Italy, Malaysia,

Spain and Japan


For Coir and Geotextiles:

2011-10% 2012-10% 2013-10% Baseline: 2010 – US$ 1.71M

For coconut oil:

2011- 10% 2012- 10% 2013- 10% Baseline: 2010 – US$ 1.506B

Major Policy and Other Concerns/Support Needed

Coco coir products:

Funding support from the Export Support Fund, the Coconut Industry Investment Fund (CIIF), and DA/PCA

The Philippine Coconut Coir Exporters Association, Inc. (PHILCOIR) proposes the creation of Coir Board similar to India

Philippine Coconut Authority (PCA) to regulate establishment of processing plants

DILG/LGUs to construct farm-to-market roads DOF to levy VAT-less or less VAT on freight for exports DTI to develop standards and manual for coco geotextiles

and biologs BOI to extend tax incentives and tax credit to coco coir

and coco peat exporters Technical support for the development of various

applications of coco peat PCA to undertake projects to improve/increase access of

processors to supply of coconut husk Review and rationalize the present cabotage system in

shipping to afford competitive and affordable shipping cost

Coconut oil:

Philippine Coconut Authority (PCA) to undertake planting and replanting programs to increase and improve coconut yield


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Export Strategies/Action Plans

Coco coir products:

Conduct research and review/assess feasibility of exporting coco coir products in target markets

Identify markets where coco coir products have preferential tariffs due to bilateral/multilateral Free Trade Agreements (FTAs)

Assess and improve competitiveness vis-à-vis leading world suppliers

Promote coco peat as animal bedding material Promote geotextile as soil erosion and desert control

material Promote coco peat as soil conditioner Conduct out-bound and In-bound business missions

(OBM and IBM) Develop promo collaterals/materials and website for coco

coir products Monitor export performance of coco coir industry

Coconut oil:

For priority markets, , United Coconut Associations of the Philippines U(UCAP), Foreign Trade Service Corps (FTSC), and Bureau of Export Trade Promotion (BETP) to promote the various benefits of using coconut oil to counter negative publicities by competitors, and to highlight its advantages over palm oil

FTSC to research on competing products --- Malaysia and Thailand’s on palm oil production

Develop promo collaterals/materials and website for coco oil products

Identify markets where coco oil products have preferential tariffs due to bilateral/multilateral Free Trade Agreements (FTAs)


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H. MINERALS

Priority Products Metallic – Gold, Copper, Nickel Non –Metallic Minerals - marble

Priority Markets Asia-Pacific: China, Korea, Australia, Japan


2011 – 5% 2012 – 5% 2013 – 5%

Baseline: 2010 – US$1.87B

Major Policy Concerns / Policy Support Needed

Policy inconsistencies or disjoint between the national government and local government units in terms of land use, taxation, environment (including mining moratorium, ban on open-pit mining)

Push for responsible mining especially for small scale mining / proliferation of small scale mining permits granted by LGU’s (sans environmental , safety, and health issues)

Unwarranted interventions by environmentalist groups and other organizations in the interpretation / implementation of the Rules of Procedures on Environmental Cases (Writ of Kalikasan)

Lukewarm response / lack of support by the LGUs


Information campaign for mining companies to adopt and implement Corporate Social Responsibility commitments / Promote CSR Guidebook

Aggressive support through BOI investment roadshow / investment missions abroad

BOI and MGB to identify and promote investment-ready mining projects with prepared feasibility studies / facilitate business registration and issuance of permits

Build-up database on small scale producers of minerals


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I. MOTOR VEHICLE PARTS

Priority Products

Original Equipment Manufactures (OEMs): Wiring harness, transmissions/gears, sensors,

alternators, brake systems and servo brakes

Replacement parts: radiators, leaf springs, filters, batteries, alloy wheels, exhaust system

Priority Markets

OEMs: Developed Economies – USA, Japan and Korea Emerging Economies – China and India Regional – Australia, New Zealand and ASEAN Replacement Parts: USA, China/Japan, Western Europe (Germany and

Netherlands


2011 – 8% 2012 – 8% 2013 – 8% Baseline: 2010 – US$ 3.679B


1. Implementation of EO 877-A

(New Motor Vehicle Development Program) Implementation of the Support Program for parts

and CKDs Serious government commitment to promote

exports 2. Proactive efforts to develop linkage with neighbors

in complementing policies on taxes, tariff, labor incentives, customs and trade to harmonize standards.


Position the country as hub for regional clusters to be

the preferred promotion platform for export Improve and expand the replacement parts market Promote the sector’s subcontracting capabilities for

customized orders of various automotive metal and plastic fabrications

Pursue aggressive export sales and investment promotions activities in target markets, highlighting the Philippines as a supplier of quality and cost-effective premium parts and components

Implement the Comprehensive Motor Vehicles Program


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41

ANNEX 2:

Market Briefs

Data for General Trade Indicators were taken from ITC Trademap to allow for global comparison (e.g., country market shares vs. the world market). Bilateral Trade data were taken from the Trade Relations

Report (TRR) prepared by the BETP which makes use data from both ITC Trademap and the National Statistics Office (NSO), the official Philippine data source which provides more recent Philippine trade

data.


42


43

A. PHILIPPINES – ASEAN TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ Billion) : 351.4 GDP Per Capita (US$) : 3,500 GDP Growth Rate (%) : 7.3

Source: World Factbook 2011 B. GENERAL TRADE INDICATORS

ASEAN Imports from the

World (2010) in US$

Thousand

ASEAN Share

in World

Imports (2010)

Growth of

ASEAN Imports (2009-2010)

ASEAN Imports from PH (2010) in US$

Thousand

Share of PH to Total

ASEAN Imports (2010)

Growth of PH

Exports to ASEAN

(2009-2010)

Share of ASEAN to Total

PH Exports (2010)

957,104,556 6.4% -3.77% 11,557,639 1.21% -7.18% 4.91% Source: ITC Trademap

For 2010, ASEAN’s imports amounted to US$ 957.10 billion, this accounts for 6.4% of total

world imports. But from 2009-2010, ASEAN imports have declined by 3.77%. Philippine exports to ASEAN for 2010 were valued at US$ 11.55 billion. This represents

4.91% of the country’s total exports but only 1.21% of ASEAN’s total imports from the world. Moreover, Philippine exports to ASEAN have declined by 7.18% from 2009-2010.

C. PHILIPPINES – ASEAN BILATERAL TRADE

BILATERAL MERCHANDISE TRADE Value in US$ Thousand

Year Total

Trade PH Exports to

ASEAN PH Imports

from ASEAN Balance of

Trade 2006 18,906,246 8,192,202 10,714,044 (2,521,842) 2007 21,482,971 8,031,907 13,451,064 (5,419,157) 2008 22,379,493 7,089,911 15,289,582 (8,199,671) 2009 17,516,160 5,844,310 11,671,850 (5,827,540) 2010 27,827,451 11,557,639 16,269,812 (4,712,173)

Source: ITC Trademap

Total bilateral trade with the ASEAN for 2010 amounted to PhP 27.82 billion, a 58.86% increase from the previous year. Moreover, the balance of trade has been in the negative for the period 2006-2010. However, the trade deficit has decreased by 19.13% from PhP 5.82 billion in 2009 to PhP4.72 billion in 2010.

Philippine exports to the ASEAN in 2010 represent 22.47% of total PH exports to the

world of $51.43 billion. ASEAN imports account for 27.94% of PH imports from the world of $58.22 billion.


44

Top ASEAN export markets are Singapore, accounting for 63.43% of total Philippine exports for 2010, followed by Thailand with 15.44% and Malaysia with 12.08%. Top ASEAN import suppliers are Singapore with 33.43%, Thailand with 25.19%, Malaysia with 15.75%, Indonesia with 14.75% and Vietnam with 10.75%.

PHILIPPINE EXPORTS TO ASEAN MEMBER-STATES January – December 2010

Value in US$ Thousand

Rank FOB % Share TOTAL PH EXPORTS 51,431,703 100.00

TOTAL PH EXPORTS TO THE ASEAN 11,557,639 22.47

1 Singapore 7,331,225 63.43 2 Thailand 1,784,167 15.44 3 Malaysia 1,396,496 12.08 4 Viet Nam 570,550 4.94 5 Indonesia 449,217 3.89 6 Myanmar 11,233 0.10 7 Cambodia 8,495 0.07 8 Brunei Darussalam 5,955 0.05 9 Lao People's Democratic Republic 301 0.0


PHILIPPINE IMPORTS FROM ASEAN MEMBER-STATES January – December 2010


RANK SUPPLIERS FOB % Share

TOTAL PH IMPORTS 58,228,624 100.00

TOTAL PH IMPORTS FROM

ASEAN 16,269,812 27.94

1 Singapore 5,439,478 33.43 2 Thailand 4,098,377 25.19 3 Malaysia 2,562,475 15.75 4 Indonesia 2,399,713 14.75 5 Viet Nam 1,750,771 10.76 6 Myanmar 13,378 0.08 7 Brunei Darussalam 2,912 0.02 8 Cambodia 2,696 0.02 9 Lao People's Democratic Republic 38 0.0



45

2010 TOP PHILIPPINE EXPORTS TO ASEAN

Products Exports (US$ ‘000)

% Share

TOTAL 11,557,639 100.00 1 Electrical, electronic equipment 7,274,710 62.94 2 Machinery, nuclear reactors, boilers, etc 1,212,346 10.49 3 Vehicles other than railway, tramway 782,985 6.77 4 Copper and articles thereof 490,795 4.25 5 Mineral fuels, oils, distillation products, etc 338,221 2.93 6 Tobacco and manufactured tobacco substitutes 111,621 0.97 7 Optical, photo, technical, medical, etc apparatus 106,942 0.93 8 Plastics and articles thereof 101,459 0.88

9 Dairy products, eggs, honey, edible animal product nes 98,448 0.85

10 Fertilizers 93,178 0.81 Source: ITC Trademap

2010 TOP PHILIPPINE IMPORTS FROM ASEAN

Products Imports (US$ ‘000)

% Share

TOTAL 16,269,812 100.00 1 Mineral fuels, oils, distillation products, etc 3,591,609 22.08 2 Electrical, electronic equipment 3,175,996 19.52 3 Machinery, nuclear reactors, boilers, etc 1,834,560 11.28

4 Cereals 1,567,224 9.63

5 Vehicles other than railway, tramway 1,566,662 9.63 6 Plastics and articles thereof 640,808 3.94 7 Miscellaneous edible preparations 280,604 1.72 8 Ores, slag and ash 263,646 1.62 9 Organic chemicals 247,549 1.52

10 Essential oils, perfumes, cosmetics, toiletries 238,402 1.47 Source: ITC Trademap


46

B. PHILIPPINES - BRAZIL TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ trillion) : 2.194 GDP Per Capita (US$) : 10,900 G DP Growth Rate (%) : 7.5

Source: The World Factbook 2011 B. GENERAL TRADE INDICATORS

Brazil’s World

Ranking as

Importer (2010)

Brazil’s Imports from the

World (2010) in US$

Thousand

Brazil’s Share

in World

Imports (2010)

Growth of

Brazil’s Imports (2006-2010)

Brazil’s Imports

from PHL (2010) in US$

Thousand

Share of PHL to Brazil's Total

Imports (2010)

Growth of PHL Exports

to Brazil (2006-2010)

Share of Brazil to Total

PHL Exports (2010)

22 181,648,672 1.2% 15% 131,467 0.07% 13 0.3% Source: ITC Trademap

At the moment, Brazil is one of the world’s darling economies. After all, Brazil is the B in BRIC (Brazil, Russia, India & China) , the acronym that represents the world’s biggest emerging markets. In 2010, Brazil ranked 22nd biggest importer in the world. Its total imports amounted to US$ 181.65 billion, accounting for 1.2% of total world imports. From 2006 to 2010, Brazil’s imports increased by 15%.

In 2010, Philippines exports to Brazil were valued at US$ 131.47 million, representing

only 0.2% of Brazil’s total imports from the world and only 0.3% of the Philippines’ total exports. From 2006-2010, Philippine exports to Brazil have grown by 13%.

C. PHILIPPINES – BRAZIL BILATERAL TRADE

BILATERAL MERCHANDISE TRADE

Value in US$ Million

Year Total Trade

Exports to Brazil

Imports from Brazil

Balance of Trade

2006 325.54 76.41 249.13 (172.72) 2007 439.72 75.74 363.98 (288.24) 2008 428.74 69.02 359.72 (290.70) 2009 305.11 83.30 221.81 (138.51) 2010 339.24 131.47 207.77 (76.30)

Growth Rate (%) 2006-2010 (2.79) 12.53 (8.23)



47

2010 TOP PHILIPPINE EXPORTS TO BRAZIL

Products Exports (US$ Million)

% Share

TOTAL 131.47 100.00 1 Computer data storage units 27.84 21.18

2 Monolithic integrated circuits, digital (excluding cards)

25.41

19.33

3 Computer input/outputs with/without storage 11.37 8.65

4 Static converters: UPS (uninterrupted power supplies) or no-break equipment

10.96

7.95

5 New pneumatic tires, of rubber for motor cars incl. station wagons & racing cars

5.66

4.31

6 Motor vehicles parts, nes 5.20 3.95

7 Electronic micro-assemblies made from discrete, active

4.88

3.71

8 Spectacle lenses of other materials other than glass 3.81 2.90

9 Transmission apparatus for radio telephony, radio telegraphy incorporating reception apparatus

3.35

2.55 10 Coconuts, dessicated 3.02 2.30


2010 TOP PHILIPPINE IMPORTS FROM BRAZIL

Products Imports (US$ Million)

% Share

TOTAL 207.77 100.00 1 Copper ores & concentrate 35.76 17.21 2 Wheat, nes & meslin 32.61 15.69

3 Tobacco unmanufactured partly or wholly stemmed or stripped

20.44

9.84

4 Bovine cuts, boneless, frozen 18.25 8.78 5 Glutamic acids & its salts 17.88 8.61 6 Fowls (gallus domesticus), cuts & offal, frozen 10.99 5.29

7 Milk not concentrated & unsweetened exceeding 1%, not exceeding 6% fat

9.09

4.37

8 Bovine, live except pure-bred breeding 7.77 3.74 9 Raw sugar, cane 6.84 3.29

10 Bulldozers & angledozers, crawler type) 3.29 1.58 Source: ITC Trademap


48

C. PHILIPPINES – CHINA TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP PPP (US$ trillion) : 10.09 GDP Per Capita (US$) : 7,600 GDP Growth Rate (%) : 10.3 Source: The World Factbook 2011

B. GENERAL TRADE RELATIONS

China’s World

Ranking as

Importer (2010)

China’s Imports from

the World (2010) in US$

Thousand

China’s Share

in World

Imports (2010)

Growth of

China’s Imports (2006-2010)

China’s Imports


Thousand

Share of PHL to China's

Total Imports (2010)

Growth of PHL Exports (2006-2010)

Share of China to

Total PHL Exports (2010)

2 1,394,199,479 9.3% 13% 5,701,504 1.2% -3 11.1% Source: ITC Trademap

China is one of the fastest-growing economies in the world, ranking as the 2nd biggest

importer in 2010. Its total imports amounts to US$ 1.4 trillion, accounting for 9.3% of the world’s total imports. From 2006-2010, imports of China have grown by 13%.

In contract, Philippines exports to China have fallen by -3% from 2006-2010. Philippine

exports to China were valued at US$ 5.70 billion, accounting for only 1.2% of China’s total imports from the world for 2010. But China remains as an important Philippine market as exports to China represent 11.1% of the country’s total exports.

C. PHILIPPINES - CHINA BILATERAL TRADE

BILATERAL MERCHANDISE TRADE Value in US$ Million

Year Total Trade Exports to

China Imports from

China Balance of

Trade 2006 8,497.05 4,627.66 3,869.39 758.27 2007 9,982.76 5,749.86 4,232.90 1,516.97 2008 10,030.27 5,469.19 4,561.09 908.10 2009 6,994.32 2,933.92 4,060.39 (1,126.47) 2010 10,635.41 5,701.50 4,933.90 767.60

Growth Rate (%) 2006-2010 0.94 -3 4.54



49

In 2010, China moved to fourth slot as the Philippine’s top trading partner (next to Japan, the

US, and Singapore). Bilateral trade between the Philippines and China amounted to US$10.31 billion (9.71% of the Philippines total external trade) in 2010. Of which, exports to China went up by 94.61% from US$2.93 billion in 2009 to US$5.70 billion in 2010 making China as the fourth largest export market. On the other hand, China ranked as the Philippines’ fourth largest supplier of imports in 2010.

Top Philippines exports to China in 2010 consisted of Machinery, nuclear reactors and

boilers; Electrical and electronic equipment; Ores, slag and ash; Copper products; and Mineral fuels, oils and distillation products. Major imports consisted of Electrical, electronic equipment; Machinery; Iron and steel products; Mineral fuels, oils, distillation products; and Plastics and articles thereof..

2010 TOP PHILIPPINE EXPORTS TO CHINA


% Share

TOTAL 5,701.50 100.00 1 Machinery, nuclear reactors, boilers, etc 2,452.79 43.02

2 Electrical, electronic equipment 1,831.13 32.12

3 Ores, slag and ash 322.03 5.65

4 Copper and articles thereof 236.39 4.15

5 Mineral fuels, oils, distillation products, etc 190.61 3.34

6 Plastics and articles thereof 125.91 2.21

7 Animal, vegetable fats and oils, cleavage products, etc

98.08 1.72

8 Organic chemicals 92.62 1.62

9 Vehicles other than railway, tramway 64.33 1.13

10 Optical, photo, technical, medical, etc apparatus 42.29 0.74 Source: ITC Trademap

2010 TOP PHILIPPINE IMPORTS FROM CHINA

Products Imports

(US$ Million) %

Share

TOTAL 4,933.90 100.00

1 Electrical, electronic equipment 1,242.15 25.18

2 Machinery, nuclear reactors, boilers, etc 912.08 18.49

3 Iron and steel 265.01 5.37

4 Mineral fuels, oils, distillation products, etc 223.47 4.53

5 Plastics and articles thereof 158.17 3.21

6 Fertilizers 154.17 3.12

7 Organic chemicals 128.13 2.60

8 Vehicles other than railway, tramway 114.34 2.32

9 Articles of iron or steel 113.87 2.31

10 Inorganic chemicals, precious metal compound, isotopes

97.08 1.97


Philippine Export Development Plan 2011-2013

50

D. PHILIPPINES – EUROPEAN UNION TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP(US$ Trillion) : 16.07 GDP Per Capita (US$) : 32,700 GDP Growth Rate (%) : 1.8 Source: World Factbook 2011

B. GENERAL TRADE INDICATORS

EU Imports from the World

(2010) in US$

Thousand

EU’s Share in

World Imports (2010)

Growth of EU

Imports (2009-2010)

EU Imports


Thousand

Share of PHL to EU's Total

Imports (2010)


to EU (2009-2010)

Share of EU to Total PHL

Exports (2010)

5,240,732,339 34.9% -23.0% 7,412,441 0.14% -6.97% 14.41% Source: ITC Trademap

As a trading bloc, EU is the largest importer in the world. In 2010, the EU’s imports

amounted to US$ 5.24 trillion, accounting for 35% of total world imports. However, in 2009-2010, total EU imports declined by 23%.

Accounting for 0.14% of EU’s total imports from the world, Philippine exports to the EU for

2010 were valued at US$ 7.41 billion. This represents 14.41% of the Philippines’ total exports to the world. Philippine exports to the EU declined 6.97% for the period 2009-2010.

C. PHILIPPINES – EU BILATERAL TRADE RELATIONS



Source: ITC Trademap.

YEAR TOTAL

TRADE

PH EXPORTS TO THE EU

PH IMPORTS FROM THE EU

BALANCE OF TRADE

2006 13,008 8,737 4,271 4,466

2007 12,085 8,592 3,493 5,099

2008 13,284 8,519 4,765 3,754

2009 13,509 7,967 5,542 2,425

2010 11,683 7,412 4,271 3,141 Ave Growth

Rate% 2006-2010 (1.03) (3.96) 4.72


51

Total bilateral trade with the EU posted a negative average growth of 1.03% in the last five years (2006-2010). Worldwide economic slowdown particularly affected majority of eurozone economies beginning 2009 which, in turn, caused exports to shrink 3.96% on the average during the same period. Imports, however, grew 4.72%. Balance of trade continues to be in favor of the Philippines.

PH exports to the EU in 2010 represent 14.41% of total PH exports to the world of $51.43 billion; EU imports account for 7.33% of PH imports from the world of $58.229 billion.

Top EU export markets are Germany, the Netherlands, France, the UK, Italy, Belgium,

and Spain. Top EU suppliers are Germany, France, Ireland, the UK, the Netherlands, Belgium, Italy, Austria, Spain, and Finland.

Top 10 PH exports to EU in 2010 include electronic integrated circuits and

microassemblies, automatic data processing machines, coconut oil (copra), semiconductor devices, parts and accessories of computers/office machines, motor vehicle parts and accessories.

Top 10 imports from the EU include electronic ICs, aircraft (helicopters, airplanes) and spacecraft (satellites), medicament mixtures, electric apparatus for line telephony, parts and accessories of computers, structures (rods, angles, plates) of iron and steel, and vaccines/toxins/micro-organism cultures.

Data Source: ITC Trademap.

PHILIPPINE EXPORTS TO INDIVIDUAL EU MEMBER-STATES

January – December 2010 Value in US$ Thousand

RANK MARKETS Value % Share

TOTAL PH EXPORTS TO THE WORLD 51,431,703 100.00

TOTAL PH EXPORTS TO THE EU 7,412,441 14.41

1 GERMANY 2,505,597 35.85

2 NETHERLANDS 2,428,878 32.77

3 FRANCE 413,323 5.58

4 UK 394,962 5.33

5 ITALY 349,382 4.71

6 BELGIUM 347,043 4.68


52

7 SPAIN 158,189 2.13

8 HUNGARY 128,556 1.73

9 CZECH REPUBLIC 112,175 1.51

10 FINLAND 84,673 1.14

11 AUSTRIA 77,067 1.04

12 POLAND 67,834 0.92

13 SWEDEN 38,539 0.52

14 GREECE 37,985 0.51

15 DENMARK 31,380 0.42

16 IRELAND 19,241 0.26

17 MALTA 13,506 0.18

18 PORTUGAL 12,757 0.17

19 ROMANIA 10,403 0.14

20 SLOVAKIA 8,558 0.12

21 BULGARIA 6,150 0.08

22 CYPRUS 4,492 0.06

23 LITHUANIA 2,517 0.03

24 LUXEMBOURG 2,362 0.03

25 SLOVENIA 2,156 0.03

26 ESTONIA 1,577 0.02

27 LATVIA 1,422 0.02



53

PHILIPPINE IMPORTS FROM INDIVIDUAL EU MEMBER-STATES

January – December 2010 Value in US$ Thousand


RANK SUPPLIERS Value % Share

TOTAL PH IMPORTS FROM THE WORLD 58,228,624 100.00 TOTAL PH IMPORTS FROM THE EU 4,270,634 7.61 1 GERMANY 1,182,262 27.68

2 FRANCE 692,433 16.21

3 IRELAND 321,729 7.53

4 UK 303,212 7.10

5 NETHERLANDS 298,716 6.99

6 BELGIUM 271,521 6,36

7 ITALY 225,608 5.28

8 AUSTRIA 188,161 4.41

9 SPAIN 177,885 4.17

10 FINLAND 145,903 3.42

11 SWEDEN 128,503 3.01

12 CZECH REPUBLIC 115,497 2.70

13 DENMARK 105,344 2.47

14 ROMANIA 43,047 1.01

15 HUNGARY 26,011 0.61

16 BULGARIA 13,317 0.31

17 POLAND 9,526 0.22

18 LITHUANIA 4,826 0.11

19 SLOVENIA 4,588 0.11

20 PORTUGAL 4,550 0.11

21 GREECE 2,562 0.06

22 LUXEMBOURG 2,318 0.05

23 CYPRUS 1,284 0.03

24 SLOVAKIA 1,281 0.03

25 ESTONIA 410 0.01

26 MALTA 163 0.00

27 LATVIA 27 0.00


54

2010 TOP PHILIPPINE EXPORTS TO THE EU


2010 TOP PHILIPPINE IMPORTS FROM THE EU



Products 2010 EXPORTS (US$ Million)

%Share

TOTAL 7,412 100.00

1 Electronic integrated circuits and microassemblies

2,238 30.19

2 Automatic data processing machines; optical reader, etc.

894 12.06

3 Coconut (copra) oil 614 8.28 4 Diodes/transistors & semiconductor

devices 438 5.91

5 Parts & accessories of computers & office machines

319 4.30

6 Parts & accessories of motor vehicles 313 4.22

7 Photographic camera; photograph flashlight apparatus

264 3.56

8 Electric transformers, static converter (ex. rectifiers)

226 3.05

9 Aircraft parts 179 2.42 10 Prepared/preserved fish & caviar 122 1.65

Products 2010 EXPORTS (US$ Million)

%Share

TOTAL 4,271 100.00

1 Electronic integrated circuits & microassemblies

1,119 26.20

2 Aircraft (helicopter, airplanes), spacecraft (satellites

344 8.05

3 Medicament mixtures 259 6.06 4 Electric apparatus for line telephony, incl.

current line system 131 3.07

5 Parts & accessories of computers & office machines

103 2.41

6 Machines & mechanical appliances 86 2.01 7 Structures (rods, angle, plates) of iron &

steel 83 1.94

8 Vaccines, toxins, micro-organism-cultures 68 1.59 9 Food preparations 68 1.59

10 Wheat and meslin 62 1.45


55

E. PHILIPPINES – INDIA TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$Trillion) : 4.046 GDP Per Capita (US$) : 3,400 GDP Growth Rate (%) : 8.3 Source: The World Factbook ,2011


India’s World

Ranking as

Importer (2010

India’s Imports from


Thousand

India’s Share in


Growth of

India’s Imports (2006-2010)

Total Imports

from PHL to India (2010) in US$

Thousand

Share of PHL to India's Total

Imports (2010)

Growth of PHL Exports to India (2006-2010)

Share of India to


17 220,290,676 1.5% 15% 409,845 0.2% 25% 0.8% Source: ITC Trademap India, one of the world’s emerging economies, ranks as the 17th biggest importer in the world for

2010. Total imports amount to US$ 220.29 billion, accounting for1.5% of total world imports. From 2006 to 2010, India’s imports have increased by15%.

Valued at US$ 409.84 million, Philippine exports account for just 0.2% of India’s total imports

from the world in 2010. While India currently represents only 0.8% of the country’s total exports, exports to India have grown by 25% from 2006-2010.

C. PHILIPPINES – INDIA BILATERAL TRADE



Year Total Trade Exports to India

Imports from India

Balance of Trade

2006 519.68 120.13 425.01 (304.88) 2007 735.58 243.97 514.52 (270.55) 2008 808.50 193.35 654.29 (460.77) 2009 702.69 200.31 523.32 (365.45) 2010 975.59 409.84 565.75 (155.91)

Growth Rate (%)

2006-2010

11.82% 25.32% 6.07%


In 2010, India ranked 15th among the top trading partners of the Philippines. Total bilateral trade was registered at US 975.60 million, representing 0.8% of total Philippine trade to the world. Exports increased by 25.32% from US$ 120.13 million in 2006 to


56

US$ 409.84 million in 2010, while imports grew at 6.07% from US$ 425.01 million to US$ 565.76 million during the same period.

Top exports included the following products: integrated circuits, parts and accessories of

the motor vehicles and computer data storage units.

Major imports included boneless meat of bovine animals; motorcycles and cycles fitted with an auxiliary motor; and medicaments.

2010 TOP PHILIPPINE EXPORTS TO INDIA


Products Exports (US$ ‘000) % Share

TOTAL

409,845 100.00

1 Monolithic integrated circuits, digital

142,083 34.67

2 Motor vehicle parts nes

34,023 8.30

3 Computer data storage units

21,013 5.13

4 Transmissions for motor vehicles

20,601 5.03

5 Sanitary articles of paper

18,920 4.62

6 Newsprint, in rolls or sheets

16,696 4.07

7 Fertilizers containing nitrogen, phosphorus & potassium in packs

11,481 2.80

8 Coal , whether or not pulverised but not agglomerated

8,759 2.14

9 Flat rolled , coated alum-zinc alloy

7,761 1.89

10 Ammonium sulphate

7,650 1.87


57

2010 TOP PHILIPPINE IMPORTS FROM INDIA

Products Imports (US$’000)

% Share

Total

565,756 100.00

1 Bovine cuts boneless, frozen

106,475 18.82

2 Motorcycles with other than a reciprocating piston engine

39,382 6.96

3 Medicaments nes, in dosage

28,126 4.97

4 Motorcycle parts nes

18,409 3.25

5 Transmission apparatus,for radio telephony incorporating reception apparatus

16,969 3.00

6 Soya-bean oil-cake & other solid residues, whether or not ground or pellet

13,404 2.37

7 Tobacco, unmanufactured, partly or wholly stemmed or stripped

12,999 2.30

8 Automobiles w reciprocating piston engine displacing not more than 1000 cc

9,694 1.71

9 Semi-finished products of iron/non-alloy steel

8,134 1.44

10 Soya bean flour and meals

7,380 1.30 Source: ITC Trademap


58

F. PHILIPPINES - JAPAN TRADE RELATIONS

A. ECONOMIC INDICATORS (2010)

GDP(US$Trillion) : 5.46 GDP Per Capita (US$) : 34,000 GDP Growth Rate (%) : 3.9 Source: The World Factbook July 5, 2011


Japan’s World

Ranking as

Importer (2010)

Japan’s Imports from the

World (2010) in US$

Thousand

Japan’s Share

in World

Imports (2010)

Growth of

Japan’s Imports (2006-2010)

Total Imports

from PHL to Japan

(2010) in US$

Thousand

Share of PHL to Japan's



to Japan (2006-2010)

Share of Japan to

Total PHL

Exports (2010)

4 692,620,567 4.61% 2% 7,827,498 1.13% -1.84% 15.2% Source: ITC Trademap

As an industrialized country, Japan ranks as the 4th biggest importers in the world for 2010,

with total imports amounting to US$ 692.62 billion. This accounts for 4.6% of total world imports. From 2006-2010, imports by Japan have grown by 2%.

For 2010, Philippine exports to Japan were valued at US$7.83 billion. This represents

15.2% of the Philippine’s total export and 1.14% of Japan’s total imports from the world. Philippine exports to Japan have declined by 1.84% from 2006-2010.

C. PHILIPPINES-JAPAN BILATERAL TRADE

BILATERAL MERCHANDISE TRADE Value in US$ Billion

Year Total Trade Exports to Japan

Imports from Japan

Balance of Trade

2006 15.60 7.92 7.68 0.24 2007 14.52 7.30 7.22 0.09 2008 14.83 7.71 7.12 0.59 2009 11.97 6.21 5.76 0.44 2010 15.13 7.83 7.30 0.53

Growth Rate (%) 2006-2010

-2.50 -1.84 -3.19



59

Japan was the Philippines’ leading export market and import source in 2010. Exports of Philippine products to Japan decreased from US$7.92 Billion in 2006 to

US$7.83 Billion in 2010, with an average growth rate of -1.84 percent. The highest level of exports was in 2006.

Imports from Japan decreased from US$7.68 Billion in 2006 to US$7.30Billion in 2010

and imports from Japan in 2010 accounted for 12.33% of total Philippine imports from the world.

Philippine exports to Japan in 2010 accounted for 15.22 percent of total Philippine

exports to the world.

Major exports to Japan in 2010 were computer input/outputs, with or without storage (17.25%), builder’s joinery and carpentry of wood (12.30%), ignition wiring set and other wiring sets used in vehicles/aircraft (5.78%), parts and accessories of automatic data processing machines and units thereof (5.41%) and sulphides of metals nes; polysulphides of metals (3.70%).

Imports from Japan in 2010 amounted to US$7.30 Billion accounting for 12.33% share of

the total Philippine imports.

Top imports from Japan were parts and accessories parts and accessories of automatic data processing machines and units thereof (17.39%), parts of electronic integrated circuits and micro assemblies (7.67%), electronic integrated circuits, monolithic, analogue (5.41%), gold in other semi-manufactured form non-monetary including gold plated with platinum (3.56%) and parts of machines and mechanical appliances nes having individual functions (2.63%).

A positive balance of trade amounting to US$530 million was achieved in 2010.

2010 TOP PHILIPPINE EXPORTS TO JAPAN

Rank Products Exports (US$ Million) % Share

TOTAL 7,827.49 100.00 1 Computer input/outputs, with/without storage 1,350.37 17.25

2 Builder's joinery and carpentry of wood nes 962.64 12.30

3 Ignition wiring sets & other wiring sets used in vehicles/,aircraft etc

452.09 5.78

4 Parts & accessories of automatic data processing machines & units thereof

423.43 5.41

5 Sulphides of metals nes; polysulphides of metals

289.56 3.70

6 Static converters, nes 237.91 3.04 7 Motor vehicle parts nes 183.16 2.34 8 Indicator panels incorporating liquid crystal

device/light emitting diode 172.58 2.20

9 Bananas including plantains, fresh or dried 167.80 2.14 10 Precious metal ores and concentrates nes 165.63 2.12



60

2010 TOP PHILIPPINE IMPORTS FROM JAPAN

Rank Products Exports (US$ Million) % Share

TOTAL 7,304.75 100.00 1 Parts & accessories of automatic data

processing machines & units thereof

1,270.33 17.39

2 Parts of electronic integrated circuits and micro assemblies

560.54

7.67

3 Electronic integrated circuits, monolithic, analogue or analogue and d

395.29

5.41

4 Gold in other semi-manufactured form n-monetary(inc gold plated w platinum)

259.80

3.56

5 Parts of machines & mechanical appliances nes having individual functions

192.39

2.63

6 Electrical app for switching/ protec elec circuits not exceed 1,000 V,nes 156.40

2.14

7 Sulphuric acid; oleum 152.90 2.09 8 Semiconductor devices, nes 149.92 2.05 9 Automobiles w reciprocating piston engine

displacing > 1500 cc to 3000 cc 147.65 2.02

10 Motor vehicle parts nes 131.69 1.80



61

G. PHILIPPINES – RUSSIA TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ TRILLION) : 2.229 GDP Per Capital (US$) : 15,900 GDP Growth Rates (%) : 3.8

Source : The World Factbook 2011 B. GENERAL TRADE INDICATORS Russia’s

World Ranking

as Importer

(2010)

Russia’s Import from the World (2010) in

US$ Thousand

Russia’s Share in

world Imports (2010)

Growth of

Russia’s Imports (2006-2010)

Russia’s Imports

from PHL (2010) in

US$ Thousand

Share of PHL to

Russia’s Total

Imports (2009)


to Russia (2006-2010)

Share of Russia to Total PHL Exports (2010)

18 217,415,099 1.4% 8% 34,527 0.02% 13% 0.07% Source: ITC Trademap

Viewed as one of the emerging economies in the world, Russia ranks as the 18th biggest

importer for 2010, with total imports amounting to US$ 217.41 billion. This accounts for 1.4% of total world imports. Imports of Russia have grown by 8% from 2006-2010.

In 2010, Philippine exports to Russia were valued at US$ 34.53 million, representing 0.07%

of the country’s total exports. From 2006-2010, Philippine exports to Russia have grown by 13%.

C. PHILIPPINES – RUSSIA BILATERAL TRADE

BILATERAL MERCHANDISE TRADE Value in US$ Million

Year Total Trade Exports to

Russia Imports from Russia Balance of Trade

2006 241.94 23.53 218.41 (194.88)

2007 141.43 25.88 115.55 (89.67)

2008 178.2 33.92 144.28 (110.36)

2009 302.35 39.09 263.27 (224.18)

2010 501.04 34.53 466.51 (431.98)

Ave. Growth

Rate 2006-2010 24.80 12.51 26.38


62

Trade with Russia continues to be sharply skewed in Russia’s favor, with the trade balance ballooning to negative $432 million in 2010 .

Exports posted a positive average 12.51% growth in the last five years (2006-2010), likewise

imports posted a positive average 26.38 growth in the same period.

Top PH exports for 2010 were desiccated coconut, carrageenan, garments, tobacco, lighters, activated carbon, personal care products, electric accumulator, and banana chips. Top imports are crude petroleum oils, products of iron and non-alloy steel, bars and rods, wheat and meslin, fertilizers, mineral fuels, iron and steel, cereals, fertilizers, organic chemicals, wheat flour, articles of rubber, inorganic chemical, copper and printed materials.

2010 TOP PHILIPPINE EXPORTS TO RUSSIA

Products 2010 Exports

(US$ Million) %Share

TOTAL PH EXPORTS TO RUSSIA 34.53 100.00

1 Vegetable saps & extracts 4.89 14.15

2 Brazil nuts, cashew nuts & coconuts 4.86 14.08

3 Tobacco unmanufactured; tobacco refuse 3.12 9.04

4 Women's blouses & shirts, knitted or crocheted 3.07 8.89

5 Cigarette lighters & other lighters 2.48 7.19

6 Activated carbon; activated natural mineral products; animal black 1.38 3.99

7 Coconut (copra),palm kernel/babassu oil & their fractions 1.31 3.79

8 Preserved fruits nes 1.27 3.67

9 Personal toilet preparations shaving preparations, deodorants etc. 1.14 3.30

10 Electric accumulator 1.12 3.26

Source: ITC Trademap 2011


63

2010 TOP PHILIPPINE IMPORTS FROM RUSSIA

Products 2010 Exports

(US$ Million) %Share

TOTAL PH IMPORTS FROM RUSSIA 466.51 100.00

1 Crude petroleum oils 342.30 73.37

2 Semi-finished products of iron or non-alloy steel 46.72 10.02

3 Bars & rods, in irregular wound coils, of iron or non-alloy steel 27.34 5.86

4 Wheat and meslin 26.06 5.59

5 Mineral or chemical fertilizers 8.31 1.78

6 Mineral or chemical fertilizers, nitrogenous 3.47 0.74

7 Flat-rolled products of iron /non alloy 2.25 0.48

8 Electronic integrated circuits and microassemblies 2.24 0.48

9 Synthetic filam yarn, not put up 1.94 0.42

10 Copper bars, rods and profiles 1.41 0.30

Source: ITC Trademap 2011


64

H. PHILIPPINES – UNITED STATES OF AMERICA TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP(US$ Trillion) : 14.72 GDP Per Capita (US$) : 47,400 GDP Growth Rate (%) : 2.8 Source: The World Factbook 2011


US World Ranking

as Importer

(2010)

Total US Imports from


Thousand

US Share

in World

Imports (2010)

Growth of US Import

s (2006-2010)

Total Imports

from PHL to US (2010) in US$

Thousand

Share of PHL to US Total

Imports (2010)


to US (2006-2010)

Share of US to


1 1,966,496,750 13.1% -2% 7,568,138 0.4% -5% 14.7% Source: ITC Trademap

As the largest importer in the world for 2010, US total imports amounted to US$ 1.97 trillion.

This accounts 13.1% of total world imports. US imports registered a negative growth of 2% from 2006 to 2010.

Philippine exports to the US for 2010 were valued at US$ 7.57 billion. This comprises 14.7% of the Philippine’s total exports but only accounts 0.4% of total US imports from the world.

Moreover, Philippine exports to the US have declined by 5% from 2006-2010. C. PHILIPPINES –UNITED STATES BILATERAL TRADE



Year Total Trade

Exports to US

Imports from US

Balance of Trade

2006 17,396.32 8,697.64 8,698.68 (1.04) 2007 16,716.74 8,601.40 8,115.34 486.06 2008 15,954.56 8,216.44 7,738.12 478.32 2009 12,285.31 6,797.10 5,488.21 1,308.89 2010 13,860.60 7,568.14 6,292.46 1,275.68

Growth Rate (%) 2006-2010 (7.34) (5.01) (9.87)


In 2010, USA was the second single country export market of Philippine exports next to Japan. Total bilateral trade was valued at $13.86 billion. Exports to USA declined by 5.01% from $8.70 billion in 2006 to $7.57 billion in 2010. Imports also decreased by 9.87% from $8.70 billion in 2006 to $6.29 billion in 2010.


65

The negative growth of exports can be attributed to the decrease in PH exports of electronic products from US$3.43 billion in 2008 to $2.96 billion in 2009 due to the US financial crisis that started in 2008.

2010 TOP PHILIPPINE EXPORTS TO USA


% Share

TOTAL 7,568.14 100.00

1 Portable digital computers 980.11 12.95

2 Computer data storage units 468.76 6.19

3 Electronic microassemblies made from discrete, active 404.40 5.34

4 Ignition wiring sets & other sets used in vehicles, aircraft 366.01 4.84

5 Static converters 360.17 4.76

6 Transmission apparatus, for radiotelegraph incorporating reception apparatus

308.37 4.07

7 Computer input/outputs with/without storage 303.69 4.01

8 Electrical apparatus for switching electrical circuits, not exceed 1,000 v

297.57 3.93

9 Photographic other than cinematographic cameras 260.74 3.44

10 Coconut(copra) oil crude 245.17 3.23 Source: ITC Trademap

2010 TOP PHILIPPINE IMPORTS FROM USA


% Share

TOTAL 6,292.46 100.00

1 Electronic integrated circuits, monolithic, analogue 1,683.16 26.75

2 Parts of electronic integrated circuits and microassemblies

1,284.44 20.41

3 Parts and accessories of automatic data processing machines and units

337.47 5.36

4 Wheat and meslin 281.82 4.48

5 Aircraft of an unladen weight exceeding 15,000kg 213.42 3.39

6 Soya-bean oil-cake 202.10 3.21

7 Monolithic integrated circuits, digital 141.53 2.25

8 Milk powder not exceeding 1.5 fat 115.71 1.84 9 Machines and mechanical appliances 70.26 1.12

10 Machines and appliances for testing the mechanical properties of metal

70.16 1.11



66

I. PHILIPPINES - AUSTRALIA TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ Billion) : 882.4 GDP Per Capita (US$) : 41,000 GDP Growth Rate (%) : 2.7 Source: The World Factbook 2011


Australia World

Ranking as

Importer (2010)

Australia Imports from the

World (2010) in US$

Thousand

Australia Share in


Growth of

Australia Imports (2006-2010)

Australia Imports


Thousand

Share of PHL to

Australia Total

Imports (2010)


to Australia

(2006-2010)

Share of Australia to Total

PHL Exports (2010)

19 188,740,660 1.3% 8% 348,770 0.2% -12% 0.7% Source: ITC Trademap

Australia ranks as the 19th biggest importer in the world for 2010, with total imports amounting to US$188.74 billion. This accounts for 1.3% of total world imports. Imports of Australia have grown by 8% from 2006-2010.

In 2010, Philippines exports to Australia were valued at US$ 349 million, representing 0.7%

of the country’s total exports. From 2006-2010, Philippine exports to Australia have declined by 12%.

C. PHILIPPINES – AUSTRALIA BILATERAL TRADE



Year Total Trade

Exports to Australia

Imports from Australia

Balance of Trade

2006 1,153 488 665 (177)

2007 1,289 528 761 (233)

2008 1,428 471 957 (486)

2009 1,081 296 785 (489)

2010 1,251 349 902 (553)

Growth Rate (%) 2006-2010 (0.13) (11.74) 6.62



67

2010 TOP PHILIPPINE EXPORTS TO AUSTRALIA


% Share

TOTAL 349 100.00

1 Lead-acid electric accumulators of a kind used for starting piston engines

37 10.60

2 Radio receiver not capable of operating w/o extension source of power for motor vehicle combined

26 7.45

3 Ignition wiring sets & other wiring sets used in vehicles, aircraft

21 6.01

4 Nickel ores and concentrates 18 5.16 5 Static converters, 18 5.16

6 Carboys, bottles, flasks, jars, pots, phials and other containers

16 4.58

7 Electric conductors, for a voltage not exceeding 80 V,

10 2.87

8 Coconuts, dessicated 9 2.58 9 Light petroleum distillates 9 2.58

10 Games, coin or disc-operated, other than bowling alley equipment

7 2.01


2010 TOP PHILIPPINE IMPORTS FROM AUSTRALIA


% Share

TOTAL 902 100.00 1 Copper ores and concentrates 230 25.50 2 Bovine cuts boneless, frozen 42 4.66 3 Milk powder not exceeding 1.5% fat 35 3.88

4 Petroleum oils and oils obtained from bituminous minerals, crude

31 3.44

5 Wheat and meslin 24 2.66 6 Anhydrous ammonia 24 2.66

7 Titanium pigments and preps, >80% titanium oxide

24 2.66

8 Salt (including table salt & denatured salt) pure sodium chloride & sea water

20 2.22

9 Malt, roasted 20 2.22 10 Medicaments, in dosage 19 2.11



68

J. PHILIPPINES – NEW ZEALAND TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ billion) : 117.8 GDP Per Capita (US$) : 27,700 GDP Growth Rate (%) : 1.5

Source: The World Factbook 2011

B.GENERAL TRADE INDICATORS

New Zealand’s

World Ranking

as Importer

(2010)

New Zealand’s Imports from the

World (2010) in US$

Thousand

New Zealand’s Share in


Growth of New

Zealand’s Imports (2006-2010)

New Zealand’s Imports


Thousand

Share of PHL to

New Zealand's


Growth of PHL Exports to New Zealand (2006-2010)

Share of New

Zealand to Total

PHL Exports (2010)

56 30,157,848 0.2% 1% 32,701 0.11% -21% 0.1% Source: ITC Trademap

New Zealand ranks as the 56th importer for 2010, with total imports amounting to US$30.16 billion. This accounts for 0.2% of total world imports. Imports of New Zealand have grown by 1% from 2006-2010.

In 2010, Philippines exports to New Zealand were valued at US$ 32.70 million, representing

only 0.1% of the country’s total exports. From 2006-2010, Philippine exports to New Zealand have declined by 21%.

C. PHILIPPINES – NEW ZEALAND BILATERAL TRADE


Value in US$ ‘000

Year Total Trade

Exports to New Zealand

Imports from New Zealand

Balance of Trade

2006 341,775 53,171 288,604 (235,433) 2007 486,247 114,154 372,093 (257,939) 2008 477,238 49,308 427,930 (378,622) 2009 347,040 28,714 318,326 (289,612) 2010 459,259 32,701 426,558 (393,857)

Growth Rate (%) 2006-2010 2.57 (20.96) 6.45



69

2010 TOP PHILIPPINE EXPORTS TO NEW ZEALAND


% Share

TOTAL 32,701 100.00

1 Bananas including plantains, fresh or dried 7,325 22.40

2 Lead-acid electric accumulators of a kind used for starting piston engines 3,494 10.68

3 Photographic, other than cinematographic cameras 2,171 6.64

4 Sacks, bags, packing, of strip plastic material 1,344 4.11

5 Mucilages & thickeners, modified or not, derived from vegetable products 1,341 4.10

6 Coconuts, dessicated 955 2.92

7 Jams, fruit jellies, fruit/nut purée & paste, prepared ,sugared, sweetened or unsweetened 894 2.73

8 Pineapples, fresh or dried 858 2.62

9 Surface-active preparations, washing and cleaning preparations 772 2.36

10 Pineapples or with prepared or preserved, sugared, sweetened, spirited or not 761 2.33



70

2010 TOP PHILIPPINE IMPORTS FROM NEW ZEALAND


% Share

TOTAL 426,558 100.00

1 Milk powder not exceeding 1.5% fat 121,212 28.42

2

Milk and cream powder unsweetened exceeding 1.5% fat 67,857 15.91

3 Fats and oils derived from milk 53,800 12.61

4

Buttermilk, curdled milk & cream, kephir & fermented or acid milk & cream 29,806 6.99

5

Milk not concentrated & unsweetened exceeding 1% not exceeding 6% fat 23,901 5.60

6 Paper, Kraftliner, in rolls, unbleached, uncoated 14,927 3.50

7 Bovine cuts boneless, frozen 11,106 2.60

8

Prep of cereals, flour,starch/milk for infant use, put up for retail sale 10,388 2.44

9 Cheese processed, not grated or powdered 8,686 2.04

10 Butter 8,041 1.89



71

K. PHILIPPINES – TURKEY TRADE RELATIONS

A. ECONOMIC INDICATORS (2010) GDP (US$ BILLION) : 960.5 GDP PerCapital (US$) : 12,300 GDP Growth Rates (%) : 8.2

Source : The World Factbook 2011. B. GENERAL TRADE INDICATORS

Turkey’s World

Ranking as Importer

(2010)

Turkey’s Import from the World

(2010) in US$ Thousand

Turkey’s Share in

world Imports (2010)

Growth of Turkey’s Imports (2006-2010)

Turkey’s Imports

from PHL (2010) in

US$ Thousand

Share of PHL to

Turkey’s Total

Imports (2009)

Growth of PHL

Exports to Turkey

(2006-2010)

Share of Turkey to Total PHL Exports (2010)

20 185,541,037 1.2% 4% 61,885 0.03% -12 % 0.12% Source: ITC Trademap.

Turkey’s push to qualify as an EU candidate encouraged the country to undertake major reforms to strengthen its democracy and economy.

Turkey is emerging from the global crisis in relatively good shape. Imports and exports are on the rise. However, Turkey continues to rely on the EU as destination of 45% of its exports, which makes it vulnerable to the effects of the euro crisis. Nevertheless, growing domestic consumption contributed to the 4% average growth in imports in the last five years (2006-2010).

Turkey is the 20th importer in the world, but the Philippines’ share in Turkey’s annual imports is only around 0.03%.

C. PHILIPPINES – TURKEY BILATERAL TRADE

BILATERAL MECHANDISE TRADE Value in US$’000

Source: ITC Trademap 2010.

YEAR TOTAL TRADE

EXPORTS IMPORTS BALANCE OF TRADE

2006 101,775 78,711 23,064 55,647 2007 108,713 73,434 35,279 38,155 2008 118,353 63,174 55,179 7,995 2009 86,100 33,902 57,739 (18,326) 2010 120,834 61,885 58,949 2,936

Ave. Growth Rate (%) 2006-2010

1.11 (11.79) 26.74


72

Total 2010 figures, show marked recovery as exports nearly doubled, expanding 82.5% over previous years’ total. However, exports in the last five years (2006-2010) contracted 11.8% on the average.

Top exports include flat-rolled products of iron, tv cameras/transmission apparatus, parts and accessories of motor vehicles, processed coconut, coconut oil (crude), yarn of artificial fiber, electronic integrated circuits, and rubber pneumatic tires.

Top imports include wheat flour, unmanufactured tobacco, medicament mixtures, lifting/handling/loading machinery, knitted/crocheted fabrics, electric transformers/static converters, iron and steel stoves/ranges/grills, and other firearms and similar devices.

2010 TOP PHILIPPINE EXPORTS TO TURKEY

Products 2010

EXPORTS (US$’000)

%Share

TOTAL 61,885 100.00

1 Flat rolled products of iron & steel, plated/coated

7,992 12.91

2 Television cameras, transmission apparatus 7,978 12.89 3 Parts & accessories of motor vehicles 7,320 11.83 4 Coconuts processed 6,144 9.98 5 Coconut oil (crude) 5,556 8.98 6 Yarn of artificial fiber 5,269 8.51 7 Electronic ICs & micro assemblies 5,082 8.21 8 New pneumatic tires, of rubber 2,741 4.43 9 Yarn of synthetic fiber, not put up for retail 2,460 3.98 10 Parts of TV reception apparatus 1,947 3.15



73

2010 TOP PHILIPPINE IMPORTS FROM TURKEY

Products 2010

IMPORTS (US$’000)

%Share

TOTAL 58,949 100.00 1 Wheat or meslin flour 25,637 43.49 2 Unmanufactured tobacco 7,398 12.55

3 Medicament mixtures 6,711 11.38

4 Lifting/handling/loading machinery 2,349 3.98 5 Knitted or crocheted fabrics 1,541 2.61 6 Electric transformer, static converter 916 1.55 7 Iron & steel stoves, ranges, grills, etc. 778 1.32 8 Other firearms and similar devices 762 1.29 9 Machines & mechanical appliances 680 1.15 10 Fruit and vegetable juices, unfermented 671 1.14



74

L. PHILIPPINES – SOUTH KOREA TRADE RELATIONS


GDP (US$ trillion) : 1.467 GDP Per Capita (US$) : 30,200 GDP Growth Rate (%) : 6.1 Source: The World Factbook 2011


South Korea’s World

Ranking as

Importer (2010)

South Korea’s Imports from the

World (2010) in US$

Thousand

South Korea’s Share

in World

Imports (2010)

Growth of

South Korea’s Imports (2006-2010)

South Korea’s Imports


Thousand

Share of PHL to South

Korea’s Total

Imports (2010)


to South Korea (2006-2010)

Share of

South Korea

to Total PHL

Exports (2010)

10 425,098,361 2.8% 6% 2,228,182 0.52% 10 4.3% Source: ITC Trademap

South Korea is an export-oriented country, with a total trade volume of US$892.8 billion in 2010. This figure also makes them the 7th largest exporter and 10th largest importer in the world. Its total imports amounted to US$ 425.10 billion, accounting for 2.8% of total world imports. From 2006 to 2010, South Korea’s imports increased by 6%.

In 2010, Philippines exports to South Korea were valued at US$ 2,228.18 million, representing only 0.52% of South Korea’s total imports from the world and only 4.3% of the Philippines’ total exports. From 2006-2010, Philippine exports to South Korea have grown by 10%.

C. PHILIPPINES – SOUTH KOREA BILATERAL TRADE



Year Total Trade

Exports to South Korea

Imports from South Korea

Balance of Trade

2006 4,755.18 1,422.83 3,332.35 (1,909.52) 2007 5,187.64 1,783.73 3,403.91 (1,620.17) 2008 5,651.04 2,522.52 3,128.52 (606.01) 2009 4,989.06 1,828.20 3,160.86 (1,332.66) 2010 6,262.63 2,228.18 4,034.45 (1,806.27)

Growth Rate (%) 2006-2010 5.25 9.66 3.13



75

2010 TOP PHILIPPINE EXPORTS TO SOUTH KOREA


% Share

TOTAL 2,228.18 100.00

1 Electronic integrated circuits and micro assemblies 638.10 28.64

2 Electrical capacitors, fixed, variable or adjustable 340.22 15.27 3 Crude petroleum oils 290.97 13.06 4 Automatic data processing machines; optical reader 145.84 6.55 5 Parts & accessories of computers & office machines 94.56 4.24

6 Diodes/transistors & semiconductor devices 74.97 3.36

7 Refined copper and copper alloys, unwrought 62.21 2.79 8 Pipe, chewing & snuff tobaccos 45.56 2.04

9 Oil-cake 42.23 1.90 10 Petroleum oils, not crude 35.60 1.60


2010 TOP PHILIPPINE IMPORTS FROM SOUTH KOREA


% Share

TOTAL 4,034.45 100.00

1 Electronic integrated circuits and micro assemblies 1,646.76 40.82

2 Petroleum oils, not crude 472.29 11.71

3 Electrical capacitors, fixed, variable or adjustable 209.43 5.19

4 Cars (incl. station wagon) 102.42 2.54

5 Parts & accessories of computers & office machines 95.64 2.37

6 Machines & mechanical application having individual functions

90.79 2.25

7 Gold unwrought or in semi-manufactured forms 83.60 2.07

8 Public-transport type passenger motor vehicles 73.02 1.81

9 Flat-rolled prod of iron or non-alloy/steel, clad plated or coated

57.97 1.44

10 Ethyl alcohol & other spirits 47.44 1.18 Source: ITC Trademap


76

M. PHILIPPINES – SOUTH AFRICA TRADE RELATIONS


GDP (US$ Billion) : 524 GDP Per Capita (US$) : 10,700 GDP Growth Rate (%) : 2.8

Source: The World Factbook 2011


S. Africa World

Ranking as

Importer (2010)

S. Africa Imports from the

World (2010) in US$

Thousand

S. Africa Share

in World

Imports (2010)

Growth of S.

Africa Imports (2006-2010)

S. Africa Imports


Thousand

Share of PHL to S. Africa's



to S. Africa (2006-2010)

Share of S.

Africa to Total

PHL Exports (2010)

35 80,139,282 0.53% 1% 128,727 0.2% 19 0.3% Source: ITC Trademap

IN 2010, South Africa ranks as the 35th biggest importer in the world. Its total imports amounted to US$ 80.13 billion, accounting for .53% of total world imports. From 2006 to 2010, South Africa’s imports increased by 1%.

In 2010, Philippines exports to South Africa were valued at US$ 128.73 million, representing

only 0.2% of South Africa total imports from the world and only 0.3% of the Philippines’ total exports. From 2006-2010, Philippine exports to South Africa have grown by 19%.

C. PHILIPPINES – SOUTH AFRICA BILATERAL TRADE



Year Total Trade

Exports to S. Africa

Imports from S. Africa

Balance of Trade

2006 91,677 51,224 40,453 10,771 2007 164,560 106,004 58,556 47,448 2008 157,397 92,647 64,750 27,897 2009 154,316 92,157 62,159 29,998 2010 187,352 128,727 58,625 70,102

Growth Rate (%) 2006-2010 14.63 19 8.35



77

2010 TOP PHILIPPINE EXPORTS TO SOUTH AFRICA


% Share

TOTAL 128,727 100.00 1 Parts & access of motor vehicles 55,014 42.74 2 Tobacco unmanufactured 14,671 11.40

3 Organic surface-active agents, washing & clean preparations

9,404 7.31

4 Medicament mixtures, put in dosage 5,597 4.35 5 Breakfast cereals & cereal bars 5,462 4.24 6 Electric transformer, static converter 4,806 3.73

7 Articles for funfair, table/parlour games & auto bowling alley equipment

4,766 3.70

8 Optical fibre, cables; sheets & plate of polarising materials

2,674 2.08

9 New pneumatic tires, of rubber 2,232 1.73 10 Automatic data processing machines;optical reader 1,929 1.50


2010 TOP PHILIPPINE IMPORTS FROM SOUTH AFRICA


% Share

TOTAL 58,625 100.00 1 Maize (corn) 20,390 34.78 2 Flat-rolled prod of iron or non-alloy /steel, clad,

plated or coated 7,643 13.04

3 Chemical wood pulp, soda or sulphate, other than dissolving grades

3,350 5.71

4 Vegetable tanning extracts; tannins & their salts 3,085 5.26 5 Semi-finished products of iron or nonalloy steel 2,787 4.75 6 Ethyl alcohol & other spirits 2,516 4.29 7 Cotton, not carded or combed 2,176 3.71 8 Electronic integrated circuits and micro assemblies 1,540 2.63 9 Unsaturated acyclic & cyclic monocarboxylic acid &

anhydrides, halides 1,356 2.31

10 Mechnical wood pulp 1,188 2.03 Source: ITC Trademap


78


79

ANNEX 3: The National Export

Development and Competitiveness Fund


80


81

THE NATIONAL EXPORT DEVELOPMENT AND COMPETITIVENESS FUND

BACKGROUND: Funding assistance for export development is premised on business realities. Every type of business has to invest in the marketplace to be able to capture shares. Generally, most businesses need to invest even more in order to increase their share of the market. Although companies that have attained critical mass can maintain and grow profits while spending significant amounts on market promotions, national export development is configured differently and needs government assistance in addition to private-sector market investments. The reason is that Philippine exports consist of a wide range of business activities- from supply chain components to finished goods and services of varying gross profit margins constantly affected by foreign exchange fluctuations and competitive action. The amounts necessary to promote, innovate and build in-country capacity in order to achieve significant export growth cannot be wholly generated much less sustained by the margins structure of the exporting community. Furthermore, export manufacturing facilities of intermediate goods are largely a component of multinational, multi-country supply chains where Philippine participation is pre-determined by long- term supply chain strategies. Moving up this chain becomes an in-country initiative dependent on Philippine capacity developed by local and foreign investments typically motivated by government promotion programs. These are the fundamental reasons why the Export Development Act provided for promotion funding for exports. As contained in Section 14 of the Act, the EDC through the DTI shall develop an export promotion privatization program. Section 14 further provides that until funding is secured from the export promotion privatization program, “the national government shall appropriate such sums as may be necessary to the Council for export promotion and information.” Because of differences with Congress pertaining to appropriations for government promotional functions affected by the EDA’s export promotion privatization program, implementation of this program was stalled. Meanwhile, from 1999 to 2004 (a period covering two PEDP three-year cycles), export promotion assistance was mainly drawn from the activities of the Bureau of Export Trade Promotion (BETP), the Center for International Trade Exhibitions and Missions (CITEM), the Foreign Trade Service Corps (FTSC), the Philippine Trade Training Center (PTTC), the Product Development and Design Center of the Philippines (PDDCP), the Garments and Textile Export Board (GTEB), the Philippine International Trading Corporation (PITC) and the Board of Investments (BOI- for investment promotion). While this arrangement was helpful at the time, the evolving competition in a fast-paced global export environment and challenging economic conditions in mature and emerging export markets called for higher levels of funding support beyond the budgets appropriated to these various government export promotion agencies with the exception of the GTEB.1 Responding to competitive pressures from China and other rapidly developing exporting countries in ASEAN and Eastern Europe coupled with the difficulties arising from an appreciating peso and the effects of the global financial crisis, an Export Promotion Fund managed by the EDC and DTI was established. In 2005, the BSP granted the EDC a Php 10.5 million fund. In 2007, the BSP, DTI, DBM, NEDA and PHILEXPORT pooled together a Php 280 million Export Promotion Fund (EPF). In

1 The GTEB was deactivated at the end of the sector’s quota regime in 2004. Its residual funds were remitted to the National Treasury for draw-down by the DTI’s Garments and Textile Industry Development Office [GTIDO] under the BOI, following the Administrative Code’s provisions on the disposition of residual corporate funds.


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2009, a Php 200 million grant was drawn from the Economic Stimulus Fund of the Office of the President for an Export Support Fund (ESF) initially approved at Php 1 billion. These funds enabled Philippine exports to grow by thirty-eight percent (+38%) for the 2005-2007 PEDP period vs. the prior three years. More significantly, the funding support arrested export decline to only two percent (-2%) in 2008 and seventeen percent (-17%) in 2009 when the rest of the exporting world suffered more than twenty percent reduction (-20%) because of the global financial crisis. Eventually, use of these support funds enabled Philippine exports to recover with a thirty-four percent (+34%) growth in merchandise and twenty-one percent (21%) growth in services in 2010. FUND SOURCE: The source of the fund will initially come from the Office of the President (OP) amounting to P100 million per year starting 2011 until it is subsequently included in the budget of the DTI. The DBM will facilitate transfer of the initial funds from the OP to a DTI line budget item.

MANAGEMENT OF THE FUND:

The EDC and DTI shall manage and deploy the fund for promotional and capacity-building assistance programs for exporters. Through a strengthened EDC Secretariat, improvements on earlier utilization mechanism shall be developed and implemented.


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