PHILIPPINE EXPORTS to the European Union (EU) could hit $10 billion by the end of the year, riding on the back of generalized system of preferences plus (GSP+) which grants special duty-free privileges on certain products.
Department of Trade and Industry (DTI) Secretary Ramon M. Lopez told reporters on Tuesday during the EU-Philippine Business Summit at the Solaire Grand Ballroom in Pasay city that with the export growth rate hitting 30%, year-to-date revenue is at around $7 billion.
“Economic relations have been good, even the GSP+ utilization has increased from 2015 to 2016 and we expect greater utilization this year because more and more exporters are getting advantage of the GSP+ as they get to be aware of the privilege.”
Exports to Europe as of June grew by 36%. In 2016, the GSP+ utilization rate rose to 71% from 68% the year before, with privileged products amounting to €1.7 billion worth of exports. Total exports last year hit €6.7 billion.
GSP+ status grants some 6,247 products reduced or no tariffs when exported to Europe. The scheme runs for up to nine years and is intended as a form of economic assistance to developing countries.
The Philippines is the only Southeast Asian country to earn GSP+ status.
Mr. Lopez confirmed that at present there are no products the DTI plans to request adding to the list of GSP+ goods.
Crude coconut oil was the top export under GSP+ at €496 million, followed by canned tuna and rubber valued at €115 million and €58 million, respectively.
Bicycles and bicycle parts hit €33.5 million while preserved and processed pineapples came in fifth with €29.1 million worth of exports.
EU is the country’s largest foreign investor, the fourth largest trading market and export partner, as well as the fifth-largest importer of Philippine goods as of 2016.
European Chamber of Commerce of the Philippines President Guenter Taus in his speech said that the Philippines should enhance its trade facilitation and boost business competitiveness to become an attractive foreign direct investment (FDI) destination.
“On the topic of foreign investment, substantial reforms are needed in order to provide for the creation of a more competitive business environment that includes a level playing field and an appealing incentive scheme for foreign investors,” Mr. Taus said.
“By restricting FDI, the Philippines is currently losing out to other Southeast Asian countries that offer a more favorable legislative framework, thus missing the positive spillover effect of direct investments.”
EU Ambassador Franz Jessen said in his speech that the EU is also the second-largest source of overseas remittances, with about 800,000 Filipinos residing and working in the region as of 2013.
“The European economy is growing at a very healthy rate of 2.4%. This has led to a significant increase in EU imports from the rest of the world, including the Philippines. Last year, EU exports to the world increased by 16%. Our imports increased even more, by 17%,” Mr. Jessen said in his speech.
GSP+ status was almost revoked earlier this year over alleged human rights and labor rights violations.
Mr. Lopez and Philippine Special Envoy to the EU Senator Juan Edgardo M. Angara appealed to the EU Parliament last month to seek continuation of GSP+ amid an ongoing EU review.
The GSP+ report which will cover 2016 and 2017 will come out sometime in January.