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

Enabling Business, Empowering Consumers

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


Objectives

The 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 country’s 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 1994


An 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 exports

Global scenario is analytically described including underlying international structures

Situation of the country conducting the plan in the international context and the changes that had transpired over time which must be factored into the plan

Framework of the Plan


The content of such a framework may begin by reviewing plans and account for variances between actual vs. planned achievements

Explaining variances may yield insights as to what were missed out in previous plans

Or it may rely on some findings from research on the country or comparative experiences of other countries

It provides the knowledge base for planning targets and crafting strategies to achieve them

Numbers (targets) are behaviorally determined

Framework of the Plan


Deriving the PEDP from two sources Hard 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)


analytical 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:


Survey Data

BSOs and trade groups with their market forecasts and industry/products tracking in global markets

market intelligence from Commercial Attaches or 3rd party information sources

innovations in trade in services especially those in IT and IT-enabled services and their market evolution

industry / products / trade in services experts, their market insights and outlook


Factors Influencing Exports PEDP becomes an amalgam of hard data

and analysis, and survey data – a product of strong analysis and market pulse

PEDP is able to identify two groups of factors that become handles for the strategies for implementing it

Monitoring and evaluation system can be built into the PEDP

PEDP is translated into a work program


DTI 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.


Advocacy Instruments that DTI can champion

Equally 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 movements

financial lending costs

power and energy costs and tariffs

infrastructure – magnitude, location, etc.

local government participation


Desirable contents of the PEDP:

few assessments vs. many assessments

breadth vs. depth

point targets vs. range targets

global vs. regional (non-discriminatory vs. FTA-based targets)

reviving old industries/products/services vs. cultivating new and emerging ones

doable targets vs. fighting targets

varying policy scenarios vs. single context


The PEDP Methodology

Framework

Hard Data Survey DataPEDP

DTIInstruments

AdvocacyInstruments


The PEDP Consultation and Approval Process

Post National Export Congress - initial consultations with BSOs done last Dec. 2013

Regional Consultation Workshops (NCR/Luzon, Visayas and Mindanao)

Draft PEDP for presentation to, and approval of, DTI Excom and EDC Excom

Final approval of PEDP in an EDC meeting called for the purpose, to be chaired by PBSA III


Selection of Candidate Key Sectors

Profile 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


CRITERIA LOW MEDIUM HIGH

CAGR of PH exports, 2006-2012

Zero or negative

More than 0 but less than 1.86%

More than 1.86%

Average annual value of PH exports, 2006-2012

Less than US$28 M

At least US$28 M but less than US$315 m

More than US$315 M

Employment of sector Less than 2,045

At least 2,045 but less than 5,397

More than 5,397

Value-added of sector Less than 0.27 for every P1 value of output

At least 0.27 but less than 0.4 for very P1 value of output

More than 0.4 for every P1 value of output

Employment from SMEs Less 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 Sectors


HIGH 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


PSIC INDUSTRY0729 Mining of other non-ferrous metal ores

2670Manufacture of optical instruments and photographic equipment

2790 Manufacture of other electrical equipment3011 Building of ships and floating structures

“Candidate” KEY EXPORT SECTORS Tier 1: INVESTMENT-DRIVEN (attraction of inward investments through incentives)


HIGH growth rate of PH exports (i.e., growing faster than average PH exports)

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


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

5 SECTORS

CRITERIA 2


“Candidate” KEY EXPORT SECTORSTIER 2

PSIC INDUSTRY

1020 Processing and preserving of fish, crustaceans and molluscs

1030 Processing and preserving of fruit and vegetables1040 Manufacture of vegetable and animal oils and fats1622 Manufacture of builders' carpentry and joinery*2930 Manufacture of parts and accessories for motor

vehicles

* More of an Investment–driven industry (via incentives)


MEDIUM 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



PSIC INDUSTRY

1061 Manufacture of grain mill products2023 Manufacture of soap and detergents, cleaning and

polishing preparations, perfumes and toilet preparations

2511 Manufacture of structural metal products2593 Manufacture of cutlery, hand tools and general

hardware3211 Manufacture of jewellery and related articles3290 Other manufacturing n.e.c.


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

PH exports grew faster than world exports during 2006 to 2012


MEDIUM to HIGH value-added

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

5 SECTORS

CRITERIA 4



PSIC INDUSTRY

1061 Manufacture of grain mill products1104 Manufacture of soft drinks; production of mineral

waters and other bottled waters1811 Printing2023 Manufacture of soap and detergents, cleaning and

polishing preparations, perfumes and toilet preparations

2100 Manufacture of pharmaceuticals, medicinal chemical and botanical products

2599 Manufacture of other fabricated metal products n.e.c.


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


LOW growth rate (zero or negative)

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

11 SECTORS

CRITERIA 5


25

-10.0 -9.0 -8.0 -7.0 -6.0 -5.0 -4.0 -3.0 -2.0 -1.0 0.00

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Plastics products

Electronic comp. & boards

Computers & peripheral eqpt

Wearing apparel

Furniture

Iron & steel

Pulp & paper

Oth. electronic & electric wires




PSIC INDUSTRY

1050 Manufacture of dairy products1392 Manufacture of made-up textile articles, except

apparel1410 Manufacture of wearing apparel, except fur apparel1701 Manufacture of pulp, paper and paperboard2220 Manufacture of plastics products2410 Manufacture of basic iron and steel2610 Manufacture of electronic components and boards2620 Manufacture of computers and peripheral

equipment2732 Manufacture of other electronic and electric wires

and cables2910 Manufacture of motor vehicles3100 Manufacture of furniture


Classification/ Segmentation of Export Industriesby Value and Growth Rate

PH Exports in US$ million

CAGR of PH Exports

315

0

28

1.86

LL (42)

ML (22)

HL (6)

LM (2)

MM (1)

HM (2)

LH (39)

MH (37)

HH (14)


Value 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$28M Growth 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 Rate


Classification of Exportsby Value and Growth Rate

Value of exports Growth rate No. of Industries

High High 14

High Medium 2

High Low 6

Medium High 37

Medium Medium 1

Medium Low 22

Low High 39

Low Medium 2

Low Low 42


0.0 20.0 40.0 60.0 80.0 100.0 120.0 -

500

1,000

1,500

2,000

2,500

3,000

3,500

Average growth rate, 2006-12, %

Val

ue

of

Exp

ort

s, 2

012,

US

$ m

illi

on

Other electrical eqpt

Vehicle parts & accessories

Fruits and vegetables

Electric motors, generatorsVegetable and animal oils

Non-ferrous metal ores

Fish, crustaceans, molluscs

Optical instruments

Ships and floating structures

Builder's carpentry and joinery

Refined Petroleum

Basic chemicals

Special purpose machineries

Communication eqpt

CANDIDATE KEY SECTORS BASED ON EXPORT VALUE AND GROWTH OF EXPORTS (HH -14)


PEDP Core Strategies

Market DiversificationMaximizing the benefits of Free Trade

Agreements (FTAs)Product DiversificationMoving up the Value Chain


PH Exports 1991-2013In US$ FOB

Source: NSO Data, processed by BETP-EDP

PH Export Merchandise Performance


Annual Merchandise Export Performance

33

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -

10.000

20.000

30.000

40.000

50.000

60.000

(30.00)

(20.00)

(10.00)

-

10.00

20.00

30.00

40.00

In U

S B

illi

on

In %

, G

row

th R

ate


Monthly Merchandise Export PerformanceJanuary 2008- January 2014

Value in US$ Billion

% Growth

Source: National Statistics Office

January 2014

VALUE = 4.38 US$ B

Year-on-Year %GROWTH = 9.3

J 08

FMAMJ J A SOND J 09

FMAMJ J A SOND J 10

FMAMJ J A SOND J 11

FMAMJ J A SOND J12

FMAMJ J A SOND J13

FMAMJ J A SOND J14

2.4

2.6

2.8

3

3.2

3.4

3.6

3.8

4

4.2

4.4

4.6

4.8

5

5.2

5.4

5.6

-60

-40

-20

0

20

40

60


Market Diversification

37

PH Exports 1991-2013



PH Exports 1991-2013


Maximizing the Benefits of FTAs


Electronics40%

Agribusiness10%

Min-erals6%

Shipbuild-

ing8%

Other High

Poten-tial

sector7% Others

28%

2013

Product Diversification:Export Share of PEDP Key Export Sector

2008- 2013

Elec-tron-ics

58%

Agribusiness

8%

Min-erals5%

Shipbuild-

ing4%

Other Poten-

tial Sector

9%

Other products15%

2008


Services, Electronics vs Non-electronics Exports Performance

2009 2010 2011 2012 2013

Non-Electronics 16.255 20.428 24.514 29.38 32.15

Electronics 22.18 31.07 23.79 22.72 21.82

Services 11.014 14.095 16.533 18.091 21.79

5

15

25

35

45

55

65

75


2010 2011 2012 2013 2010 2011 2012 2013

GDP 5701539 5909000 6311671 6763767

Export 2886133 2805415 3054071 3077984

Export % Share

50.62 47.48 48.39 45.51

500,000

1,500,000

2,500,000

3,500,000

4,500,000

5,500,000

6,500,000

7,500,000

42.50

43.50

44.50

45.50

46.50

47.50

48.50

49.50

50.50

51.50

50.62 %

47.48 %

48.39 %

45.51 %

Export share to GDP


PEDP 2011-2013Targets vs. Actuals

2011 2012 20130

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

72,123

80,22989,215

66,395

72,539

75,768

Actuals

Target


Export Trends

0

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

92 94 96 98 00 02 04 06 08 10 12 14

TOTAL HPTREND_TOTALEXPORTS


45

Export Trends

1,200,000,000

1,600,000,000

2,000,000,000

2,400,000,000

2,800,000,000

3,200,000,000

3,600,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

electronics_mainHPTREND_MAINELECTRONICS

800,000,000

1,200,000,000

1,600,000,000

2,000,000,000

2,400,000,000

2,800,000,000

3,200,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

components_devicesHPTREND_COMDEV

Product categories are based from NSO Table 2 (Embargo Reports)Processed By: EMB


46

Export Trends


0

40,000,000

80,000,000

120,000,000

160,000,000

200,000,000

240,000,000

280,000,000

320,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

automotive HPTREND_AUTOMOTIVE

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

MACHINERY_TRANSPORTHPTREND_MACHINETRANSPOR


47

Export Trends


0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

WOODMANUFACTURESHPTREND_WOODMANUFACTURE

40,000,000

80,000,000

120,000,000

160,000,000

200,000,000

240,000,000

280,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

GARMENTS HPTREND_GARMENTS


48

Export Trends


0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

CHEMICALS HPTREND_CHEMICALS

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

OTHER_MINERALHPTREND_OTHERMINERALS


49

Export Trends


20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

fruits and vegetablesHPTREND_FRUITSANDVEGGIE

0

40,000,000

80,000,000

120,000,000

160,000,000

200,000,000

240,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

coconut HPTREND_MAINCOCONUT


50

Export Trends


0

40,000,000

80,000,000

120,000,000

160,000,000

200,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

PROCESSED_FOOD_BEVHPTREND_PROCFOODANDBEV

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

FURNITUREFIXTURES HPTREND01


Export ForecastsUsing DBCC targets - indicative computations 2012 %sh

total2013 %sh

total2014 %sh

total2015 %sh

total2016 %sh

totalMerchandise 52.1 73.7 53.9 71.4 57.1 69.7 61.7 68.2 67.9 67.0Services 18.6 26.3 21.6 28.6 24.8 30.3 28.8 31.8 33.4 33.0Total 70.7 100.0 75.5 100.0 81.9 100.0 90.5 100.0 101.3 100.0Notes: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)


“The 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 Angelo

52


Thank You!

53

Documents

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