Foreign trade is expected to take economic center stage this year, and the government must boost the sector to meet global challenges.
“The government’s response to sustain the developments in the Philippine trade sector is crucial as it sets the direction for the country in 2021 and beyond,” said Acting Socioeconomic Planning Sec. Karl Kendrick T. Chua.
“As economies resume normal operations, we must also work towards getting ahead of the competition and breaking down barriers to trade to ensure availability of raw materials to producers and spur the innovative and productive capacity of the sector,” the NEDA chief said.
The country’s rade performance in November showed encouraging signs that the country is well-positioned to take advantage of improvements in external demand and that the government’s efforts to reinvigorate businesses is gaining traction, the National Economic and Development Authority said.
The Philippine Statistics Authority reported today that after eight consecutive months of contraction, exports grew by 3.0 percent in November 2020. This is the highest year-on-year growth recorded since March, when the country began imposing restrictions due to the pandemic.
The country also joined the ranks of other Asian economies that registered export expansions in November 2020 as exports to East Asia, particularly China, and ASEAN remained positive.
On the other hand, dampened consumer demand contributed to an 18.9 percent decrease in imports in November 2020 as inward shipments of raw materials, intermediate goods, and capital equipment continued to drop.
Driven by stronger exports, the contraction of the country’s merchandise trade performance eased to 10.6 percent in November 2020 from 11.9 percent in October 2020.
Notably, the Senate’s passage of the Financial Institutions Strategic Transfer Act, and the Corporate Recovery and Tax Incentives for Enterprises Act in the last quarter of 2020 signaled the government’s commitment to boosting the country’s business environment and financial sector.
In particular, FIST would help banks increase funds to lend to small businesses, while CREATE would stimulate the micro, small, and medium enterprises, promote more performance-based and targeted tax incentives, and help attract more investments in the country. Chua urges both houses of Congress to work together to approve CREATE as soon as possible.
To boost trade recovery, Chua said that structural reforms to encourage investments in the country, such as the amendments to the Public Service Act, Foreign Investment Act and the Retail Trade Liberalization Act, need to be aggressively pursued to create an inclusive and transformative economy.
On the domestic front, Chua recognized that the country also needs to undertake a review of the non-tariff measures in place that effectively limit access to critical raw materials resulting in higher costs to manufacturers and producers.
The NEDA chief added that online platforms such as TradeNet would be integral in enabling the country to be at the forefront of digital solutions designed to reduce cost and facilitate trade.
“Placing this system as a backbone of trade transactions will not only ensure continuity of business activities, but will also help the government in its campaign to lessen face-to-face transactions, thereby reducing opportunities for corruption,” said Chua.