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Cris Evert Lato
Cebu Daily News

CEBU CITY, Philippines – Entrepreneur Nelson Bascones has been delivering seafood and marine products to the restaurants and institutions in the United States and Japan since 1996.

Since food is a basic commodity, he experienced good business operations with occasional market slowdown in between brought about by oversupply and competition.

But no challenge has been more crucial to the food export business compared to this year, said Bascones, chief executive officer of Central Seafoods Inc., which has a plant in Barangay (village) Pilipog, Cordova town.

“Demands are too low even as supply remains the same. That’s the problem today. The dollar has appreciated against the peso but we don’t have the market now,” he told Cebu Daily News.

While Bascones may be feeling the pinch of the Japanese economy, which is currently experiencing a recession, Cebu in general may only feel its impact in the first quarter of 2009, said Fred Escalona, executive director of Confederation of Philippine Exporters Foundation Inc. Cebu (Philexport Cebu).

“The prospects for the first half of next year are gloomy. Akong tan-aw dili pa grabe (The way I see it it’s not yet that serious) but it is expected that this will result to company streamlining or laying off (of workers),” he said.

Bascones said it is difficult to determine if the employee displacement will be massive or not. He, however, noted that production will not stop if demand from abroad remains stable.

At the Mactan Economic Zones (MEZ) 1 and 2 in Lapu-Lapu City, news of probable laying off have not circulated, said Director Porferio Montesclaros of the Mactan Export Processing Zone Chamber of Exporters and Manufacturers (Mepzcem).

The two economic zones have about 200 locators, majority of which are Japanese firms. The locators produce electronic spare parts, garments, metals and camera lenses, among others.

Ninety percent of these locators are members of Mepzcem, an organization of exporters and manufacturers located within the two economic zones.

Montesclaros said he has not heard of any talks that employees are planning to apply for another round of wage increases following complaints of low spending power.

“In general, we are all experiencing a slowdown. Everybody is concerned with worldwide economic situation and we are working very hard to survive,” he said.

Asked if Mepzcem members have met to discuss on possible measures they will take following the Japanese recession, Montesclaros said: “Individually, locators are very, very careful in spending but we have not met to discuss this. But companies have each adapted energy conservation habits and other cost-cutting measures.”

High cost of power is still one of the major concerns especially among locators inside MEZ 1, he said.

“High costs of electrical power is more prevalent in Mez 1 (than Mez 2) because electricity is supplied by diesel-fired power plants of independent power producers, while Mez 2 is connected to the grid hence, cheaper,” he said.

Because of the global economic meltdown, Bascones, who also sits as trustee of Cebu Chamber Commerce and Industry (CCCI), said products such as crab meat and cooked squid are sold abroad at 30 to 40 percent off.

“Prices went so low to the point that we already lose money. Later on, we can adjust but as of now we cannot just lower prices (of products) because raw materials we bought were high,” said Bascones.

Bascones said 80 percent of its operation costs go to raw materials.

Although Japan only accounts 10 percent of exports, Bascones said sales are somehow affected because high-end products such as pasteurized cans of crab meat and ready-to-eat sliced squid are mostly sold to Japan.

Ninety percent of their products go to the US.

“The high-end market does not anymore buy these value-added products they go for the mid-end like raw whole squid or cattlefish. For the past two weeks now, we have not received orders from Japan,” he said.

With or without a crisis, he said, companies are often in the attentive mode to watch out for possible challenges and issues.

Between 2006 to 2008, Central Seafoods has laid off more than 250 employees. The company only has around 100 employees at present. This is part of the company’s cost-saving measures.

On the other hand, Escalona said the appreciation of the dollar against the peso has not worked to the advantage of the exporters.

“Under normal economic conditions, that (dollar appreciation against peso) may have been beneficial but today, market is not there,” said Escalona.

But Escalona said mitigating factors for the Philippine economy and Cebu are the decrease in oil price and remittances from overseas Filipino workers (OFWs).

“Most of our OFWs are in the Middle East, whose economy is working well with the increase in the price of oil reaching the more than $150 level in the last months. While there might be some casualties (for OFWs working in the US), remittances will still help us,” he added.

Meanwhile, Tourism secretary Joseph “Ace” Durano remains optimistic that the recession will not significantly affect tourist arrivals from Japan.

“As far as Japan is concerned, we see business travel slowing down but leisure travel is still up that’s why Japanese arrivals in Cebu and Bohol remains up,” Durano said in a text message.

More than 96,000 Japanese came to Cebu from January to August 2008 making it the second highest number of tourists to visit the province. Japan follows Korea, which has 150,000 tourist arrivals in the same period.

Rica D. Delfinado
Philippine Star

Exports grew 8.3 percent in June from a year ago, faster than the 2.3-percent annual increase in the earlier month, as electronics shipments rebounded, the National Statistics Office (NSO) reported yesterday.

Exports amounted to $4.493 billion in June compared with $4.147 billion in the same period last year.

This brought export receipts from January to June to $25.578 billion, a four-percent increase from $24.6 billion a year ago.

Shipments of electronic products, the country’s most important export group, rose 6.4 percent, after contracting three months in a row to May due to soft global demand.

Electronics, largely assembled from imported parts, accounted for 58.6 percent or $2.63 billion of the total export revenue in June.

Apparel and clothing accesssories was the country’s second top earner in June with a combined share of 3.8 percent and an aggragate receipt of $172.33 million. The figure, however, was 7.6 percent lower than $186.50 million in June. Petroleum products followed with total revenue of $137.28 million.

Rounding up the list of top exports were: coconut oil, $116.97 million; woodcraft and furniture, $110.72 million; ignition wiring set, $78.33 million and metal components, $53.39 million.

The US emerged as the country’s top export destination, with export receipts of $702.74 million, down 0.1 percent year-on-year.

Japan was the second biggest market, accounting for $652.36 million or 14.5 percent of the total. The amount was up 2.6 percent over last year’s.

Other leading markets include China ($491.43 million), Hong Kong ($436.25 million), Netherlands ($349.55 million), Germany ($301 million), Singapore ($246.28 million), Korea ($233.46), Malaysia ($177.60 million), and Taiwan ($170.39 million).

The government has revised its forecast for export growth in 2008 to five percent from six percent largely due to slower export demand. Growth in 2007 was 6.05 percent.

Shipments of electronics and semiconductors should rise five percent after a 4.5 percent expansion last year, industry experts earlier said.

The Philippines supplies about 10 percent of the world’s semiconductor manufacturing services, including mobile phone chips and micro processors. Other key exports include garments and accessories, vehicle parts, coconut oil, tropical fruit and wood furniture.

Ted P. Torres
Philippine Star

The country’s export earnings grew by only 2.3 percent to $4.224 billion in May, slower compared to a 4.9-percent annual increase in the earlier month, the National Statistics Office (NSO) reported yesterday.

The January to May total climbed 3.1 percent to $21.09 billion from $20.452 billion in the same period last year.

Shipments of electronic products, the country’s most important export group, fell 3.4 percent, reflecting soft demand because of a general slowdown in the global economy.

Electronics, largely assembled from imported parts, accounted for 58.6 percent or $2.47 billion of the total export revenue in May.

Copper cathodes were the country’s second largest export in May, growing by 16.2 percent to $155.14 million, the NSO said.

Other top exports include apparel and clothing accessories, woodcrafts and furniture, petroleum products and coconut oil.

Manufactured goods managed to post a 1.5-percent increase in May. Machinery and transport equipment expanded by 36.1 percent while processed food and beverages grew by 47 percent.

Agro-based exports went up by 3.6 percent despite lower volume shipments of coconut products, which were induced partly by lower demand from Europe.

The United States remained the country’s top export destination, with export receipts of $675.59 million, up 2.7 percent from April’s figure.

Japan was the second biggest market, accounting for $665.40 million or 15.8 percent of the total. The amount was up 22.1 percent year-on-year.

Other leading markets include China (502.05 million), Hong Kong ($395.98 million), Korean ($313.31 million), Netherlands ($278.23 million), Singapore ($234.64 million), Germany ($205.34 million), Taiwan ($168.39 million), and Malaysia ($163.62 million).

The government has revised its forecast for export growth in 2008 to five percent from six percent largely due to slower export demand. Growth in 2007 was 6.05 percent.

The main industry body for electronics and semiconductors said exports in the sector in 2008 should rise five percent after 4.5 percent expansion in 2007.

The Philippines supplies about 10 percent of the world’s semiconductor manufacturing services, including mobile phone chips and micro processors. Other key exports include garments and accessories, vehicle parts, coconut oil, tropical fruit and wood furniture.

The central bank said last month it expected the country’s trade deficit this year to expand by a third and reach $11 billion, the highest in at least nine years.

Rocel Felix, Thomson Financial
Inquirer.net

MANILA, Philippines — (UPDATE) Merchandise exports rose at a slower pace of 2.3 percent to $4.224 billion in May after growing 4.9 percent in the previous month, the government said on Thursday.

Shipments of electronics products, the country’s main export, were down 3.4 percent year-on-year in May after contracting 1.7 percent in April from a year ago. Revenue from electronics accounts for 58.6 percent of overall exports.

“There’s a lot of uncertainty hanging over the outlook for global demand, and as we move into the second half of the year, things could worsen,” said David Cohen, chief economist at Action Economics in Singapore.

Besides electronics, which are largely assembled from imported parts, other key Philippine exports include garments and accessories, vehicle parts, coconut oil, tropical fruit and wood furniture.

The marked weakness in imports and exports of electronics, a key dollar earner for the Philippines, reflected easing global demand, he said.

The bulk of the country’s imports are raw materials for electronic products intended for exports.

The Philippine central bank has trimmed its projection for this year’s balance-of-payments surplus to $2.5 billion from $3.4 billion previously given the global downturn.

Shipments of cathodes and copper were the country’s second top export earner in May, growing 16.2 percent to $155.1 million. Garments posted the biggest decline of 17.7 percent to $150.2 million.

The US was the top market for Philippine exports with a 16 percent share and receipts rising 2.7 percent to $657.6 million.

Shipments to Japan rose 22.1 percent to $545.2 million, accounting for a 15.8 percent share.

($1 = P45.57)

Ma. Elisa P. Osorio
Philippine Star

Exporters said they are happy with the 45.50 to $1 exchange rate saying that this will help them regain losses they incurred last year.

“The 45.50 to a dollar is just about okay for us. What we don’t want is a fluctuation. We want it to remain steady,” Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc (Philexport) said in an interview.

Ortiz-Luis said the exporters have already adjusted to the current exchange rate.

“The strong peso has killed a number of exporters, they have already closed. We are not happy about that. We have suffered for a year and a half,” he lamented.

Ortiz-Luis said 75 firms have already closed because of the mounting pressure.

Over 10,000 jobs have been lost due to plant closures. There could be more,” Ortiz-Luis said.

Philexport reported that a large food processing company in a town in Misamis Oriental had recently shut down its facilities and paid the separation pay of its 2,000 employees due to heavy losses after the strong peso made pricing uncompetitive.

The plant uses coconut as its main raw material and was the biggest employer in that Misamis Oriental town.

A Pampanga-based furniture exporter has reported that it has closed four of its five factories and has retrenched 2,500 workers due to the rising peso.

Another big company that processes and exports mangoes in Davao City reported it laid off 550 workers as of the end of last year for the same reason.

by Reuters
from The Philippine Daily Inquirer

MANILA, Philippines – Exports grew 4.9 percent in April from a year ago after a revised 6.6 percent annual contraction in March, government data showed.

Shipments of electronics products, the most important export group, were down 1.7 percent year-on-year reflecting soft demand in the West because of the economic slowdown.

Month-on-month exports in April were up 3.2 percent compared with a 2.0 percent month-on-month rise in March.

Electronics, largely assembled from imported parts, accounted for 58.2 percent of total export revenues in March. Electronics exports were up 2.9 percent month-on-month in April after a 0.4 percent contraction in March.

Exports to the United States, the country’s top export destination in the month, rose 8.7 percent in April from a year ago, accelerating from the previous month’s 1.0 percent annual increase.

Exports to Japan, the second-biggest market, rose 14.4 percent after rising 18.5 percent in March from a year ago.

Shipments to China rose 4.8 percent in April from a year ago compared with a 13.2 percent annual rise in March, while exports to Hong Kong fell 23.6 percent in April from a year ago.

Edward Teather, an economist from UBS said: “In dollar terms, they (the export figures) are relatively soft, and that is consistent with the picture given by the weakening global environment so it is not a huge surprise.”

“The peso may provide some relief, but the danger is inflation pressures mean that the cost base is going up as well.”

Frederic Neumann, an economist from Asia Pacific HSBC said while exports recovered after the contraction in March, “the Philippines remains a relative underperformer, as all other countries registered accelerating export growth in double digits.”

“We remain very cautious on the export outlook because the weakness in the US is likely to persist and there are concerns that demand from Europe might soften as well.”

Vishnu Varathan, an economist from Forecast Pte Ltd. said “the US SEMI Book-Bill ratio still shows a weak global electronics sector and inevitably the Philippines’ major export components could come under some pressure.”

“A weaker peso could provide some relief here though the suspicion is that it may not be enough to offset slowing demand. Manufacturers will be squeezed and this may be bad news for those on the margin.”

The United States was the Philippines’ top export market, accounting for 16 percent of total shipments. Japan was second at 15.4 percent, China was third at 12 percent and Hong Kong was fourth at 9.0 percent.

The Philippine government has revised its forecast of export growth in 2008 to 6.0 percent from 8.0 percent because of the slowdown in the West. Growth in 2007 was 6.05 percent.

The Philippines supplies about 10 percent of the world’s semiconductor manufacturing services, including mobile phone chips and micro processors.

Other key exports include garments and accessories, vehicle parts, coconut oil and tropical fruit.

Rica D. Delfinado
Philippine Star

The country’s export earnings managed to rise by 2.7 percent to $12.524 billion in the first three months of the year from $12.201 billion a year ago despite weak electronics shipments and reduced sales to the US, the country’s top trading partner.

The National Statistics Office (NSO) reported yesterday that for March alone, shipments went down by 6.8 percent to $4.18 billion after enjoying a 10.5 percent growth in February.

The government previously set an eight-percent full-year growth target.

Electronics, which account for 58.5 percent of the total export revenue in March, fell 17.4 percent to $2.444 billion from $2.958 billion in March 2007.

Analysts said the fall indicated softening global demand for electronics, a worrying factor for countries such as the Philippines whose exports are dominated by the sector.

Apparel and clothing, which made up four percent of total exports for the month, also fell 9.5 percent to $166.77 million.

Woodcrafts and furniture’s total revenue rose 11.9 percent to $108.23 million from $96.74 million in March 2007.

Rounding up the list of the top exports for the month of March 2008 were cathodes and sections of cathodes of refined copper, $94.98 million; petroleum products, $86.23 million; ignition wiring set and other wiring sets used in vehicles, aircrafts and ships, $86.09 million; coconut oil, 81.42 million; other products manufactured from materials imported on consignment basis, $67.27 million and gold, $36.22 million.

Total receipts from the top 10 exports reached $3.218 billion, or 77  percent of the total exports

Japan toppled  the US to be  the  country’s top market for March with export receipts of $710.92 million, accounting for 17 percent of total income for the month.

US followed as the second top market with purchases worth $683.12 million or a measly growth of one percent from $676.60 million recorded in March 2007.

Shipments to China amounted  to $549.15 million from $485.02 million a year ago.

Other top 10 markets for March were Hong Kong, $423.35 million; Netherlands, $279.67 million; Republic of Korea, $188.35 million; Singapore, $182.68 million; Malaysia, $181.09 million; Germany, $176.93 million; and Taiwan, $153.59 million.

Erik de la Cruz, Xinhua Financial News Service
Inquirer

MANILA, Philippines — Merchandise exports rose to $4.17 billion in January from $3.27 billion a year before, a rise of 27.3 percent, because of increased shipments of electronics, the National Statistics Office said.

Shipments of electronics, which accounted for 58.5 percent of all exports in January, increased by 14.5 percent to $2.44 billion from $2.13 billion.

($1 = P48.53)