JPEPA and Current Economic Situation in the Philippines

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Export Hot Spots Post-Crisis Offensive
Strategies
Dr. Thomas G. Aquino Senior Undersecretary for
International Trade Department of Trade and
Industry
2nd Quarter Gen. Membership Meeting Philippine
Exporters Confederation, Inc, Makati City July
2, 2009
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Outline

• Assessing Past Trends
• Reviewing Projections
• Viewing Post-recovery Scenarios
• Post-crisis global environment
• Post-recovery sectors
• Government policies and Business strategies

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• In periods of uncertainty, it is important to
  ask What can be known?
• The decade is marked by three crises (3Fs) most
  relevant to the Philippines
• Food, Fuel, and Funds

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World Fuel Prices (index, annual, 1995100)?
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World Rice Prices(monthly, in US per metric
ton)?
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Levels of Uncertainty

• Known
• The global economy will recover.

• Not known
• When?
• Will it regain its previous dynamism?

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The long-term view focus on 2000-09
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What is known

• A recovery follows a recession.
• When? Green shoots are starting to show perhaps
  road to recovery visible by end of 2009.
• Will it regain its previous dynamism? Yes but
  there will be a reconfiguration among global
  economic players.

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Different Recovery Paths
BRICA Brazil, Russia, India, China ASEAN
Next 11 Bangladesh, Egypt, Indonesia, Iran,
Mexico, Nigeria, Pakistan, Philippines, South
Korea, Turkey, Vietnam. Source Prof. Bernardo
Villegas, UAP Mid-Year Briefing, June 2009
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Real GDP Growth(in , Advanced vs. Developing
Economies)?
11
Remerging Economies (1820 to 2025, estimated
share of world GDP)?
Big 4 European
US
Japan
India
China
Source World Bank, as cited by Prof. Pedro
Videla (UAP forum, April 2009)?
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Largest Economies in 2050(Projected GDP, in US
Trillion)?
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Post-recovery assessment

• The world will be as dynamic, if not more, than
  it was before the crisis.
• Global income will be dispersed among more
  countries.
• G-7 countries will be less relevant focus will
  be more about BRICA and the Next 11 set of
  countries.
• As the world recovers, it will be subjected in
  the future to the same pressures as it faced
  before the crisis (3Fs) Food, Fuel, and Funds

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World Trade Volume(goods services, annual
change)?
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Encouraging early-signs
Year-on-Year declines were lower in Mar-Apr 2009
than in Dec 2008, Jan-Feb 2009 Month-on-Month
declines are flatter.
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RP domestic economy resiliency
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Major Product Share January March 2009
Electronics still the bulk of RP Exports
TAFT Textile, Apparel, Footwear Travelgoods
(incl. fashion accessories)?
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Electronics vs Non-electronics Exports January
2008 March 2009
Non-electronics saved merchandise exports from
freefall
Value in US Billion
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Revised Export Targets 2009-2010
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Post-crisis global environment

• Return to dynamic growth but reconfiguration
  among players
• US and Europe struggle to recover conditioned by
  structural differences, e.g. mobility of factors
  of production
• Challenge to China in wielding/asserting global
  influence (FDIs, ODAs, Africa engagement,
  participation in multilateral non-economic
  initiatives e.g. security, health, disaster
  assistance, etc.) as a huge country-market
• Efforts by ASEAN and rest of dialogue partners
  i.e. Japan, Korea, Australia/New Zealand, at
  regional integration continue
• Moves of India to progressively implement reforms
  towards an open-market economy
• Rise of South America as highly-competitive
  developing regional market e.g. Brazil
• Africa in the horizon with opportunities for raw
  material sourcing, transfer of know-how/services,
  and cost of labor advantage.

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Post-recovery sectors

• Pre-global recession merchandise and services
  exports are currently undergoing stress test.
  Sectors likely to recover or emerge may fall
  under several categories
• Exportable goods and services, backed by strong
  domestic market base, would have higher chances
  of success in foreign markets
• consumer products, e.g. processed food
• services for overseas Filipinos
• Goods and services able to keep in step with
  increasing product standards in overseas markets
• organic and natural products
• Providers of services based on relatively
  lower-cost business models
• IT technical support
• healthcare
• Goods and services based on unique, natural
  selling propositions of a tropical, archipelagic
  country
• specialized tourist facilities
• events creation

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Government Policies and Business Strategies

• Government trade staff to receive training to
  intensify familiarity with changing realities of
  competition and entry into foreign markets
• US market undergoing structural change
• Africa as an unexplored region
• Elevate status of institutions, build capacity,
  and increase size of resources devoted to export
  trade financing, including proper appreciation of
  opportunities and risks in reconfigured foreign
  markets
• PhilExim
• Step-up efforts that will enable national and
  local agencies to realize the need and implement
  measures that will remove unnecessary costs that
  underlie trade transactions.

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Government Policies and Business Strategies

• As subsidiary bodies, export-oriented industry
  associations to continue professionalization of
  their services to enable the national
  export-oriented federation to address national
  issues affecting exports across sectors and
  regions.
• Exporting companies to deepen expertise in doing
  business in specific foreign markets as a way of
  internationalizing their core operations.
• Exporting companies to continue encouraging
  stakeholders (private and public) behind industry
  value chain to implement best practices that make
  country exports highly competitive.

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Export Hot Spots Post-Crisis Offensive
Strategies
Dr. Thomas G. Aquino Senior Undersecretary for
International Trade Department of Trade and
Industry
2nd Quarter Gen. Membership Meeting Philippine
Exporters Confederation, Inc, Makati City July
2, 2009