Proposed Philippine Export Development Plan PEDP

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Proposed Philippine Export Development Plan
(PEDP) 2008-2010 (Revised as of 22 July 2008)
Presentation to PHILEXPORT GMM, HOTEL
SOFITEL July 23, 2008
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Contents of the Plan

• Framework and Planning Process
• 2005-2007 Scorecards
• Global Outlook
• Key Challenges
• Opportunities
• 2008-2010 Export Targets
• Strategies
• Policy and Financial Requirements
• Implementation

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• Part 1. Framework and Planning Process
• 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

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Part 2 PEDP 2005-2007 Scorecards
Philippine Export Performance vs Targets
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Part 2 PEDP 2005-2007 Scorecards cont.
Philippine Export Growth Rates vs Targets

Sources MTPDP 2004-2010,BSP,NSO as processed
through BETP-managed TRADELINE
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Part 2 PEDP 2005-2007 Scorecards cont.
Selected ASEAN Export Performance 2003-2006 (in
US B)
Source Trademap ASEAN Secretariat
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• Part 2 PEDP 2005-2007 Scorecards cont.

Comparative Merchandise Exports Growth ()
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

• Export growth remained positive
• 2006 surge in intra-regional trade with China and
  the rest of Asia
• Peso reduced export revenues the following year

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Part 2 PEDP 2005-2007 Scorecards cont.
Comparative Services Exports Growth ()

2005
2006 2007 RP
12 42 31 Global
Commercial Services 12 12
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Sources Bangko Sentral ng Pilipinas
WTO

• Growing contribution of commercial services
  exports to total trade.
• Booming BPO services continue to lead growth.

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Part 2 PEDP Scorecards, cont.

Overall balance in market shares
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Part 2 PEDP 2005-2007 Scorecards cont.
RP Merchandise Exports to the World
Source National Statistics Office
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Part 2 PEDP 2005-2007 Scorecards cont.

Policy Measures put in place for
better business environment
Legend
On-going need to accelerate
No action so far
Accomplished
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Part 2 PEDP 2005-2007 Scorecards cont.

Legend
On-going need to accelerate
No action so far
Accomplished
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Part 3. Global Outlook, 2008-2010

• Historic credit crisis
• Record-high oil prices
• Heightened inflation fears
• Perhaps even the beginning of a recession???

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• Part 3. Global Outlook, 2008-2010

Moderate global growth expected
Global Outlook (GDP, in )
Actual Markets 2007
2008 2009 2010 World
3.7 2.7 3.0
3.4 USA 2.2 1.1
1.9 2.5 European Union
2.6 1.7 1.5
1.9 Japan 2.0
1.4 1.6 2.1 China
11.9 9.4
9.2 9.0 India
8.7 7.0
7.5 8.0 ASEAN
10.0 9.7 9.6
Sources Global Economic Prospects 2008
International Monetary Fund, 2008
Asian Development Bank, Development
Outlook, 2008 World Bank, July 2008
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• Part 3. Global Outlook, 2008-2010

• 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.
• Asias growth track is more stable than the rest
  of the world

Sources Global Economic Prospects 2008
International Monetary Fund, 2008
Asian Development Bank, Development
Outlook, 2008 World Bank, July
2008
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Part 3. Global Outlookcont. A. Key Challenges

• 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

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Part 3. Global Outlookcont.

• B. Key Opportunities
• Deepening economic integration of ASEAN region
• Additional market access arising from ASEAN plus
  partners
• (i.e. China, Korea, Australia, New Zealand, and
  Japan)
• Emerging markets like India, South Africa, and
  Eastern Europe including Russia, Turkey and
  Ukraine, among others.
• Increased oil revenue-driven spending in the
  Middle East

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Part 4. 2008-2010 Exports Targets cont.
2008 Export Industry Projections
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Part 4. 2008-2010 Export Targets
Growth in services exports to outpace merchandise
exports
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Part 4. 2008-2010 Exports Targets
Growth in services exports to outpace that of
merchandise
84.4
73.2
64.2
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Part 4. 2008-2010 Exports Targets cont.

• Revenue Streams as Sources of Growth

• Goods
• Automotive Parts
• Electronics
• Food
• Homestyle Products
• Minerals
• Natural Organic Products (non-food)
• Textile, Apparel, Footwear, Travelgoods

• Services
• ICT
• Construction
• Emerging Services
• Health Wellness
• Medical Tourism
• Wellness/ Spa
• Retirement
• Logistics
• Entertainment
• Education

Focus of more resources
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Part 5. Strategies
1. Market Strategies a. Geographical Markets b.
Culture-based Markets 2. Product Strategies a.
Build up competitor intelligence to enhance
product differentiation b. 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
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Part 5. Strategies cont.

• 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

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Part 5. Strategies cont.

• 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

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Part 5. Strategies cont.
Export Promotion Fund
According to ITC/World Bank economists
For every US1 US 40 increase exports
(spent by TPOs)
PEDP Total Exports Target in 2008 is with
incremental of US5.27B in goods (net of
electronics) and services
Following this standard, we actually need
US117M 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
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Thank You
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• 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

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• 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.

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• Rising 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
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• 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

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• 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

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• 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