The garments industry in the Philippines may receive a much-needed shot in the arm as a result of the country’s qualification for the preferential trade arrangement under the European Union Generalized System of Preferences (EU-GSP+), according to the Department of Trade and Industry (DTI).
But the trade office said that to maximize the benefits of EU-GSP+, the garments and textiles industry road map should be fast-tracked, and both are seen to be completed by year-end.
“If you look at the last four years, the garments have been having a little comeback in terms of export value and employment; it’s been increasing. With the EU-GSP+, this can be a tremendous boost to the garments industry. Garment manufacturers, small and large ones are gearing up for this EU-GSP+,” Trade Secretary Gregory L. Domingo said at a news conference of CS Garments Inc.
“We expect the garment sector to be robust because of the EU-GSP+. I think some of those who left may be coming back. And if they are coming back, suppliers of raw materials will also be coming back,” Philippine Economic Zone Authority Director General Lilia B. de Lima said at the same news conference.
CS Garments Inc. is a German-owned company exporting high-end market shirts to Europe that has been operation in the Philippines for over 25 years.
The said firm specifically cited the need for the government to attract more manufacturers of raw materials as it is currently importing 80 percent of its raw material from abroad for cost-efficiency.
The dearth of raw materials in the industry is an offshoot of the garment industry’s decline beginning in the mid-90s. At that time, a World Trade Organization agreement allowing preferential tariffs and quotas to apparel and textile imported the United States, Canada and Europe, was beginning to be phased out.
The increased global competition following the development led to the decline of the garments industry’s exports in countries with small production volumes like the Philippines.
Given that the availment of the EU-GSP+ benefits is hinged on domestic content requirement for particular goods, the availability of locally sourced materials is significant.
For this purpose, Assistant Secretary for Industry Development and Trade Policy Rafaelita Aldaba said that the textile and garment industry road map is likely to be completed by year-end.
“We are formulating a road map for garments and textiles industry. It’s important because it will provide direction and identify challenges affecting development of both and link them together. We’re hoping by end of this year, we’ll be able to complete both,” Aldaba said.
Aldaba said that the road maps will work on building the two industries by addressing challenges including high power costs that discourage investors from locating, the importation of raw materials, and availability of accessories and inputs to be used by garments manufacturers to move up the value chain.
“By doing the road map we can come up with business models to be used by our investment promotion agencies when they promote the industry abroad,” Aldaba said.