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Government sees exports reaching $102B-$103B range by 2016

The government sees an export range of $102 billion-$103 billion by 2016 based on the growth assumptions of the Development Budget Coordination Committee (DBCC) which were described as “very achievable.”

Senen M. Perlada, director of the Bureau of Export Trade Promotions (BETP) of the Department of Trade and Industry (DTI), told reporters on the sidelines of the “Game and Creative Contents Networking Philippines 2014” in Makati that the Philippine Export Development Plan (PEDP) 2014-2016 is expected to be completed no later than end of July  this year.

“We’ve done the initial draft and we are now doing the graph, hopefully we have it approved no later than July depending on the refinements,” Perlada said.

While the Export Development Council (EDC), which is crafting the new PEDP, will consider the DBCC target as its floor or base target, Perlada said the growth could still be adjusted upward.

The DBCC target is a range of $102 billion-$103 billion by 2016. The current PEDP has set a point export target of $120 billion by 2016.

“The $120 billion is difficult but $102 billion-$103 billion range is very much achievable based on the DBCC if we look at the assumptions,” he said.

For the export merchandize alone, the DBCC has targeted 6 percent growth this year, 8 percent by 2015 and 10 percent by 2016.

The EDC, however, is yet to factor in the appetite of the export industry and see if the DBCC targets can still be adjusted higher.

The DBCC is a Cabinet-level group composed of the National Economic and Development Authority, Bangko Sentral ng Pilipinas, and the Budget and Finance departments. It sets the government’s macroeconomic assumptions and targets and recommends spending ceilings for economic and social development, national defense and debt servicing, among others.

Perlada also noted that EDC has to dump a point targeting saying it is a difficult as the export sector has become so dynamic.

Instead, the EDC is shifting to range targeting.

“We’ve learned our lesson in having point target and perhaps we can move into range target. So once the private sector comes in, we will have a final range target and perhaps a fighting target,” he said noting that the $120-billion target could become a fighting target .

The EDC has also completed its consultations and the executive committee is just awaiting for the initial draft to be shown prior to setting up a meeting with President Aquino for approval.

DTI  Secretary Gregory L. Domingo earlier conceded that the $120-billion target by 2016 is not attainable but $101.3 billion is more likely.

The current PEDP has assumed a $120 billion exports goal by 2016 from a $60 billion baseline in 2010.

Domingo explained that if the $120-billion target must be achieved, exports growth should be at 25 percent annually. However, he said, a more realistic growth rate for both merchandize and services is only between 10-15 percent a year until 2016.

Based on the $120-billion target, the country has to export $44.5 billion within the next three years to hit the target. Total 2013 exports reached $75.5 billion.

He, however, said that electronics export is expected to recover this year because of the economic rebound of the US economy. Most of the country’s electronics exports go to the US market. The Semiconductor and Electronics Industries in the Philippines Inc. has forecasted a 5 percent raise in electronics exports this year backed by stronger demand for automotive and consumer electronics as well as new investments in the country  from firms which are relocating from Thailand and China.

Based on the assumptions by the DBCC, exports growth this year is expected at 8.6 percent to $$82 billion, comprising of $57.2 billion in merchandize exports at 6 percent growth while services exports contributing $24.8 billion at 15 percent growth.

By 2015, the inter-agency DBCC assumed an exports growth of 10.4 percent to $90.6 billion or merchandize exports at $61.8 billion or 8 percent growth and services exports at $28.8 billion. By the end of the Aquino administration’s term, the country’s total exports should have reached $101.3 billion or 11.91 percent growth. This includes $68 billion for merchandize exports at 10 percent growth while services exports contributing $33.4 billion at 16 percent growth.