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Technical Barriers Facing Philippine Exporters. Case Study of Electronics and Garments Exports. John Lawrence Avila University of Asia and the Pacific, Philippines. Marine Products - 1%. Construction Materials - 0.49%. Forest Products - 10%. Home Furnishings - 1%. Others - 2%.

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Technical Barriers Facing Philippine Exporters

Case Study of Electronics and Garments Exports

John Lawrence Avila

University of Asia and the Pacific, Philippines


Marine Products - 1%

Construction Materials - 0.49%

Forest Products - 10%

Home Furnishings - 1%

Others - 2%

Motor Vehicles and Parts - 1.74%

Food - 2.9%

Giftwares - 0.45%

Wearables - 0.16%

Organic Products - 0.18%

Other

Manufactured

Products – 10%

Machinery and Transport - 4.4%

Mineral Products - 2.1%

Garments and Textiles - 6%

Others - 13%

Agro-Based

49%

Garments - 7%

ELECTRONICS - 3%

Mineral Products -18%

ELECTRONICS

66%

1976

2005

From coconuts to chips


% TO TOTAL

RP EXPORTS

TOP 5 EXPORTS

2005

  • ELECTRONICS 66 %

  • GARMENTS 6%

  • 3.Agro-Based &

  • Processed Food 6%

  • 4. Machinery &

  • Transport 4%

  • Forest/Mineral

  • Products 2%

  • 6.Others 16%

Source: BETP/DTI


Most Exports from EPZs


EPZ Exports by Product, 1995-2004 (%)


Exports grew at average 17%, 1995-2005

Electronics exports stood at around USD 27.3 billion in 2005.


Over 60% goes to East Asian region

EUROPE - 19%

US$ 5.1 Billion

CHINA - 13%

US$ 3.5 Billion

USA - 13%

US$ 3.3 Billion

JAPAN - 18%

US$ 4.8 Billion

OTHER ASIA - 37%

US$ 10.6 Billion

Hongkong- US$ 2.8 B

Singapore- US$ 2.1 B

Malaysia - US$ 2.1 B

Taiwan- US$ 1.4 B

Korea- US$ 1.0 B

Others- US$ 1.2 B

Source: Bureau of Export Trade Promotion, DTI


CLASSIFICATIONOF THE ELECTRONICS INDUSTRY

PHILIPPINE ELECTRONICS INDUSTRY

ELECTRONIC DATA PROCESSING

Personal Computers, Hard Disk Drives, Floppy &

Zip Drives, CD ROM, Motherboards, Software

Development, Data Encoding and Conversion,

Systems Integration Customization

COMPONENTS AND DEVICES

(SEMICONDUCTOR)

Pentium III, DSPs, Integrated Circuits,

Transistors, Diodes, Resistors, Coils,

Capacitors, Transformers, Lead Frames, PCB

CONSUMER ELECTRONICS

TV Sets, Electronic Games, Radio Cassette

Players, Karaoke Machines,

Radio Cassette, Recorder

TELECOMMUNICATIONS

Telephones, Pagers, VHF,UHF Radios,

Cellular Phones, Scanners,

Satellite Receivers

OFFICE EQUIPMENT

Photocopy Machines and Parts,

Electronic Calculators

COMMUNICATIONS AND RADAR

Pagers, CCTV, Radar Detectors,

Marine and Land Mobile Radios,

CB Transceivers

CONTROL & INSTRUMENTATION

PCB Assembly for

Instrumentation Equipment

MEDICAL AND INDUSTRIAL

Spiro Analyzers,

Smoke Detectors

AUTOMOTIVE ELECTRONICS

Electronics Brake Systems (EBS),

RC Systems, Car Radios, Wiring Harness

Source: Masterplan for Philippine Electronics Industry 1998


SMS – 74%

COMPONENTS AND DEVICES - 74.03%

EMS – 26%

COMPUTER REL.PROD./EDP – 20.17%

CONSUMER ELECTRONICS – 2.07%

AUTOMOTIVE ELECTRONICS – 1.45%

COMMUNICATIONS AND RADAR – 0.98%

OFFICE EQUIPMENT – 0.70%

TELECOMMUNICATIONS – 0.59%

CONTROL & INSTRUMENTATION – 0.06%

MEDICAL AND INDUSTRIAL – 0.03%

Exports are mostly parts and components

EMS

26%

SMS

74%

Source: Masterplan for Philippine Electronics Industry 1998


SEIPI

Industry Standards

ISO 9000 Certified, member of International Electrotechnical Commission (IEC)

Observes best known methods

in manufacturing (JIT,TQM, 5S, QPIC)

Capabilities Range from IC Packaging,

PCB Assembly, Full Product Assembly

Lead in ASEAN Electronics Forum and ACCI Electronics committee

Promotes harmonization of safety and EMC standards in ASEAN

Participates in MRAs for Electrical and Electronic products testing and certification


Others

Malaysia

8%

2%

Singapore 2%

883 Firms

Philippines

Taiwan

28%

4%

NATIONALITY:

72% Foreign

28% Filipino

Europe

7%

US

9%

Korea

Japan

10%

30%

DOMINATED

BY MNCs

Exports are mostly intra-industry trade

Sources: Philippine Board of Investments (BOI) &

Philippine Economic Zone Authority (PEZA)


Declining share of Garments Exports


Garments Exports

ASEAN: USD 19m

CHINA: USD 4.4m

JAPAN: USD 58m

KOREA: USD 3.7m

EAST ASIA: USD 104m

United States:

USD 1,737m


Industry profile

  • Predominantly Filipino-owned SMEs

  • Import-dependent, sourcing over 80% of their textile requirement (polyester fiber, cotton, rayon, and acrylic) from abroad

  • Extensive sub-contracting practice stemming from relations fostered by MFA regime (particularly for US market)

  • Philippine firms part of triangle manufacturing


Standards issues for garments

  • Subject more to fashion trends and less on government regulations

  • Standards a function of sub-contracting arrangements and branding

  • Conformity assessment costs usually assumed by buyer

  • Social and labor standards imposed on those seeking access to US markets

  • ROO and licensing issues more prominent


Manufactures subject to NTBs


Manufactures subject to NTBs


Summary

  • Standards not a serious trade impediment

  • Impact on standards is a function of buyer-driven model, i.e. specification of inputs is determined by foreign buyers

  • Garments and electronics part of global production network

  • AFTA is not a natural export destination for Philippine garments and electronics


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