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SERGIO R. ORTIZ-LUIS, JR. President - PHILEXPORT

This president's report from the 2nd General Membership Meeting on July 2, 2009, discusses the challenges faced by the Philippine export industry in the global economic crisis. While the sector saw a decline last year, there are signs of recovery with new orders coming in and consumer spending picking up in the US. The report also outlines the role of PHILEXPORT in advocacy work and initiatives to identify post-crisis opportunities for growth.

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SERGIO R. ORTIZ-LUIS, JR. President - PHILEXPORT

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  1. PRESIDENT'S REPORT Positioning Philippine Exports in the Global Map SERGIO R. ORTIZ-LUIS, JR. President - PHILEXPORT 2nd General Membership Meeting July 2, 2009  1:30 – 5:30p.m. Makati Sports Club

  2. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Export industry - hardest hit segment of the domestic economy by the lingering global economic crisis.

  3. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Most industries suffered double-digit declines – food and furniture.

  4. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Exports contracted by 2.86% last year. But turned out to be only the beginning. • The full impact of the global trade slowdown came to us in the first half of this year.

  5. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Major exports are beginning to recover, with new orders trickling back. • This, coupled with the perking up of consumer spending in the US, could mean - the WORST IS OVER.

  6. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Latest forecast made by the Export Development Council is that, counting out services exports, our sector will most likely retreat by 16% for the whole of this year.

  7. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • The best economists led by noble laureate Paul Krugman, see a slow, painful recovery for the highly industrialized economies that are now under recession.

  8. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Economic managers say that the crisis would not affect us as badly as our neighbors that are very dependent on exports like Singapore, Thailand, Malaysia, Japan and South Korea.

  9. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Exports made up close to half of the GDP during the boom years. • Exports share in the GDP 47% in 2006; retreated to 43% in 2007 and declined 38% last year.

  10. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • If services export are counted in like the BPO industry and OFWs, the combined share of the productive economy exceeds 60%, with OFW money estimated by foreign chambers to contribute 12% of the yearly GDP.

  11. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • If circumstances beyond ours and government’s control, crush dollar earnings from exports and OFWs, the whole economy will suffer an economic catastrophe of national proportions.

  12. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club We could not, and we must not, make this worst scenario happen.

  13. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Prospects of a gradual global recovery prompted your leadership to look beyond the present crisis, search for new opportunities, plan and implement programs that are more lasting.

  14. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Theme: Moving Forward: Identifying and Riding on Post-Crisis Opportunities

  15. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club PHILEXPORT’s role, from frontline services to advocacy: • Prying open new markets and expanding existing ones.

  16. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Advocacy Work: • Passage into law of the Export Development Act of 1994 in preparation to our accession to the World Trade Organization the following year.

  17. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Under the Act: • EDC was institutionalized • PHILEXPORT played a frontline role in the formation of another institution, the National Competitiveness Council.

  18. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club The EDC and the NCC have assumed much of the reform advocacies PHILEXPORT had borne on its shoulders in the past decade.

  19. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • The need to upgrade and match educational training with the needs of the productive economy, making local governments more business-friendly and bringing down business costs.

  20. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • High-impact achievement -- grant of the P1 billion Export Support Fund or ESF that has supplanted the initial P280M Export Promotions Fund put together in late 2007 and spent in projects last year.

  21. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • It is now called ESF because the scope of projects is no longer limited to export promotions. It now includes development projects: • fish laboratory facility of tuna industry in GenSan • other industry-wide common facilities – furniture design center in Cebu

  22. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club The new funding, with a first tranche of P200 million, has been released to DTI and must be spent soonest.

  23. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • All committees have been constituted. PHILEXPORT trustees are committee members and now are evaluating project proposals; • Approving committee hopes to approved the first projects under the new ESF before the end of this week.

  24. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • 70% of the P1 billion will be plowed into projects of exporting groups composed mainly of SMEs.

  25. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • 30% will be used by the big groups, particularly the electronics, BPO and IT industries for a high-profile international investment promotions campaign for new locators.

  26. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We expect that direct government grants for the ESF will continue to come while PGMA is in Malacanang, although we have advocated for a more sustainable government support.

  27. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We do have funding support for long-nurtured, strategic projects that need to be put immediately on the ground.

  28. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We are already finding ways of making the present export slump as a blessing to our collective future.

  29. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Our export facilitation service has been moving at full speed: • Electronic linkages between our OSEDC in Manila to the Bureau of Customs is presently under test operations

  30. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Similar interconnection will soon follow in other one-stop centers in Subic, Clark, Cebu and the rest of the major exporting regions with similar facilities, may get linked to the BOC later this year.

  31. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We expect a major jump in trade facilitation reform also this year with the Senate approval of the accession documents to the Revised Kyoto Convention, the global blueprint for simplified and harmonized customs administration practices.

  32. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Legislative reforms to facilitate trade, complement our low-profile activities: • buyer-seller matching • travel tax exemption • visa-free APEC business cards

  33. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We have strived to help build the capabilities of our affiliates, regional chapters with some funding support.

  34. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Our tie-up withthe CBI, the capability building is more direct to pre-screened exporters that are helped in breaking into the European market. This, we have been doing for about seventeen years.

  35. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We can do much more in systematizing capability building initiatives of chapters and industry association with proper allocation of the P1 billion ESF that we must commit to projects this year.

  36. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • We have intensified our information gathering and dissemination of urgent information that they need to know through e-mail and the mainstream media.

  37. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • These are Market and Policy Advisories, in addition to the weekly PHILEXPORT News and Features (PNF).

  38. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • PHILEXPORT look for ways to further deepen our capabilities to get market and competitor information that we find very important.

  39. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Highly-developed countries –like EU and US may be tempted to put up more non-tariff barriers to trade: • mandatatory pre-testing of food products; • Fish catch traceability – EU • Wood supply traceability for furniture export to US

  40. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • This is another area we need to help partners in government, particularly our commercial attaches.

  41. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Our information gathering and dissemination arms must now link up more closely and work as a team.

  42. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club • Commercial attaches have easier access to the most recent trade info that our exporters and policy-makers may require, while our team has direct access to the exporters.

  43. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club We can do a lot more in the service of our constituents if the two set up regular, two-way communications.

  44. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club It is not the end of our voyage. You are all here because we are still looking for solutions and have not given up.

  45. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Hope is alive that we can survive through the recovery stage. The seas are stormy now, the sailing tough. But sooner or later, we will reach calm waters and call port to safely unload our cargoes.

  46. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club It has happened before; it will happen again in this crisis.

  47. 2nd Quarter General Membership Meeting July 2, 2009 Makati Sports Club Mabuhay!!! And may we all have a fruitful afternoon.

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