Apparel and clothing accessories exports from the Philippines dropped 8.7% in the first half of the year to just US$434.6m

Apparel and clothing accessories exports from the Philippines dropped 8.7% in the first half of the year to just US$434.6m

Clothing industry sources in the Philippines say their country is one of the few that has not seen a boost in garment export orders as a result of the US-China trade war – despite the government's plan to boost local manufacturing capacity. 

The much-trumpeted Manufacturing Resurgence Programme of president Rodrigo Duterte had originally stated that a national 'Roadmap for the Garments and Textile Industry' should be drafted by the end of last year (2018). But it has not been released.

And, moreover, exports of Philippines-manufactured apparel and clothing accessories in the first half of this year dropped 8.7% compared to January-June 2018, to just US$434.6m. The overseas sale of yarns and fabrics made in the Philippines performed even worse, dropping by 15.2% to US$94.7m in the same period.

"From August 2018 to today, nothing has been done [by the government]," says Robert Young, trustee for the textile, yarn and fabric sector of the Philippine Exporters Confederation Inc (Philexport) and president of the Foreign Buyers Association of the Philippines (FOBAP). 

Speaking to just-style, he says clothing sector growth "should have kickstarted with the Philippines' textile garments industry roadmap by the Board of Investments, but unfortunately, that roadmap is still unfinished to this time."

Philexport has called on the government to release a comprehensive package for textile investors with incentives such as reduced value-added tax (VAT), special electricity bill rates, subsidies encouraging the employment of additional workers, as well as duty-free importation of textile machinery or equipment.

Young furthermore called on the government's department of science and technology to design and fund a textile technology course to help Philippines clothing and textile manufacturers understand and adopt new technologies exploiting new automation and data exchange systems generated by Industry 4.0 innovation.

Lack of action

Similarly, Nelly Favis-Villafuerte, non-executive director of the Petron Corporation, the largest oil refining and marketing company in the Philippines, and a potential supplier to a robust textile sector, said in an opinion piece in the Manilla Bulletin newspaper last month that this lack of action has meant Philippines' garment exports have not benefited significantly from the US-China trade war.

She argues that the Philippines, unlike India, Vietnam and some other Asian countries, lacks the capacity to accept bulk garment export orders.

"[This is] because we lack competent textile manufacturers and locally milled textile plus required accessories," Favis-Villafuerte says. "The net effect of our lack of textile manufacturers during the trade war is very discouraging." 

Orders have been switched from China "to Vietnam, India and other countries except the Philippines," she explains. 

The latest comments are in contrast to the optimism expressed to just-style towards the end of last year, when industry executives were hopeful that garment investment would relocate from China to the Philippines.

Trade data had also pointed to an uptick in fortunes for the Philippines' troubled garment export sector, with forecasts for year-on-year growth of between 10% and 20%.

However, as reported on just-style last month, Chinese yarn, fabric and garment maker Texhong Textile Group is considering investing in a production facility in the Philippines, according to the country's Department of Trade and Industry.

During the 1990s the Philippines' garments and textile export sector was considered a sunrise industry, but its Board of Investments has noted the country failed to compete after the WTO's Agreement on Clothing and Textiles (ACT) scrapped restrictive quotas from 2005, which had been used to protect the Philippines' textile and clothing sector from overseas suppliers.

FOBAP's Young, for his part, has identified a long list of problems that prevent the Philippines' clothing and textile sector fight for international orders, including high electricity, labour, logistics and financing costs, low worker efficiency, outdated technology, insufficient government support, rampant smuggling, high dependence on imports and high VAT. 

The extent to which these issues are tackled by a government road map, should one be released, remains to be seen.