‘Trade war, issues over tax perks to crimp PHL exports’

UNRESOLVED issues on tax incentives and shipping fees are making it difficult for exporters to rebound, as they expect receipts to contract in the next few months after the value of shipments fell by 2.5 percent in March.

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation (Philexport), said the export sector has yet to see the worst this year. He said local and international issues continue to hamper efforts of exporters to recover, as shipments yet again contracted at the end of the first quarter.

Data from the Philippine Statistics Authority (PSA) showed exports in March slipped 2.49 percent to $5.87 billion, from $6.02 billion during the same month last year.

As exports declined, imports rose 7.77 percent to $9.01 billion, from $8.36 billion, PSA data reported. This swelled the country’s trade deficit for March by 33.76 percent to $3.13 billion, from $2.34 billion.

Export receipts in the first quarter declined 3.13 percent to $16.36 billion, from $16.9 billion during the same period last year.

Imports expanded 4.68 percent to $26.17 billion, from $25 billion, according to PSA data. The country’s trade deficit after the first quarter ballooned to $9.8 billion, higher by nearly 21 percent from $8.1 billion during the same quarter last year.

Ortiz-Luis said the trade climate is not in favor of a rebound, especially with the United States and China in a stalemate over their tariff war.

The United States is planning to raise additional tariffs on Chinese goods on Friday, as talks between Washington and Beijing trade officials are in limbo over alleged backpedaling from the latter’s camp. The economic standoff between the world’s largest economies is taking a toll on global shipments, such as on electronic products, which is Manila’s top export good.

“All of the economic factors are not in our favor. Agriculture is not doing well. Our electronics industry is hit hard by the trade conflict between the US and China. Our nonelectronic manufacturers are not increasing their production. Almost everybody is nascent, suffering from an economic issue, resulting in this slowdown,” Ortiz-Luis told the BusinessMirror.

Trade Secretary Ramon M. Lopez agreed with Ortiz-Luis, attributing the first-quarter exports decline to supply-driven issues heavily influenced by the trade conflict. Electronic exports from January to March dropped 1.55 percent to $8.84 billion, from $8.98 billion during the same stretch last year.

“[There have been] weaker orders in electronics, which accounts for 54 percent of total exports, affected by lower orders in other countries because of trade war concerns, and we are part of this global value chain,” Lopez said in a text message to the BusinessMirror.

Ortiz-Luis also said exporting firms are not bringing in new investments and augmenting their production, as they await the fate of incentives that could be soon stripped away from them. The government is moving to rationalize tax perks granted to firms in economic zones under the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill.

Many semiconductor firms are apparently holding off their expansion plans, as they intend to move out of the Philippines should the government decide to lift their incentives.

The Philexport chief also blamed the unresolved issue of high shipping fees that exporters have long lamented as an impediment to trade. State agencies are crafting a joint administrative order regulating shipping charges, but have failed to promulgate it in time to meet their April deadline.

“We have a lot of problems on shipping fees, port policies and infrastructure that are all left hanging by the government. Couple this with the issue on economic zone firms and their incentives, [and] you will really have an unstable export performance. As long as this is the case, we see our figures in the negative,” Ortiz-Luis said.

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