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Enabling Business, Empowering Consumers PHILIPPINE EXPORT DEVELOPMENT PLAN PEDP 2014-2016 (Framework and Methodology) enen M. Perlada xecutive Director, Export Development Council (EDC) irector, Export Marking Bureau (EMB) REGIONAL PEDP CONSULTATIONS

Enabling Business, Empowering Consumers PHILIPPINE EXPORT DEVELOPMENT PLAN PEDP 2014-2016 (Framework and Methodology) Senen M. Perlada Executive Director,

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Philippine Export Development Plan PEDP 2014-2016(Framework and Methodology)Senen M. PerladaExecutive Director, Export Development Council (EDC)Director, Export Marking Bureau (EMB)

REGIONAL PEDP CONSULTATIONS

Enabling Business, Empowering ConsumersEnabling Business, Empowering ConsumersObjectivesThe President of the Republic of the Philippines shall approve a rolling three-year Philippine Export Development Plan prepared by the Department of Trade and Industry (DTI) which shall form part of the Medium Term Philippine Development Plan (MTPDP). It shall be formulated in consultation with the private sector, validated and updated semestrally.The PEDP shall define the countrys annual and medium-term export thrusts, strategies, programs and projects and shall be jointly implemented by the government, exporters and other concerned sectors.ARTICLE 2*Institutional Structures Strategies*R.A. 7844 - Export Development Act of 1994Enabling Business, Empowering ConsumersAn effective plan is usually preceded by a framework Framework must contain some behavioral determinants of what is being planned in this case, what explains the behavior of exportsGlobal scenario is analytically described including underlying international structuresSituation of the country conducting the plan in the international context and the changes that had transpired over time which must be factored into the planFramework of the Plan Enabling Business, Empowering ConsumersThe content of such a framework may begin by reviewing plans and account for variances between actual vs. planned achievementsExplaining variances may yield insights as to what were missed out in previous plansOr it may rely on some findings from research on the country or comparative experiences of other countriesIt provides the knowledge base for planning targets and crafting strategies to achieve them Numbers (targets) are behaviorally determined

Framework of the PlanEnabling Business, Empowering ConsumersDeriving the PEDP from two sourcesHard Data/Analyses Source:some rigorous measures of the competitiveness of Philippine exports

there are, for instance, many alternative indicators of the competitiveness of industries roughly indicating their comparative advantage

many organizations maintain databases that keep track of these indicators (e.g. WTO, UN, etc) Enabling Business, Empowering Consumersanalytical assessment of why some industries have lost competitiveness and their prospects of recovering

the path of labor productivity and why even rich countries can compete with PH exports which rely more on cheap labor

the relative quantitative impacts of broad macroeconomic parameters on exports (e.g. exchange rates, power rates, non-tariff barriers)

industry analyses and eventual road maps Hard Data/Analyses source:Enabling Business, Empowering ConsumersSurvey Data

BSOs and trade groups with their market forecasts and industry/products tracking in global marketsmarket intelligence from Commercial Attaches or 3rd party information sourcesinnovations in trade in services especially those in IT and IT-enabled services and their market evolutionindustry / products / trade in services experts, their market insights and outlookEnabling Business, Empowering ConsumersFactors Influencing ExportsPEDP becomes an amalgam of hard data and analysis, and survey data a product of strong analysis and market pulsePEDP is able to identify two groups of factors that become handles for the strategies for implementing itMonitoring and evaluation system can be built into the PEDPPEDP is translated into a work program Enabling Business, Empowering ConsumersDTI Instruments for crafting Strategy

There is a wide array of strategic marketing instruments to support the achievement of PEDP targets those being directly managed and controlled by government agencies with whom stakeholders engage to do international business (i.e. pre-feasibility/feasibility consultations, production advice, packaging techniques, marketing clinics, market access information and mechanisms, incentives (e.g. BOI), affirmative action on MSMEs, etc. Enabling Business, Empowering ConsumersAdvocacy Instruments that DTI can championEqually powerful (or more powerful) factors that influence exports are instruments that are not managed and directed by DTI but which can be advocated towards some directions either directly or through other stakeholders, for instance:real effective exchange rate movementsfinancial lending costspower and energy costs and tariffsinfrastructure magnitude, location, etc.local government participationEnabling Business, Empowering ConsumersDesirable contents of the PEDP:few assessments vs. many assessmentsbreadth vs. depthpoint targets vs. range targetsglobal vs. regional (non-discriminatory vs. FTA-based targets)reviving old industries/products/services vs. cultivating new and emerging onesdoable targets vs. fighting targetsvarying policy scenarios vs. single contextEnabling Business, Empowering ConsumersThe PEDP MethodologyFrameworkHard DataSurvey DataPEDPDTIInstrumentsAdvocacyInstrumentsEnabling Business, Empowering Consumers12The PEDP Consultation and Approval ProcessPost National Export Congress - initial consultations with BSOs done last Dec. 2013Regional Consultation Workshops (NCR/Luzon, Visayas and Mindanao)Draft PEDP for presentation to, and approval of, DTI Excom and EDC ExcomFinal approval of PEDP in an EDC meeting called for the purpose, to be chaired by PBSA III Enabling Business, Empowering Consumers13Selection of Candidate Key SectorsProfile industry groups based on their export performance, employment and value-added

Identify target industry groups for export promotion, development and assistance based on economic criteria

Identify specific commodities within the targeted industry groups

Objectives

Enabling Business, Empowering Consumers14CRITERIALOWMEDIUMHIGHCAGR of PH exports, 2006-2012Zero or negativeMore than 0 but less than 1.86%More than 1.86%Average annual value of PH exports, 2006-2012Less than US$28 MAt least US$28 M but less than US$315 mMore than US$315 MEmployment of sectorLess than 2,045At least 2,045 but less than 5,397More than 5,397Value-added of sectorLess than 0.27 for every P1 value of outputAt least 0.27 but less than 0.4 for very P1 value of outputMore than 0.4 for every P1 value of outputEmployment from SMEsLess than 8.3% of sector emp.At least 8.3% but less than 33.5% of sector emp.More than 33.5% of sector emp.Selection of Candidate Key SectorsEnabling Business, Empowering ConsumersHIGH growth rate of PH exports (i.e., growing faster than average PH exports)

HIGH value of PH exports (at least US$315M)

HIGH employment (at least 5,397)

HIGH value-added (at least P0.40 for every P1.00 of value of output)

4 SECTORS

CRITERIA 1 Enabling Business, Empowering ConsumersPSICINDUSTRY0729Mining of other non-ferrous metal ores2670Manufacture of optical instruments and photographic equipment2790Manufacture of other electrical equipment3011Building of ships and floating structuresCandidate KEY EXPORT SECTORS Tier 1: INVESTMENT-DRIVEN (attraction of inward investments through incentives)Enabling Business, Empowering ConsumersIncludes incentives, investment promotion, improved infrastructure, EODB, database build-up, attraction of valueadded nodes of the value chain17HIGH growth rate of PH exports (i.e., growing faster than average PH exports)

HIGH value of PH exports (at least US$315 M)

HIGH employment (at least 5,397)

LOW value-added (less than P0.27 for every P1.00 of value of output)

5 SECTORS

CRITERIA 2 Enabling Business, Empowering ConsumersCandidate KEY EXPORT SECTORSTIER 2PSICINDUSTRY1020Processing and preserving of fish, crustaceans and molluscs1030Processing and preserving of fruit and vegetables1040Manufacture of vegetable and animal oils and fats1622Manufacture of builders' carpentry and joinery*2930Manufacture of parts and accessories for motor vehicles* More of an Investmentdriven industry (via incentives)Enabling Business, Empowering ConsumersEMB-centric, except for builders carpentry which is investment-led promotion 19MEDIUM to HIGH growth rate of PH exports (positive average growth rate)

MEDIUM to HIGH value of PH exports (at least US$28 M)

MEDIUM to HIGH employment (at least 2,045)

MEDIUM to HIGH value-added (at least P0.27 for every P1.00 of value of output)

MEDIUM to HIGH employment share from SMEs

6 SECTORS

CRITERIA 3 Enabling Business, Empowering ConsumersCandidate KEY EXPORT SECTORSTIER 3PSICINDUSTRY1061Manufacture of grain mill products2023Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations2511Manufacture of structural metal products2593Manufacture of cutlery, hand tools and general hardware3211Manufacture of jewellery and related articles3290Other manufacturing n.e.c.Enabling Business, Empowering Consumers2023: + shampoo, lotion, deodorants, glycerol, personal care3290: will be dissected by EMB to determine emerging exports

21HIGH growth rate of PH exports (at least 1.86%)

PH exports grew faster than world exports during 2006 to 2012

HIGH employment (at least 5,397)

MEDIUM to HIGH value-added

LOW to MEDIUM value of PH exports (less than US$315 M)

5 SECTORS

CRITERIA 4Enabling Business, Empowering Consumers22Candidate KEY EXPORT SECTORSTIER 4PSICINDUSTRY1061Manufacture of grain mill products1104Manufacture of soft drinks; production of mineral waters and other bottled waters1811Printing2023Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations2100Manufacture of pharmaceuticals, medicinal chemical and botanical products2599Manufacture of other fabricated metal products n.e.c.Enabling Business, Empowering Consumers1811: Printed materials; newspapers, printed advertising, catalogues2599: cans and tins for food products, rivets, washers, screw machine products, metal household plates, etc.

23MEDIUM to HIGH value of PH exports (at least US$28M)

HIGH employment (at least 5,397)

LOW growth rate (zero or negative)

LOW to MEDIUM value-added (less than P0.40 per P1 value of output)

11 SECTORS

CRITERIA 5Enabling Business, Empowering ConsumersThese are sectors which are in mature export industries experiencing continuous decline in exports and need assistance to prevent further decline.

2425Candidate KEY EXPORT SECTORSTIER 5Enabling Business, Empowering ConsumersCandidate KEY EXPORT SECTORSTIER 5PSICINDUSTRY1050Manufacture of dairy products1392Manufacture of made-up textile articles, except apparel1410Manufacture of wearing apparel, except fur apparel1701Manufacture of pulp, paper and paperboard2220Manufacture of plastics products2410Manufacture of basic iron and steel2610Manufacture of electronic components and boards2620Manufacture of computers and peripheral equipment2732Manufacture of other electronic and electric wires and cables2910Manufacture of motor vehicles3100Manufacture of furnitureEnabling Business, Empowering Consumers26Classification/ Segmentation of Export Industriesby Value and Growth RatePH Exports in US$ millionCAGR of PH Exports3150281.86LL (42)ML (22)HL (6)LM (2)MM (1)HM (2)LH (39)MH (37)HH (14)Enabling Business, Empowering ConsumersUS$315 M average exports - value derived from 2006-2012 % share to total exports and multiplied by 2012 total exportsUS$28 M median exports1.86 average growth rate (2006-2012)27Value of PH exportsHIGH if industry exports is at least US$315MMEDIUM if industry share in total PH exports is at least US$28M but less than US$315MLOW if industry share in total PH exports is less than US$28MGrowth rate of PH exports HIGH if export growth rate is at least 1.86%;MEDIUM if export growth rate is between 0% and 1.86%LOW if export growth rate is negative.

Classification of Export Industriesby Value and Growth RateEnabling Business, Empowering Consumers28Classification of Exportsby Value and Growth RateValue of exportsGrowth rateNo. of IndustriesHighHigh14HighMedium2HighLow6MediumHigh37MediumMedium1MediumLow22LowHigh39LowMedium2LowLow42Enabling Business, Empowering Consumers29Enabling Business, Empowering ConsumersCandidate 14 key export sectors plotted with indicative employment figures30PEDP Core StrategiesMarket DiversificationMaximizing the benefits of Free Trade Agreements (FTAs)Product DiversificationMoving up the Value ChainEnabling Business, Empowering ConsumersPH Exports 1991-2013In US$ FOBSource: NSO Data, processed by BETP-EDP

PH Export Merchandise PerformanceEnabling Business, Empowering ConsumersAnnual Merchandise Export Performance33Enabling Business, Empowering ConsumersAnnual Merchandise Export Performance2000 -2013

Source: National Statistics OfficeEnabling Business, Empowering ConsumersMonthly Merchandise Export PerformanceJanuary 2008- January 2014

Value in US$ Billion% GrowthSource: National Statistics OfficeJanuary 2014VALUE = 4.38 US$ BYear-on-Year %GROWTH = 9.3Enabling Business, Empowering ConsumersElectronics vs Non-electronics ExportsJanuary 2008 January 2014Source: National Statistics OfficeJanuary 2014In US$ BillionElectronics - 1.79 Non-Electronics - 2.59Total Exports - 4.38Enabling Business, Empowering ConsumersMarket Diversification37PH Exports 1991-2013Source: NSO Data, processed by BETP-EDP

Enabling Business, Empowering ConsumersPH Exports 1991-2013Source: NSO Data, processed by BETP-EDPMaximizing the Benefits of FTAs

Enabling Business, Empowering ConsumersProduct Diversification:Export Share of PEDP Key Export Sector 2008- 2013Enabling Business, Empowering ConsumersServices, Electronics vs Non-electronics Exports PerformanceEnabling Business, Empowering ConsumersExport share to GDPEnabling Business, Empowering ConsumersPEDP 2011-2013Targets vs. Actuals

Enabling Business, Empowering ConsumersPEDP 2011-2013Targets vs. Actuals

Enabling Business, Empowering ConsumersExport Trends

Enabling Business, Empowering Consumers4445Export Trends

Product categories are based from NSO Table 2 (Embargo Reports)Processed By: EMBEnabling Business, Empowering Consumers46Export TrendsProduct categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB

Enabling Business, Empowering Consumers47Export TrendsProduct categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB

Enabling Business, Empowering Consumers48Export TrendsProduct categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB

Enabling Business, Empowering Consumers49Export TrendsProduct categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB

Enabling Business, Empowering Consumers50Export TrendsProduct categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB

Enabling Business, Empowering ConsumersExport ForecastsUsing DBCC targets - indicative computations2012%sh total2013%sh total2014%sh total2015%sh total2016%sh totalMerchandise52.173.753.971.457.169.761.768.267.967.0Services18.626.321.628.624.830.328.831.833.433.0Total70.7100.075.5100.081.9100.090.5100.0101.3100.0Notes:SERVICES2014 export target (IT-BPM services, based from BPAP 20% growth and other services related 5%; average growth at 15%; per DBM BPM6 70-75% exports are IT related)2015 - 2016 targets are at indicative 16% growth rates (for validation with ITBPM/other services sectors/NEDA/BSP) Enabling Business, Empowering Consumers51The great danger for most of us lies not in setting our aim too high and falling short, but in setting our aim too low, and achieving our mark.

-Michael Angelo52Enabling Business, Empowering ConsumersThank You!53Enabling Business, Empowering Consumers