PortCalls

NEDA forecasts healthier trading environment in 2004

THE National Economic and Development Authority (NEDA) forecast stronger growth in the last quarter of 2003 and next year, pointing to healthier trading environment in 2004.
At the recently concluded PortCalls Cargo Economics Conference, NEDA assistant director for National Planning and Policy Staff Scholastica Cororaton said gross domestic product (GDP) is expected to range from 3.8% to 4.3% in the third quarter of the year, and 4.2% for the full year. Next year, GDP growth will be from 4.9% to 5.8%, she added.
The country will also benefit from "firmer recovery taking place in the US and Japan, while Europe has began to come out of its decline. Asian economies are also recovering from the impact of Severe Acute Respiratory Syndrome (SARS)," she explained.
However, Cororaton noted exports to the US market have eroded and shifted to the ASEAN-4 and China, a development that should be taken as positive considering it lessens the country's overdependence on the economies of US and Japan.
From January to July, exports to the US posted a negative variance of 16%, while exports to Japan inched up by a meager 1.5%. Other Asian countries, meanwhile, continue to patronize Philippine exports, with Hong Kong, China and Malaysia in the lead.
Cororaton said while the electronics sector exhibited weak export growth in the early months of 2003, this is expected to pick up in the fourth quarter and will continue until 2004 as replacement of computers and wireless semi-conductors boost world demand for electronic products.
"Exports were weak in July to August. Total exports in dollar terms fell 2.2% in August as electronic products exports fell 7.1% following a similar worldwide trend," she said.
Imports, on the other hand, remained healthy with a 6.4% expansion in the first seven months of the year, Cororaton said.
Growth is strong in consumption goods such as cars, motorcycles and finished agricultural products. However, semi-processed materials indicate growth at a slower pace, she added.
"If the situation continues until the fourth quarter, this would paint a rather bleak Christmas for our semiconductor exports, since our electronics industry relies a lot on imported inputs," she said.
The US and Japan, Cororaton noted, remain the top sources of imported products, mainly capital equipment. The fastest-growing import sources are still China and Malaysia. Of the traditional markets, only Japan managed to increase its exports to the Philippines.
"With lower imports of raw materials for electronics exports and with oil inventories built up during the US-Iraq war being drawn down, imports have also slackened. However, imports of capital goods are up 12% and this bodes well for future growth," she stressed.
Cororaton disclosed certain macroeconomic indcators are encouraging and supportive of stronger growth in the coming quarters. The fiscal deficit, inflation rate and treasury bill rates are lower than the low end of the forecast.
"The exchange rate has started to stabilize while our international reserves are higher than the full-year target," she said.

ADB lead economist: World economy on the rebound

THE global economy is on the rebound, and this will translate to healthy trade and investments in the near term, said Asian Development Bank Economics and Research Department lead economist Dr. Ernesto M. Pernia, at last week's PortCalls Cargo Economics Conference 2003 at the Hyatt Regency Manila.
Asia is showing signs of improvement and will retain its title as the fastest-growing region in the world, he said.
Exports and investments remain to be Asia's main growth drivers, and are particularly robust in countries such as China, Thailand, Vietnam and India.
Pernia said the Philippines is likely to exhibit slower growth compared with other neighboring Asian countries.
"Over the past 20 years, per capita GDP (gross domestic product) growth in the Philippines has lagged far behind that of several other Asian countries. In fact, the modest growth of the 1990s barely made up for the contraction of the 1980s, leaving average per capita incomes in the Philippines today just marginally higher than they were two decades ago."
Investments, he said, have also been "constrained by a low savings rate owing to the dependency burden of high population growth. And an unfavorable investment climate keeps foreign direct investment low."
In addition, the country's dependency on electronics industry as its main export driver makes it vulnerable to "external market swings."
The Philippines, Pernia said, must seize opportunities to achieve a turnaround, adding it could benefit from the growing importance of China as an export market, and the recently forged Bali Concord which would attract more intra-regional trade and investment.
To help achieve growth, Pernia said law and order must be in place; institutions must be strengthened and governance improved; investment climate (essentially the regulatory system and infrastructure) improved; export sector diversified; reversals in trade liberalization avoided; and population growth slowed.

Consolidation, integration key trends in logistics

SUPPLY chain integration, consolidation, alliances and partnerships. These are the key trends in today's logistics business, according to experts at last week's PortCalls Cargo Economics Conference at the Hyatt Regency Manila.
They say that the tough environment calls for logistics providers that offer a one-stop-shop service. Those that do not have that capability acquire this through partnerships. The enabler for everything, they say, is technology.
DHL Express Phils. Country manager Charles Brewer said service integration normally leads to product development for higher-yield industrial traffic. "Rapid and 'virtual' partnering will be key to new supply chain management strategies, as the best integrators work together to attain the biggest prizes," he noted.
The times also call for providers that offer flexibility and speed, track-and-trace capabilities, collaborative logistics, and reverse logistics.
"Such trends involve the application of technologies, physical integration of joint management processes, streamlined internal processes and modified policies, e-commerce and cost reduction," said Brewer.
Apart from global alliances and partnerships, active participation of integrators, use of time-definite services, and adoption of supply chain management are among the trends in airfreight forwarding, said Aircargo Forwarders of the Philippines, Inc. president Eduardo de Guzman, II.
"Forwarders are also likely to venture in other revenue-generating services such as domestic forwarding," he added.
Meanwhile, ASEAN Federation of Freight Forwarder Associations chairman Angelito Colona challenged logistics providers to shift from the traditional unimodal transport to intermodal transport.
Intermodal transport is a system operated by a carrier with more than one mode of transport under the control or ownership of one operator.
He also urged logistics providers to pay attention to new security regulations in place to counter terrorism, as these have a big impact on the supply chain. - Maritess R. Mesias

Private sector participation in roro project pushed

THE government should further intensify its campaign to encourage private sector infusion into the Strong Republic Nautical Highway (SRNH) project.
"The private sector should not only invest on construction and acquisition of ro-ro vessels, but also on terminals and ports, warehouses and even industrial zones," said Marita Jimenez, Office of the President's Priority Programs and Official Development Assistance Projects Secretary, at last week's SRNH Conference facilitated by the Philippine Chamber of Commerce and Industry at the Hotel Intercontinental.
According to her, some business people in Bataan still hesitate to fork out funds for the project because the facilities required to accommodate ro-ro ships are insufficient.

CTSI Logistics, Luen Thai Apparel get C-TPAT validation

THE United States Customs & Border Protection this week commended CTSI Logistics and the Luen Thai Apparel Affiliates-Saipan during an inspection visit to the island to validate the company's security plans and practices.
The following companies submitted their agreement for voluntary participation: CTSI Container Line, CTSI Logistics, Wooliston Apparel, TellaS Ltd, Chatelaine and GJM (HK) for certification under the Customs-Trade Partnership Against Terrorism (C-TPAT).
Launched in 2002, C-TPAT is part of the Homeland Security Act administered under the US Customs & Border Protection, US Department of Homeland Security to ensure all cargo getting into the US from various ports of origin is safe and free from any terrorist influence.
Two US Customs inspectors met with CTSI Logistics management and Tan Holdings affiliate apparel representatives on October 21 to review the companies' security policies and procedures in detail. The inspectors also took a tour of the company's apparel factory complex in Lower Base.
"I have visited many importer facilities all over the world and the recommendations I would give to them, you are already doing. This is really a classic example of a well-integrated supply chain," said Chief Inspector Daniel J. Sedley.
Six of the entities affiliated with CTSI and the Tan Holdings group worldwide recently applied for C-TPAT membership. They include CTSI Logistics, CTSI Container Line, Wooliston Apparel, TellaS Ltd., Chatelaine Inc., and GJM (HK) - the first two as freight forwarders and the last four as importers.
"We drew up security profiles of all our entities, including their service providers. All of these businesses signed an agreement to voluntarily participate and based on the security profiles, we had to submit a summary of the companies that outlined our security procedures in detail," said Gabriella Wortmann, Supply Chain Manager who is helping to lead the project for the company.
All companies became certified in May 2003 based on the summary. The purpose of the validation process is to affirm, increase or defer the benefits of C-TPAT membership for the participant depending on the findings. Another objective is to build stronger partnership between US Customs and the trade and to develop solutions to address potential supply chain vulnerabilities.
The validation process started in August at CTSI Logistics' New Jersey office where the company presented its overall security procedures to US Customs. Next was a visit to the CTSI Los Angeles facility, followed by Saipan. In December, US Customs officials will visit CTSI Manila, as well as affiliated apparel companies in the Philippines.
"You are to be commended for your excellent presentation," said Michael Pfeiffer, Supervisory Inspector for U.S. Customs, Office of Field Operations. "It's a matter of having all the proper policies, procedures and facilities in place to ensure your products get where they're supposed to go and the integrity of the shipments and the containers do not become compromised. We are really encouraged with your entire process."

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