AFTER suffering double-digit losses due to the pandemic, the government has decided to reduce export projections for up to 2022 by a fifth to $103.9 billion, from the original $130 billion.
In a statement on Sunday, Trade Secretary Ramon M. Lopez announced his agency’s decision to bring down the medium term export targets set under the Philippine Export Development Plan (PEDP) 2018-2022. From a range between $130 billion and $122 billion, exports of goods and services are now just expected to reach $103.9 billion by 2022.
“Given that the Covid-19 disrupted several business models, it will be difficult to achieve our pre-pandemic targets; hence, we had to adjust our projections based also on the various inputs from our industry stakeholders,” Lopez explained.
According to Lopez, the decision to trim export figures was caused by a weakened demand for goods. Overall, he said travel items, garments and wood products were hit the most because of the change in consumer appetite and decrease in production.
“The new projection can also be viewed as a fighting target for DTI [Department of Trade and Industry], given the challenges of the pandemic and the emergence of new strains, and given that this is higher than the $86 billion set by the Development Budget Coordination Committee,” the trade chief added.
Based on the DTI’s forecast, shipments of goods and services will dip by 14.7 percent to $80.5 billion in 2020, then grow by 12.4 percent to $90.5 billion in 2021; and then expand by nearly 15 percent to $103.9 billion in 2022. The DTI’s Export Marketing Bureau reviewed the numbers as sought by Lopez to accommodate changes in the business environment.
Electronic products will continue to make up for more than half of merchandise exports, as the industry assumes a 7-percent growth for 2021.
On the other hand, services exports will be carried much by the business process outsourcing (BPO) industry. The sector is staring at a 3.5-percent growth for 2021 on the upswing in demand for health information, content development and creative outputs.
For Lopez, the export sector can rebound in the next two years if firms take advantage of the tax perks offered by the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, as well as the extension of privileges in the Bayanihan to Recover as One Act, or Bayanihan 2.
The CREATE Act lowers the corporate tax rate to 25 percent, from 30 percent, which used to be the highest in Southeast Asia. On the other hand, it reforms the menu of fiscal incentives from which investors choose from when locating in the Philippines.
“A whole-of-nation approach and a stronger support to the private manufacturing and services industries and academe collaboration are needed to work on achieving the fighting targets set,” Lopez concluded.