Comprising of myriad Islands, mountainous Philippines is the fastest growing country in population with GNI per capita US $1,300 (2006). Exports have been a key driver of growth and include clothing, electrical machinery, food and live animals, chemicals, timber products as the main export sectors. The textile and garment sector in the Philippines is a vital part of the country’s economy and employs nearly 400,000 people, making it the largest employer in the manufacturing sector with approx 11% of the national total. An additional 700,000 people are employed as home-workers and small sub-contractors. Philippines had been one of the largest sources of imported garments for the major markets of North America and Western Europe when exports from its major competitors were held back by quotas. As a key agency of the Philippine Government, the Department (Ministry) of Trade and Industry (DTI) is charged with creating a business-friendly environment conducive to the growth of enterprises and supportive of fair and robust trade in goods and services, both within and outside the Philippines. The Department functions through five major groups namely Industry and Investments Group (IIG): Investment promotion in activities critical to the Department's trade and industry development program; International Trade (ITG): Promotion of domestic and international trade and commerce; Consumer Welfare and Trade Regulation (CWTRG): Enforcement of laws to protect consumers, consumer education and formation of consumer groups; Regional Operations (ROG): Responsible for the field operations of the Department in the regions and provinces; and Small & Medium Enterprises Development (SMED): Assists in the development of entrepreneurs, small and medium-scale businessmen through various programs. Mr Elmer Hernandez, 59, is the Undersecretary of IIG, Department of Trade and Industry (DTI). Mr Hernandez is a Bachelor of Science in Mining Engineering, 1970; a Master of Science in Geology, 1976; and a Master of Public Administration from University of the Philippines, 1980. Currently he is also the Managing Head, Board of Investments (BOI); Officer-in-Charge, Build Operate Transfer Center; and Undersecretary for National Development Company (NDC), Philippine Retirement Authority (PRA), Center for Industrial Competitiveness, National Industrial Manpower Training Council, and Garments and Textile Industry Development Office
Thanking you for the opportunity of this talk, we request your views on the role and significance of Textile and Garment industry in the economic growth of your Country Phillipines.
The Philippines’ Garments and Textile Industry continues to enjoy being the country’s 3rd largest exporter, next to electronics and mineral products. However, despite this seemingly impressive position, the industry is sadly experiencing great challenges ahead with the peso appreciation and increasing competition from China, Bangladesh, India and Vietnam.
Currently the industry employs close to 400,000 work force, but in the situation as discussed above, it is experiencing a tough time. In this global economic slowdown, our government is putting up measures to improve on the competitiveness of the Philippine garments and textile industry to avert closure of existing companies.
Year 2005 recorded a crucial decision implemented by WTO – Elimination of Quotas. What consequences had it brought along on your textiles and clothing industry? What were the steps taken by Ministry to win the situation in the industry’s favour?
The end of the quota regime three years ago was the beginning of the transformation of the marketplace which in turn naturally transformed the industry. The shift from quota-controlled environment to the fundamentals of a consumer-led global market, re-defined the basis for growth. That basis moved from increments driven by integrated manufacturing processes, to continuity of meaningful presence by converging the components of a consumer-centric supply chain contoured by constantly changing business cycles.
The loss of quota protection starting in 2005 effectively puts more pressure in maintaining business engagements with foreign buyers. Price, reliability, quality and delivery time have become widespread concerns.
The Philippine government has been incessantly supporting the industry, arming to be attuned to the quota-free global warfare of 2005. The Department of Trade & Industry through the deactivated Garments and Textile Export Board (GTEB), in close partnership with the private sector, has launched in 2002 the “Garments Export Industry Transformation Plan and Assistance Package”. This seeks to enhance the competitiveness of the industry and ensure that it stays viable and vibrant beyond 2004. In summary, the assistance package focus on the - development assistance programs designed to improve productivity through investments in technology and skills upgrading, to address speed-to-market concerns, develop and promote diversified markets and products.
Thus, in line with the Executive Order Nos. 285 dated 23 February 2004 and 285-A dated 10 March 2006 directing the rationalization of the operations of the Garments Textile and Export Board (GTEB), and in compliance with the proper disposition of GTEB’s corporate funds under Permanent Committee (PC) constituted pursuant to Section 45 , Chapter 5, Book VI of the Administrative Code of 1987, as reiterated under Executive Order No. 431, and in order to ensure continued efficient delivery of service to the garments and textile sector, a roadmap was prepared in accordance with the garments transformation plan.
To sustain export growth, groundwork for multilateral matters and free trade agreements (FTA) with the US, EU, Japan and economic engagement with ASEAN is being initiated as a significant development to achieve continued market access.
Can we have exports figures of this industry for past two years?
The garments and textile industry posted US$2.50 billion sales at year end 2007, compared to the 2006 where export was registered at US$2.86 billion or a decline of 12.65 percent from year to year. The garments industry sees a further decline in 2008. This could be attributed to the effects of globalization since the abolition of quota in 2005.
In 2006, total Philippine garments and textile exports grew by 11 percent in value. Exports of apparel grew by 13 percent also in value while exports of textile yarns/fabrics went down by 12 percent.
In 2005, exports grew by 6 percent. While in 2004 and the three-year average in prior periods saw Philippine garments and textile exports suffering minus 4 percent declines.
These data illustrate that during the last few years of the quota regime, Philippine exports were declining. After the quota, exports started growing.
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.