Transcript Technical Barriers Facing Philippine Exporters

Company
LOGO
Technical Barriers Facing
Philippine Exporters
Case Study of Electronics and Garments Exports
John Lawrence Avila
University of Asia and the Pacific, Philippines
From coconuts to chips
Marine Products - 1%
Construction Materials - 0.49%
Home Furnishings - 1%
Motor Vehicles and Parts - 1.74%
Food - 2.9%
Giftwares - 0.45%
Wearables - 0.16%
Organic Products - 0.18%
Machinery and Transport - 4.4%
Mineral Products - 2.1%
Garments and Textiles - 6%
Others - 13%
Forest Products - 10%
Others - 2%
Other
Manufactured
Products – 10%
Garments - 7%
Agro-Based
49%
ELECTRONICS - 3%
ELECTRONICS
66%
Mineral Products -18%
1976
2005
TOP 5 EXPORTS
2005
1. ELECTRONICS
2. GARMENTS
% TO TOTAL
RP EXPORTS
66 %
6%
3. Agro-Based &
Processed Food
6%
4. Machinery &
Transport
4%
5. Forest/Mineral
Products
6. Others
2%
16%
Source: BETP/DTI
Most Exports from EPZs
45
40
35
30
25
20
15
10
5
0
2000
2001
2002
Total exports
2003
2004
PEZA exports
2005
EPZ Exports by Product, 1995-2004 (%)
Transport and
car parts, 7
Electrical
machinery and
apparatus, 11
Electronics and
semiconductors,
55
Chemical and
chemical
products, 4
Information
technology, 4
Medical,
precision and
optical
products, 3
Rubber plastic, 2
Garments and
textiles, 2
Others, 12
Exports grew at average 17%, 1995-2005
30
25.4
US$ B
25
21.6
19.87
20
23.76 24.17
26.64
27.3
2004
2005
15
15
10
27.07
10.61
7.55
5
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
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%
JAPAN - 18%
US$ 4.8 Billion
US$ 3.3
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
CLASSIFICATION OF THE ELECTRONICS INDUSTRY
PHILIPPINE ELECTRONICS INDUSTRY
COMPONENTS AND DEVICES
ELECTRONIC DATA PROCESSING
(SEMICONDUCTOR)
Pentium III, DSPs, Integrated Circuits,
Transistors, Diodes, Resistors, Coils,
Capacitors, Transformers, Lead Frames, PCB
Personal Computers, Hard Disk Drives, Floppy &
Zip Drives, CD ROM, Motherboards, Software
Development, Data Encoding and Conversion,
Systems Integration Customization
CONSUMER ELECTRONICS
TELECOMMUNICATIONS
TV Sets, Electronic Games, Radio Cassette
Players, Karaoke Machines,
Radio Cassette, Recorder
Telephones, Pagers, VHF,UHF Radios,
Cellular Phones, Scanners,
Satellite Receivers
OFFICE EQUIPMENT
COMMUNICATIONS AND RADAR
Photocopy Machines and Parts,
Electronic Calculators
CONTROL & INSTRUMENTATION
PCB Assembly for
Instrumentation Equipment
Pagers, CCTV, Radar Detectors,
Marine and Land Mobile Radios,
CB Transceivers
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
Exports are mostly parts and components
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%
EMS
26%
SMS
74%
Source: Masterplan for Philippine Electronics Industry 1998
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
SEIPI
Exports are mostly intra-industry trade
883 Firms
Malaysia Others
Singapore 2%
2%
8%
Taiwan
4%
NATIONALITY:
72% Foreign
28% Filipino
Philippines
28%
Europe
7%
US
9%
Korea
10%
DOMINATED
BY MNCs
Sources: Philippine Board of Investments (BOI) &
Philippine Economic Zone Authority (PEZA)
Japan
30%
25
2500
20
2000
15
1500
10
1000
03
00
95
0
90
0
85
5
80
500
% Share to Total Phil Exports
3000
74
Exports in US$ M
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
Canada,
3%
Others,
10%
EU, 11%
USA,
76%
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
Origin requirements
Furniture, footwear, woven fabrics, wood
products, glass fibers, broadcast receivers, gear
boxes, car batteries, radiators
Labeling
requirements
Car parts, cream products, herbal soap, hats
and headgear, footwear
Prior authorization
requirements
Telephonic parts, gloves and mittens
Manufactures subject to NTBs
Licensing requirements
Electrical circuits, semi-conductors, transmission and
other car parts, footgear, handbags, leather coats,
tableware and kitchenware, ornamental articles,
cement, ceramics, cream products, perfumes,
detergents, make-up preparations
Standards
requirements
Electrical wiring harness, transmission, broadcast
receivers, car batteries, radiators, tableware and
kitchenware, ornamental articles, cement, ceramics,
cream products, perfumes, detergents, make-up
preparations
Testing, inspection and
quarantine
requirements
Electrical wiring harness, make up preparations,
perfumes, powders, hair products
Quota restrictions
Gears
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