WEARABLES exports dropped in January and are expected to remain weak this year, the Confederation of Wearable Exporters of the Philippines (CONWEP) said.
“Industry performance continues to shrink and we foresee an overcast horizon ahead of us for 2024,” CONWEP Executive Director Ma. Teresita Jocson-Agoncillo said via telephone.
Exports by the wearables industry posted -19% growth in January to $82.4 million.
Apparel exports contracted 13% to $44.34 million, travel goods shrank 25% to $32.38 million, and footwear exports declined 16% to $5.67 million.
Apparel exports accounted for 0.7% of total exports in January. The leading exports were electronic products and semiconductors, which accounted for 58.2% and 45.5% respectively.
The trade-in-goods deficit shrank 24% to $4.22 billion in January.
Slower global demand, external conflicts, and regional competitors continue to put pressure on wearables exports, Ms. Jocson-Agoncillo said.
“Buyers would tend to be a little more careful in placing their orders to supplier countries like the Philippines, because they would need flexible sourcing that can promise low cost, are quick-to-market, and fully adhere to international laws… tied to sustainability issues and human rights,” she said.
Tensions between China and the US, the Russia-Ukraine war, and conflict in the Middle East have been disrupting the wearables supply chain, Ms. Jocson-Agoncillo added.
CONWEP has said a major foreign brand pulled out from the Philippines and transferred operations to Vietnam after that country signed a free trade agreement with the European Union.
The wearables industry could also suffer more job losses if Philippine legislators go ahead with a wage hike law, according to CONWEP.
“A wage increase at the moment is a major factor in maintaining competitiveness as a sourcing hub for apparel products from the Philippines,” Ms. Jocson-Agoncillo said.
Foundation for Economic Freedom President Calixto V. Chikiamco said the government should prioritize infrastructure catering to the movement of goods to boost trade in the coming months. These include airports, seaports, shipping services, warehouses, roads and transport links to key trade hubs.
“(President Ferdinand R. Marcos, Jr.) should promote foreign investment in shipping now that the Public Service Act has opened the sector to 100% foreign investment,” he said in a Viber message.
Mr. Chikiamco also urged lawmakers to pass a law separating the regulatory and operating functions of the Philippine Ports Authority to address port congestion.
Meanwhile, investment pledges recently gained by the Philippines should help establish the country as a semiconductor hub in the region alongside South Korea and Taiwan, public investment analyst Terry L. Ridon said.
“Government should follow through with the investment commitments in the recent US trade mission and Berlin official trip, in which the country is positioning itself as an alternative to China in the manufacturing of semiconductors and similar products, amid the rising competition between the US and China,” Mr. Ridon, convenor of think tank InfraWatch PH, said in an e-mail.
Last week, Mr. Marcos tallied $4 billion in foreign investment pledges from German companies in manufacturing, information technology, and agriculture. Several US companies are also set to invest about $1 billion in the Philippines, US Commerce Secretary Gina Raimondo said.
Semiconductor growth must come hand-in-hand with reduced red tape and corruption, Mr. Ridon added. — Beatriz Marie D. Cruz
