The government should plug the “missing links” in the domestic garment manufacturing industry, one of the country’s top dollar earners, by supporting and developing a reliable local supply base, the Foreign Buyers Association of the Philippines (FOBAP) urged.
FOBAP, a group of buyers of soft and hardgoods industry products for exports to their customers abroad, said the local supply chain issue is a top priority that President Ferdinand Marcos Jr. should address immediately. The group also urged Marcos to make a policy pronouncement on this issue during his first State of the Nation Address today, July 25.
FOBAP President and Chairman Robert M.Young described the issue of local raw material inputs as major “missing link” to make the country’s exports competitive. Young said this can be done by developing and supporting the micro, small and medium enterprises (MSMEs) to make them reliable suppliers to exporters.
In particular, Young cited the garment and wearables sector, which mainly depends on imported raw materials such as textile for their manufacturing operations because there is no local textile manufacturing company left in the country.
Between 70 and 80 percent of raw materials for wearables manufacturing are imported, majority of which are textile. “Some locally produced components such as lining, buttons, thread are always rejected by the our foreign buyers, they are not apt to export quality standard, so we have to import as well,” said Young.
“We have low productivity due to reliance on imported raw materials for finishing the product, but which are not readily available also due to importing process delays,” he said. This results in unmet export order volumes because of cancellations.
Because of lack of support, Young said MSME suppliers have poor compliance to international trade regulations as required by foreign buyers.
Having a reliable local supply source would also save manufacturers from global supply chain disruptions during pandemic, calamities and war. Global supply chain has been disrupted due to the pandemic and now the raging war in Ukraine by Russian ruler Vladimir Putin.
Other factors affecting the competitiveness of local products for exports are global supply chain issues, particularly high cost of logistics.
The foreign buyers group urged President Marcos Jr. to prioritize the bills in Congress such as the bill in support for MSMEs, which are chain suppliers of pending exporting companies.
FOBAP said that House bills 4462 and 4316 aim to put in order the shipping costs and regulations vital to business survival. This Act which is a consolidation of Senate Bill No. 2488 and House Bill No. 4462 was finally passed by the Senate and the House of Representatives, which seeks to vest the
Maritime Industry Authority the power to promote fair and transparent destination and other shipping charges among forwarders and agents of international shipping lines.
House Bill 4316 filed by Cong. Herrera-Dy supports the same intent of the aforementioned bill but focuses on regulating the application of local charges imposed by international shipping lines to comply with existing laws on obligations and contracts and INCOTERMS, which defines the responsibilities of sellers and buyers.
To bring in state of the art technologies, FOBAP further urged the government to attract more foreign direct investments.
In addition, FOBAP said, “We need export-friendly, non-obstructionists, policies and regulations, government subsidies, intervention and creativity (out of the box) solutions. Political will in revival of the dollar revenue earner industries such as the textile, garment export sector.”
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