Revival of garments sector forecast

MANILA, Philippines–Trade officials are highly bullish of being able to revive the local garments sector over the next five years as more local firms start to take advantage of and benefit from the Philippines’ inclusion in the European Union’s new generalized system of preferences (GSP+) scheme.

Following a tour of the CS Garment Inc. factory in Cavite on Wednesday, Trade Secretary Gregory L. Domingo noted that the GSP+ scheme, which allows the Philippines to export more than 6,200 products to the EU at zero tariff, would especially be a big boost to the garments sector in terms of increasing exports, attracting new companies to tap local garments maker and setting up their own facilities in the country.

The garments sector used to be one of the strongest industries, employing some 600,000 workers. But its decline began in the mid-2000s following the lapse of the country’s exports quota of garments to the United States and Europe.

Over the last several years, however, the local garments sector saw a minor comeback in terms of export value and employment, according to Domingo, and the granting of a GSP+ status last Dec. 25, 2014, was expected to give this sector, along with other Philippine export-oriented industries, a tremendous boost.

Add to this the fact that the Philippines is the only Asean country included in the GSP+ scheme, giving local garment companies a competitive advantage over their counterparts in neighboring countries.

“We now expect a lot more orders from European firms,” Domingo added.

For her part, Lilia de Lima, director general of the Philippine Economic Zone Authority, noted that they expected a revival of the garments sector in about three to five years’ time, given the increased orders and the expected return of foreign companies that used to contract with local garments firms.

Once the garments sector picks up pace, De Lima said she was optimistic that the garments sectors’ suppliers would come back as well and set up shops here.

Domingo and De Lima joined EU Ambassador Guy Ledoux and ambassadors of EU member states in a tour of the CS Garment factory in Cavite.

Ledoux said CS Garment, which has been operating for 25 years, would be expanding its operations and hiring an additional 100 workers in anticipation of increased orders due to the GSP+ scheme.

CS Garment, which caters to the European market and produces shirts for five of the top luxury brands, was among those badly hit by the lapse in quotas, which saw the company slashing its workers to 300 from 850 and its production to about 35,000 to 45,000 pieces from the previous 80,000 to 100,000 pieces. Last year, the company produced only 400,000 pieces, noted CS Garment vice president Connie Sudhoff.

“(This) garment factory is one concrete example that the European trade preference called GSP+ is creating jobs in the Philippines. It is foreseen to recruit around 100 workers to respond to increasing orders from the European market,” Ledoux noted. “GSP+ will bring tariffs down to zero for around two thirds of tariff lines, including products that the Philippines is already exporting to the EU like processed food and fruit, footwear and garments. GSP+ gives the Philippines a comparative advantage and will help the Philippines increase exports and investments by diversifying its industry.”

“As today’s visit shows, foreign and domestic investors will put more resources in the Philippines, in facilities that produce the goods benefiting from zero tariffs. This will translate to more competitiveness for the Philippines and more jobs for Filipinos,” he added.