Manufacturers of travel goods put on hold investment plans, await USTR decision

A number of manufacturers of travel goods catering to the American market have put on hold their plans to invest in the Philippines, as they await a decision on whether local travel and luggage goods will be included in the US’ generalized system of preferences (GSP).

This was revealed by Maritess Jocson-Agoncillo, executive director of the Confederation of Garment Exporters of the Philippines (Congep), during a hearing conducted by the Office of the US Trade Representative (USTR) in Washington DC on Oct. 18.

Based on the transcript of the hearing, Jocson-Agoncillo disclosed that some investment plans had been made prior to June 30, when the USTR was supposed to decide on the request for GSP inclusion.

But when it was announced that the USTR was deferring its decision, some of the plans were put on hold.

“Actually, they have been coming to the country in and out from June up to now, still assessing the viability of bringing in investments into the country, and are just waiting for this, hopefully a positive response to our GSP request,” she added.

It can be recalled that the Philippines, along with other beneficiary countries, has been lobbying for the inclusion of travel goods in the US GSP.

For the Philippines, an inclusion does not only mean that travel goods manufactured here can be exported to the US at zero duties.

This move could also readily hike Philippine exports by as much as $700 million, generate some 70,000 additional jobs for related industries including garments, and could grow the local economy by nearly 0.5 percent during the duration of the GSP program.

An inclusion could also attract more American manufacturers to expand or set up their production facilities in the Philippines.

However, the Philippines failed to secure a favorable decision from the USTR, which decided to “defer” the granting of the Philippines’ petition, along with that of Thailand and Indonesia, among other beneficiary countries under the preferential scheme.

And this has affected business plans in the travel goods sector.

“Let me cite an experience just last July. There was a US buyer who visited the country and was visiting the route, the usual route. They call it the Asean route. And we were told that this particular buyer, together with the supplier also from Asia, was planning to invest and set up factories in the Philippines, hoping that the June 30 ruling would be favorable to us. And we were told during that meeting that we’re holding off … until this comes through, and we will let you know. So it has really affected our investment plan,” Jocson-Agoncillo said.

“So there would definitely be a direct impact on investment. We were looking at about 25 to 30,000 jobs by 2017, new jobs. And that’s like on hold at the moment,” she added.