The Philippine government recently rolled out a Garments and Textile Industry Roadmap with the aim of jumpstarting the industry’s resurgence and gain back its reputation as a competitive player in the domestic and international markets. The plan covering the period from 2020 to 2029 was divided into three phases, with annual exports growth of more than 45% targeted by the final phase :
Under the short term milestones, the Philippines should already be among the top 20 garment exporters with annual growth of around 12% annual growth in garment exports and 3-5% increase in textile exports. Top strategies to achieve the targets in the short term are:
- Address smuggling and “ukay-ukay” or second-hand apparel being sold at a low price by implementing pre-shipment inspections and cancelling business permits related to ukay-ukay;
- Provide access to capital and land through financial assistance for the purchase of raw materials, new machinery and equipment and by increasing hectarage of land for cotton production;
- Provide incentives to the sector. The roadmap identifies a need to incentivize adoption of innovative production processes that promote sustainability and green Environment, use of solar Energy, as well as waste disposal and upcyling.
- Other short-term strategies cover enhancing market access by entering into free trade agreements (FTA) particularly with the US, utilizing existing FTAs and Generalized System of Preferences; promoting innovation and automation; importing raw materials for textiles; establishing regional or localized ecosystems by mapping regional resources or indigenous fiber; strengthening support by streamlining administrative processes and building a database for the textile-garments industry; as well as pushing for manpower development.
Medium term (2023-2025)
In the medium-term, the goal is for the Philippines to be part of the top 15 garment exporters. To be in the top 15 would require an annual increase of nearly 22% in garment exports. To achieve this, the approach is to address Infrastructure gaps and logistical bottlenecks; establish clustering and agglomeration; diversify export markets; promote fashion design training centers; and increase investments for research and development.
For the long-term, the roadmap said that an annual 45.8% annual increase in the exports of garments is attainable by 2026-2029. This would enable the Philippines to enter the top ten rankings of the world’s biggest garment exporters. Long-term strategies include focusing on manpower training programs to equip workers with highly specialized skills and to increase supply of natural fiber textile raw materials.
The Philippines was the 6th largest exporters of apparel to the United States in 1970. However, export sales have since dwindled. The industry suffered in the face of challenges brought about by the end of the Multi-Fiber Agreement (MFA), which governed the world trade in textiles and garments from 1974 through 1994, imposing quotas on the amount developing countries could export to developed countries.
The MFA was replaced by the Agreement on Textiles and Clothing (ACT) in 1995, with the objective of discontinuing restrictions in the MFA including quota allocations, leading up to the full adoption of the General Agreement on Tariffs and Trade (GATT) and putting an end to the quota system by year 2005. The Philippine garments and textile industry trade steadily and continuously declined between 2005 and 2011. Its garment exports dropped by 39% from USD 2,287 million in 2005 to USD 1,402 million in 2011. In 2016, the industry exported a total of USD 1,226 million and imported USD 1,479 million worth of garments.
(Sources: Board of Investments (BOI), Philippines; Manila Bulletin; PhilStar Global)