::Industry News::

Archives 2006 Q1: January | February | March | April

February 1 | February 6 | February 8 |February 13|February 15|February 20 | February 22 | February 27

*Truckers lukewarm over body on overloading law

*Garments exports up 6% in 2005

*2GO-RRTS sees 30% volume growth in 2006

*Extension of duty-free capital equipment incentive in the works

*Open skies policy in force at Diosdado Macapagal airport

*North Harbor privatization may take longer than expected

Truckers lukewarm over body on overloading law

TRUCKERS are not optimistic that the technical committee formed by government on Republic Act 8794 or the No Overloading Law will address their concerns. This according to Ricky Papa, president of the Alliance of Concerned Truck Owners and Organizations (ACTOO). Papa told PortCalls he sees a work slowdown in Manila ports as early as today and a possible operations shutdown in seven days if the government fails to present a more concrete action plan. "We are pessimistic that the committee can do something. But we are still keeping an open mind. We are only giving them at most three meetings and if the trend shows that the meetings are going nowhere then we have no choice but to shift to plan B, which is a work slowdown and a possible operations shutdown," Papa stressed. Last week, the government formed a technical committee to hear the sentiments of truckers on the law. The committee has started marathon hearings on RA 8794, focusing on the need to further review and consult with road users; and the possible issuance of a moratorium on the law's implementation along the North Luzon Expressway (NLEX) while talks are ongoing and while waiting for the implementing rules and regulations from the Department of Interior and Local Government. Truckers claim the law is causing delays and additional cost on the business. The NLEX management is apprehending trucks over the 13.5-ton per axle load limit and requiring them to pay the P2,500 penalty per apprehension. Two weeks ago, truckers staged a strike at the entrance of the NLEX causing severe traffic jams to express their disgust over the implementation of the law along the NLEX. This forced President Gloria Macapagal-Arroyo to call a meeting between truckers and the government last Wednesday. "This week is really crucial. The committee should study their move very carefully. They should put forward a concrete and viable solution to cushion the impact of the law on truckers if they want to continue enforcing it," Papa said.

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Garments exports up 6% in 2005

Garments and textile exports in 2005 rose 6% to $2.54 billion from $2.41 billion a year earlier, according to a report from the National Statistics Office (NSO) and the Office of Textile and Apparel. The growth is, however, lower than the projected 10% growth for the industry. Still, the NSO said the industry views the first year of a quota-less regime as a period of adjustment, noting that the growth in 2005 indicates the industry's resilience against stiff competition. The growth also belied fears of a collapse of the industry in the first year of a quota-less regime. The NSO data showed exports to the US fell 1% to $1.92 billion from $1.938 billion in 2004. The marginal increase in exports of apparel which accounted for 95% of total exports to the US could not make up for the hefty fall in shipments of non-apparel goods to that country. Exports to the US cornered 76% of the total in 2005 from 80% in 2004. Shipments of apparel to the US inched up 3% to $1.83 billion from $1.785 billion a year earlier led mostly by cotton apparel, one of the growth products to that country. Apparel made of cotton such as slacks, knit blouses, shirts, etc stood at $1.182 billion, higher by 16% from $1.023 billion in the previous year. A 62% growth was noted in the export of apparel made from natural fabrics such as silk and vegetable although this was only valued at $27.74 million in 2005 from $17.16 million a year before. Exports of apparel made of man-made fabrics, which constitute the second biggest bulk of Philippine shipments to the US, fell 17% to $565.32 million from $635.64 million. Philippine exports to the European Union rose 39% to $288.78 million from $107.97 million in the previous year, eating up 11% of the total while exports to Canada amounted to $79.92 million, a 1% decline from $80.8 million in 2004. The government sees growth triggered by shifts in the order pattern of buyers, such as those from the US, as well as the limitation of garments exports from China to the US due to the imposition of safeguards. With the removal of quotas, changes were noted in the product mix where high-value products are being captured by garment manufacturers/exporters. Garments exports are shifting brand-market and product mix combinations as the end of the quota regime enabled global brands to align sourcing strategies with country-specific capabilities, product design requirements and consumer preferences.

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2GO-RRTS sees 30% volume growth in 2006

2006 2GO-RRTS, the cargo arm of Aboitiz Transport System (ATS), has a bullish outlook for the country's interisland trade particularly containerized shipments. This, after handling approximately 14,000 TEUs last year. Volume growth this year is seen at 30%, the bulk of which will still come mostly from its Manila-Mindanao-Manila market. The company is also positioning itself as one of the major freight forwarders in the local shipping industry. Kay Alcantara, 2GO marketing manager for the Road Ro-Ro Terminal System (2GO-RRTS), said the company is tapping its sister firms under ATS, specifically SuperFerry, to expand its reach and service unsaturated markets particularly those in the South. The company is also forging tie-ups with government agencies such as the Department of Agriculture to get a bigger chunk of the government's local trade even as it is tapping more Manila industries for their shipments. "2GO-RRTS is positioning itself in the future of the Philippines shipping industry and we are taking it a step at a time. We are targeting a larger chunk in the country's containerized shipping business starting this year after we posted significant growth since we were launched two years ago," Alcantara explained. 2GO-RRTS is studying the viability of some routes in the South which it plans to connect to Manila: General Santos, Cagayan de Oro, and Davao in Mindanao; and Cebu. In these sectors, it plans to ship fresh fruits, vegetables, meat, tuna and other processed fish and poultry products.

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Extension of duty-free capital equipment incentive in the works

THE government is poised to grant Board of Investment (BOI)-registered firms a two-year duty-free capital equipment incentive to make the cost of production more competitive. Trade undersecretary Elmer Hernandez said the Cabinet level inter-agency committee on tariff and related matters (TRM) has approved in principle the issuance of an executive order (EO) granting duty-free perks to BOI-registered firms for two years while a legislation that would rationalize incentives remains pending in Congress. The Tariff Commission is poised to conduct public hearings on the issue on February 22. Subject for public consultation are duties on capital equipment, spare parts and accessories falling under chapters 40, 59, 68, 69, 70, 73, 76, 82 to 85, 87, 89 to 91 and 96 of the Tariff and Customs Code of the Philippines. Hernandez said the EO would effectively extend EO 313 under improved terms to level the playing field for domestic companies, mostly registered with BOI and export companies registered with the Philippine Economic Zone Authority. EO 313, which is set to expire in June, allows export-oriented firms to import their capital goods at zero tariff, and domestic-oriented firms at 1%. "This would make our industries competitive and we are addressing the needs of investors by offering a reasonable incentive package while waiting for the rationalization of the incentives," Hernandez said. He added that the proposal to extend and improve the incentives, which was initiated by the Department of Trade and Industry, is fully supported by the Department of Finance and the Cabinet TRM despite the fact this would translate into revenue drain.

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Open skies policy in force at Diosdado Macapagal airport

THE Philippine government recently declared an open skies policy for the Diosdado Macapagal International Airport (DMIA) in Clarkfield, Pampanga after President Gloria-Macapagal Arroyo recently signed Executive Order (EO) No. 500. The EO recognizes the growing demand among low-cost passenger airlines to fly to the Philippines, as well as the government's desire to develop Clark and Subic into the best international service and logistics center under the administration's 10-point agenda. Under the EO, carriers with existing service agreements with the Philippines can now apply for a waiver of any restriction or limitation on capacity, type or aircraft or non-cabotage traffic rights. It also provides that the waiver shall be granted provided its scope does not extend beyond the commercial and technical requirements for the operation of air services to and from the airport. The new directive directed the Philippine air negotiating panel to begin talks with Singapore, Malaysia, Thailand and Korea to formalize the special charter permits granted by the Civil Aeronautics Board into permanent air entitlements. Arroyo also instructed the Air Transportation Office, the Bureau of Immigration, Bureau of Customs, Quarantine, and other agencies to provide the necessary support and facilities for the expansion of DMIA passenger and cargo services. Only budget airlines currently land at the DMIA while logistics firm UPS maintains its Asia-Pacific hub in Clark. Major airlines continue to prefer the Manila airports.