The Department of Trade and Industry is reviewing the country’s exports targets in light of the softening of the global demand for electronics sector, the country’s biggest export, with the possibility of downscaling the 8-10 percent exports target this year and 15 percent next year.
"The DTI is reviewing targets based on pronouncement by the private sector. So we are undertaking validation on all projections," Trade and Industry Secretary Peter B. Favila said.
"If exporters said they cannot do it then we have to face reality," Favila added.
According to Favila, the revalidation of targets may be completed next week.
Favila noted that global demand for electronics is slowing down and this only clearly shows that the country’s export basket must diversify.
The Philippine Exporters Confederation (Philexport) already indicated of difficulty in meeting the exports growth target under the Medium-Term Philippine Development Plan as growth has been sluggish in the past eight months of the year.
Philexport president Sergio Ortiz-Luis Jr. said that if the last quarter export performance cannot make up for the past three quarters lackluster performances then there could be a downscaling of exports growth targets.
Exports figure for the January-August this year are less than encouraging.
For the first eight months this year, the country’s exports posted only a 4.09 percent increase to $26.359 billion from $25.322 billion posted in the same period last year.
Of this figure, the electronics sector posted a measly 2.21 percent of $17.248 billion from $16.876 billion but the semiconductor sector posted a better performance of 9.82 percent to $12.603 billion from $11.476 billion in the same period last year.
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Government likely to downgrade export target
The government is targeting a 10 percent exports growth this year and 15 percent next year.
"If we cannot meet the 10 percent exports growth this year then it would be difficult to reach a 15 percent growth in 2006 or $50 billion," Ortiz-Luis said.
Given the actual performance, Ortiz-Luis said it would be a difficult situation.
"It’s hard because of the world market situation, we don’t know the situation," he said.
He, however, expressed optimism that exports in the final quarter of this year may be able to pull up the first three quarters performance and hit an 8 to 10 percent growth.
"Otherwise, it would be difficult to reach the $50 billion exports target next year," he added.
Ortiz-Luis said the $50 billion exports target next year is based on the projected recovery by the electronics’ sector.
He expects the semiconductor sector, which accounts for 60 percent of the country’s total electronics exports to continue to post growth.
Ortiz-Luis further cited the need to correct the figures on the unaccounted raw materials in the electronics sector that were secured on consignment basis to come up with a correct exports figure.
At the Exports Congress, Trade and Industry Secretary Peter B. Favila vowed to complete in six months various measures that would support the country’s exports growth targets.
Favila was instructed by President Gloria Arroyo to act on the "deliverables" or "quick wins" in the next six months.
These deliverables include the review of the export processing fees, shortening of time in the issuance of permits and business licenses, putting together the P1 billion export promotion budget under the Export Development Council and expedite approvals of geothermal energy projects and other projects tapping natural energy sources.
"These are needed to attain the exports targets," Favila said.
What the industry is putting its focus is correcting its monitoring of exports especially in the services sector.
For instance, Ortiz-Luis said the call center sector has an unreported $1billion in exports last year based on the number of seats of the industry.
The call center sector was only credited with $400 million in exports last year.
Ortiz-Luis stressed it is important that the government gets the correct exports figure noting that a 3 percent increase in exports is equivalent to 1 percent increase in gross domestic product.
Based on its analysis, if the entire electronics sector is out from the exports basket, this will translate to a 38 percent reduction in GDP.
For the period JanuaryJune this year, there were $260 million investments poured in the electronics and semiconductor sector.
The industry’s target is an annual investments of $1billion and a 10 percent exports growth.
The industry, the country’s biggest dollar earner accounting for 76 percent of total exports, employs 376,000 direct workers.(BCM)
