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Country needs to depend less on electronics

Posted on October 04, 2011

THE COUNTRY will have to depend less on electronics if export development goals are to be achieved, a Cabinet official yesterday said.

“We need to bring [electronics export share] down to 40% or 30% over the years by growing other sectors,” Trade Secretary Gregory L. Domingo told BusinessWorld at the sidelines of a budget hearing at the Senate.

The proposal was raised ahead of an Export Development Council (EDC) meeting next week to discuss the full-year outlook given renewed turmoil in markets such as the United States.

“For 2012 and beyond, we really have to work hard in diversifying our export base,” Mr. Domingo said.

“We need to grow other sectors such as furniture, garments, food and agriculture, especially the coconut water because the demand is growing so fast that we are now experiencing a supply problem.”

Electronics, which usually accounts for half of outbound shipments, has been dragging down monthly export performance. A consumption decline in troubled Western markets on top of supply setbacks caused by the Japan disaster have been cited as contributing factors.

Shipments contracted by 21.3% in July to $2.25 billion from a year earlier. Electronics comprised 50.9% of total exports for the month. The seven-month tally was $14.89 billion, down 12.6% from the comparable 2010 period.

Electronics industry officials have warned that an expected 2011 contraction could be worse than 5% but Mr. Domingo said the year’s overall 10% merchandise export growth target would not be changed.

“To confirm, we will not change around our target and it will remain at 10%, but that’s a fighting target. Export growth will be between 6-8% this year given what’s already happened. With services, maybe around 8-9% [overall] growth,” the Trade chief said.

Sergio R. Ortiz-Luis Jr., Philippine Exporters Confederation, Inc. president and EDC vice-chairman, concurred in a telephone interview: “Revising the target is not a priority in a sense that everyone knows about the state of our economy. We should also keep it in case something positive happens in the last few months of the year.”

An export official also said the annual targets should not be considered in isolation but rather as an interrelated series that have the main objective of doubling export earnings by 2016.

“The ultimate target is to grow exports to $120 billion by 2016, so if you translate that to a yearly target, that’s 10% per year,” said Senen M. Perlada, EDC executive director, on the sidelines of the Senate hearing.

“But we’ve had previous years where we grew more than 10%, so the question is not so much about what our yearend target should be in 2011 but what we should do next year given our medium term target after only growing this much in this year,” Mr Perlada added.

“There are other things that need to be addressed for 2012 other than the target, such as our strategies. Maybe the emphasis in our development projects needs to be reviewed, because our target is based on value. Maybe this time we need to determine the impact of our policies on employment.”

Mr. Perlada, nevertheless, noted that “there [would] be an EDC meeting around October 13 or 14 to review the outlook with the private sector.”

Philippine merchandise export earnings fell for a third straight month in July, by 1.7% to $4.43 billion, although revenue for the seven-month period was up by 3.3% to $29.19 billion.