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Philippines’ garment exports to register flat growth this year

Garments exports from Philippines are projected to register flat growth this year, as firms struggle to alternative sources for raw materials outside of crisis-hit China. Nearly all of the country’s apparel production is stopped due to the disrupted shipment of raw materials from source countries, particularly China. The Asian superpower is wrestling with its Coronavirus crisis that forced many factories to shut down.

The Philippines has to find alternative sources for fabric, textile and accessories, as it has no respectable domestic output for these items. This was largely why the garments industry, which is trying to make a comeback through public and private efforts, is tempering growth forecast this year, expecting export receipts to stay the same or increase by just 1 percent.

The industry is anticipating new players to come in when the Citira bill becomes law, as it will reduce corporate income tax to 20 percent by 2029, from 30 percent at present—the highest rate in the whole of Southeast Asia. In terms of market, the United States will keep its status as the country’s largest buyer of clothing products this year. The country will further solidify this position if it expands the Generalized System of Preferences (GSP) of the Philippines to garments.

As a GSP beneficiary, the Philippines can ship a total of 5,057 products to the US at zero tariff. Data from the Philippine Statistics Authority showed that exports of apparel and clothing products last year declined nearly 7 percent to $906.28 million, from $974.44 million in 2018.

Last year, the Board of Investments unveiled a road map seeking to bring back the Philippines as one of the world’s largest exporters of garments. In the short term, the industry is required to grow by 12.3 percent annually starting this year to enter the circle of the world’s top 20 by 2022.

 
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