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1PROPOSED PEDP 2008-2010
Proposed Philippine Export Development Plan (PEDP) 2008-2010
(Revised as of 22 July 2008)
Presentation toPHILEXPORT GMM, HOTEL SOFITEL
July 23, 2008
2PROPOSED PEDP 2008-2010
1. Framework and Planning Process
2. 2005-2007 Scorecards
3. Global Outlook
a. Key Challenges
b. Opportunities
4. 2008-2010 Export Targets
5. Strategies
6. Policy and Financial Requirements
7. Implementation
Contents of the Plan
3PROPOSED PEDP 2008-2010
Part 1. Framework and Planning Process
A. Framework
• Medium Term Philippine Development Plan (MTPDP) 2004-2010 as updated for 2008-2010
• Philippine Export Development Plan (PEDP) 2005-2007
B. Planning Process
• Workshops on Global Trends and Strategy Formulation • Visioning Session • Sectoral Value Chain Analysis• Regional Consultations• Focus Group Discussions
4PROPOSED PEDP 2008-2010
Part 2: PEDP 2005-2007 Scorecards
Philippine Export Performance vs Targets
43.8249.13
53.37
3.63
4.17
4.83
Services (T)
Goods (T)
39.68 41.2647.41 50.3
4.044.52
6.448.45
0
10
20
30
40
50
60
70
2004 2005 2006 2007
Services (A)
Goods (A)
US$B
Sources: NSO, BSP, EDC
43.7247.45 46.07
53.33 53.8558.2 58.75
5PROPOSED PEDP 2008-2010
Philippine Export Growth Rates vs Targets
Sources: MTPDP 2004-2010,BSP,NSO as processed through BETP-managed TRADELINE
0
5
10
15
20
25
30
35
40
45
2005 2006 2007
Target Goods
Actual Goods
Target Services
Actual Services
Part 2: PEDP 2005-2007 Scorecards… cont.
%
6PROPOSED PEDP 2008-2010
61
105
36
80
20
64
127
40
96
26
86
141
41
110
32
101
161
47
131
41
0
20
40
60
80
100
120
140
160
180
Indonesia Malaysia Philippines Thailand Vietnam
2003
2004
2005
2006
Selected ASEAN Export Performance 2003-2006 (in US $B)
Part 2: PEDP 2005-2007 Scorecards… cont.
Source: Trademap; ASEAN Secretariat
7PROPOSED PEDP 2008-2010
•Export growth remained positive •2006 surge in intra-regional trade with China and the rest of Asia •Peso reduced export revenues the following year
2005 2006 2007
RP 4 14 6
ASEAN 5* 19 16 35
Global 14 16 15
Sources: MTPDP 2004 – 2010,National Statistics Office, Trademap; WTO ; ASEAN Secretariat
* Indonesia, Malaysia, Singapore, Thailand & Vietnam
Comparative Merchandise Exports Growth (%)
Part 2: PEDP 2005-2007 Scorecards… cont.
8PROPOSED PEDP 2008-2010
2005 2006 2007
RP 12 42 31
Global Commercial Services 12 12 18
Comparative Services Exports Growth (%)
•Growing contribution of commercial services exports to total trade. •Booming BPO services continue to lead growth.
Part 2: PEDP 2005-2007 Scorecards… cont.
Sources: Bangko Sentral ng Pilipinas
WTO
9PROPOSED PEDP 2008-2010
Rest of the World 13.0%
China 22.9%
Japan14.5%
USA17.0%
ASEAN15.9%
EU17.0%
Overall balance in market shares
Major Markets of RP Merchandise Exports %2007
US$ 50.3B
Part 2: PEDP Scorecards, cont.
10PROPOSED PEDP 2008-2010
Product Group
2007
Value US$M
Growth %
Share%
Electronics 31,023 16 63
Garments & Wearables 2664 -9 5
Machinery and Transport 2,748 9 5
Food 1,476 13 3
Home Furnishing 1,215 7 2
Marine Prods 584 25 1
Mineral Products 2,548 21 5
Petroleum 1,108 21 2
Metal components 481 20 1
Coconut 944 25 2
Others 5,479 6 11
RP Merchandise Exports to the World
Source: National Statistics Office
Part 2: PEDP 2005-2007 Scorecards… cont.
11PROPOSED PEDP 2008-2010
Policy Measures
Milestones/Updates
Streamlined and Automated Procedures
Export clearance fees eliminated
(17 agencies compliant. Others are not due to their charter provisions)
ASYCUDA World e-Customs Project is delayed
Export Clearance procedures not yet fully computerized
Infrastructure Improvements
Supported moves for completion of priority infrastructure projects
GenSan Fishport improved and compliant to EU standards
Export wharfage fees reduced on April 20, 2007 - December 31, 2007. Request for extension ignored
Part 2: PEDP 2005-2007 Scorecards… cont.
Policy Measures put in place for
better business environment
Legend: Accomplished On-going; need to accelerate No action so far
12PROPOSED PEDP 2008-2010
Policy Measures
Milestones/Updates
Export Training &
Skills Enhancement
DepEd:Teachers retraining on going in English, Math and Science in basic education
DOST, TESDA, CITC: Trainings for revenue streams conducted (additional training needed)
CHED and TESDA and universities: Ladderization program being implemented
Legislative Amendments
R.A. 9501 - Amendment of Magna Carta for MSMEs approved (IRR being drafted)
Amendment of Customs Brokers Act (3rd Reading, HOR)
Anti Smuggling Bill (1st Reading, HOR & Senate)
Funding Sources for Export Promotion
Php 10.5 M grant from BSP for export promotion(90.5% utilized)
Export Promotion Fund P280 M, from DTI, BSP, DBM, NEDA and PHILEXPORT. (Will be fully obligated by 3rd Qtr, 2008)
Access of SMEs of GFI financing facilities increased
Part 2: PEDP 2005-2007 Scorecards… cont.
Legend: Accomplished On-going; need to accelerate No action so far
13PROPOSED PEDP 2008-2010
Part 3. Global Outlook, 2008-2010
• Historic credit crisis• Record-high oil prices• Heightened inflation fears
• Perhaps even the beginning of a recession…???
15PROPOSED PEDP 2008-2010
Part 3. Global Outlook, 2008-2010
Sources: Global Economic Prospects 2008
International Monetary Fund, 2008
Asian Development Bank, Development Outlook, 2008
World Bank, July 2008
• Moderate global growth expected at best
• Contraction imminent due to surging oil and food prices
• Slower growth in high-income countries
• Developing-country imports now driving global growth.
• Asia’s growth track is more stable than the rest of the world
16PROPOSED PEDP 2008-2010
Part 3. Global Outlook…cont.
A. Key Challenges
1. Market Access • ASEAN integration• EU expansion• Emerging markets
2. High Cost of Inputs to Exports
3. Rising Cost of Crude Oil
4. Uncertainties in the Peso-US Dollar Rate
5. High Cost of Doing Business
6. Inadequate training opportunities to respond to growing demand for RP human resources
17PROPOSED PEDP 2008-2010
B. Key Opportunities
1. Deepening economic integration of ASEAN region
2. Additional market access arising from ASEAN plus partners (i.e. China, Korea, Australia, New Zealand, and Japan)
3. Emerging markets like India, South Africa, and Eastern Europe including Russia, Turkey and Ukraine, among others.
4. Increased oil revenue-driven spending in the Middle East
Part 3. Global Outlook…cont.
18PROPOSED PEDP 2008-2010
2008 Export Industry ProjectionsSector Growth
in %
Electronics 0
Garments & Textile 2
Fashion Accessories 11
Machinery & Transport 18-24
Mineral Products 5
Processed Food & Beverages 2
Fresh Fruits & Vegetables 5
Marine Products 10
Home Furnishings 15
Giftwares & decors 2
Metal Components 20
Petroleum Products 12
ICT Services 39
Part 4. 2008-2010 Exports Targets… cont.
19PROPOSED PEDP 2008-2010
Part 4. 2008-2010 Export Targets
Growth in services exports to outpace merchandise exports
84.41573.21464.28 - 958.8TOTAL
23.440 16.740 11.935 – 40 8.5Services
61.08 56.56 53.34 - 6 50.3Goods
Value US$B
Growth %
Value US$B
Growth %
Value US$B
Growth %
Value US$B
2010200920082007
(Actual)
20PROPOSED PEDP 2008-2010
Growth in services exports to outpace that of merchandise…
Part 4. 2008-2010 Exports Targets
64.273.2
84.4
21PROPOSED PEDP 2008-2010
Part 4. 2008-2010 Exports Targets… cont.
Revenue Streams as Sources of Growth
Goods
1. Automotive Parts
2. Electronics*
3. Food*
4. Homestyle Products
5. Minerals*
6. Natural & Organic Products (non-food)
7. Textile, Apparel, Footwear, Travelgoods
Services
1. ICT
2. Construction*
3. Emerging Services*
• Health & Wellness
Medical Tourism
Wellness/ Spa
Retirement
• Logistics
• Entertainment
• Education* Focus of more resources
22PROPOSED PEDP 2008-2010
1. Market Strategiesa. Geographical Marketsb. Culture-based Markets
2. Product Strategiesa. Build up competitor intelligence to enhance product
differentiationb. Initiate “export branding” consciousness among exporters
3. Enterprise Strategies a. Enhance export capacity of enterprises
b. Expand business towards more aggressive export promotion
4. Policy and Legislative Agenda to empower exporters
Part 5. Strategies
23PROPOSED PEDP 2008-2010
5. Policy and Legislative Strategies
a. Trade Facilitation
• Seriously implement the streamlining and automation of trade procedures and government transactions
• Accede to the Revised Kyoto Convention
b. Strengthening of Resources
• Pursue Energy Self-Sufficiency
• Modernize the Agriculture Sector
• Involve Academic and Research Institutions
• Improve Statistical and Data Systems for Trade
• National Innovation Policy and IPR
Part 5. Strategies… cont.
24PROPOSED PEDP 2008-2010
c. Credit and Financial Support for Micro, Small & Medium
Exporters
• Reach out to more MSMEs to access Financing Programs of Government Financial
Institutions
•Increase the Export Promotion Fund
Part 5. Strategies… cont.
25PROPOSED PEDP 2008-2010
Export Promotion Fund
Part 5. Strategies… cont.
For every US$1 = US$ 40 increase exports (spent by TPOs)
According to ITC/World Bank economists:
PEDP Total Exports Target in 2008 is with incremental of US$5.27B in goods (net of electronics) and services
Following this standard, we actually need US$117M or around PhP 5.3B this year alone
EDC will be asking only PhP1B per year as Export Promotion under PEDP 2008-2010
* 1US$ = Php 45
26PROPOSED PEDP 2008-2010
Thank You
27PROPOSED PEDP 2008-2010
Market Access Issues
• Need to address constitutional and legal issues that could endanger full realization of benefits offered by FTAs and EPAs
• ASEAN FTA requires RP SMEs to adjust to demands of an open economy
• Developed country markets continue to impose stringent product standards as it is becoming more concerned with health, bio-terrorism and environment
• Intensified demand for more economic efficiency and productivity
initiatives as RP taps new markets and strengthens existing ones
• More sophisticated security requirements
28PROPOSED PEDP 2008-2010
High Cost of Inputs to Exports
• The spate of oil price hike has triggered high commodity prices.
• Insufficient supply of raw materials pushed prices up
• Logistical constraints, particularly transportation, also drove up costs of commodities
• Increasing salary rates of employees, especially in the services sector.
29PROPOSED PEDP 2008-2010
$0.00
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Nominal
Inflation Adjusted 2007Rising Cost of Crude Oil
• High world oil prices put pressure on inflation adversely affecting production costs
• Hinders industries to expand
production while forces some to close shops
• RP ranks 2nd most expensive electricity rates in ASEAN
US$/bbl.
Source: Illinois Oil and Gas Association IOGA
30PROPOSED PEDP 2008-2010
Uncertainties in the Peso-US$ Rate
• Peso had the most rapid appreciation in 2003-2007 among Asian currencies
• Export sector significantly affected by a stronger local currency • Peso started depreciating March 2008 amid lofty oil prices and high local prices • But RP exports seen to remain weak despite rise in peso-dollar rate due to lower global demand
31PROPOSED PEDP 2008-2010
High Cost of Doing Business
• RP ranked 133 out of 178 economies in Doing Business 2008, involving number of steps and documentation requirements, processing time and fees
• Slow automation of BOC and export clearance functions of agencies
• Inconsistencies in the implementation of procedures and policies in the Regions
32PROPOSED PEDP 2008-2010
Inadequate training to respond to growing demand for RP human resources
• Domestic demand for human resources needs a sustainable pool of manpower
• World expects larger movement of professionals and highly skilled labor in ICT, medicine, education, navigation, engineering, communication and entertainment fields
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