Global slowdown, trade deals threaten PH firms

The forging of new free trade deals and the return of some manufacturing operations to developed economies are among the new challenges confronting local exporters, according to an official of the World Bank Group.

“What we see are two major global trends. One is the fact that the global economy may be facing a slowdown because of a lot of things going around the world, including political uncertainties in the Middle East and  Europe,” said Roberto Martin N. Galang, operations officer for Trade and Competitiveness at the World Bank.

However, the bigger trend, according to Galang, is the separation of growth and trade.

There was a time when trade grows in step with the general economy.

That relationship has changed, however, in recent times, with the share of trade in the Gross Domestic Product continuing to shrink.

This was said to be driven by moves of large economies like China and the United States to become less export dependent and instead rely more on local sources to fuel production.

“We’re seeing a lot of manufacturing going back to the developed world, and that’s why you have the US manufacturing industry booming because you have the technologies like the 3D printer, which allow more manufacturing to be done in-house. And you have companies that want to shorten the manufacturing process (by keeping facilities closer to home) so they can serve their fickle consumers faster,” Galang explained on the sidelines of the National Exporters Congress held Thursday.

Given these new developments, Galang stressed the need for local exporters to be nearer the key markets they serve by setting up bases and manufacturing capabilities that will cut the lead time for orders and deliveries.

Also critical is government support to beef up the local enterprises’ capabilities and competitiveness in a global market.

Galang noted that SMEs, in particular, can provide that needed growth in trade as they can serve both local and global markets.

However, SMEs will need easier access to financing, innovations and new markets.

According to Galang, the Philippines has a number of programs for SMEs but these are being coursed via different government agencies such as the Department of Trade and Industry and Department of Science and Technology.

The World Bank, Galang said, hoped to put in place an integrated support system that can can push the SME agenda.

The idea is to have a one-stop shop for SMEs, whose base can be the Go Negosyo centers that are being put up across the country.