PHL trade to slow down in 2011, increase by 2012

The country’s exports are seen to slow down in 2011 and slightly pick up next year, according to the latest Philippine Trade and Investment Country Report. The forecast 2012 growth, however, will still be much slower than the growth recorded in 2010. “The forecast for the Philippines is that export growth will slow down to 5.4 percent in 2011 and then pick up to 7.2 percent in 2012, while imports are projected to grow at 5.5 percent in 2011 and 9.7 percent in 2012," said the Philippine Institute for Development Studies (PIDS), which launched the report alongside the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). The report is part of the Asia-Pacific Trade and Investment Report (APTIR), an annual publication of the UNESCAP that explores the country’s post-crisis trade and investment opportunities. Latest National Statistics Office showed exports shrunk by 1.7 percent in July year-on-year, and that imports hit a year-on-year growth of 6.6 percent in June. Last year, exports and imports increased by 26 and 21 percent, respectively. As a result, Philippine trade grew by 17.3 percent, which eclipsed the Asia Pacific region’s average 15.8-percent trade growth. Meanwhile, the whole region is expected to return to its historical trade growth rate of 10 percent this year. Utilize untapped potential Economist and PIDS senior research fellow Rafaelita Aldaba noted the Philippines needs to take advantage of post-crisis investment and trade opportunities, as well as focus on underutilized potentials in the service sectors such as tourism, information technology and construction. “Hence, …government should pursue regulatory reforms that can increase trade in services such as the removal of infrastructure bottlenecks in transportation, communications, energy, water, and other services," Aldaba said. According to PIDS, trade experts have identified issues that the Philippine government should focus on to facilitate trade, investments and business in the country. The key points include Customs modernization — to improve efficiency and reduce administrative graft. “Since the region’s recovery from the crisis was largely driven by regional trade, the country should improve its existing regional trade agreements and, perhaps, initiate new trade agreements particularly in areas of transport facilitation and establishment of regional trade protocols and standards," PIDS said. “Trade experts also articulated that increased knowledge sharing on best practices can benefit the whole region. The country, for example, can share with neighboring countries its experience with the establishment of the Philippine Economic Zone Authority which is an internationally acclaimed program for its positive effects on the economy," they added. Experts also pointed out the high cost of doing business as a major concern among investors. “Moreover, prospective investors are also driven away because of the high cost and complicated process of setting up a business in the country. Hence, the government should institute reforms and new policies such as introducing one-stop shops for business registration," said PIDS. The high cost of electricity, they said, is also a growing concern. “The country today has the highest industrial electricity cost, even higher than the cost in developed countries like Japan. Experts suggest that government conduct a detailed analysis of the components of generation and distribution costs and assess efficiency of transmission to reduce system losses," PIDS said. — BC/VS, GMA News