Believing in the trade opportunities that will be created by the Regional Comprehensive Economic Partnership (RCEP) Agreement garments industry in the Philippines urged the Senate to approve

The Confederation of Wearables Exporters of the Philippines (CONWEP) and its affiliate, the Coalition of Philippine Manufacturers of PPE (CPMP), noted that the RCEP Agreement is already enjoyed by RCEP signatories such as Vietnam — the Philippines’ closest competitor in the industry—since 01 January 2022. The RCEP allows manufacturers from member countries to source raw materials such as yarn and fabric worldwide, with the finished products qualifying for preferential tariff treatment under the Agreement.  

CONWEP Executive Director Marites Jocson-Agoncillo and CPMP Executive Director Rosette Carillo, through their letter furnished to the DTI, remarked that global brands have redirected their orders to the Philippines from Viet Nam due to the hesitation of the latter’s workforce to return to the factories because of the COVID-19 pandemic.  

According to Executive Directors Jocson-Agoncillo and Carillo: “We need RCEP to sustain such opportunities. Otherwise, we again lose these orders, as well as significant planned investments on apparel and textile from countries such as China, Taiwan, and others, to Viet Nam which is expected to resume its operations in the next couple of months.” 

The sector was among those affected by the slowdown in the economic activities brought by the COVID-19 pandemic and is still reeling from its effects. CONWEP’s data highlighted that almost 20,000 direct workers were displaced due to the global pandemic. Pre-pandemic, the sector employed 260,000 to 280,000 workers. 

In line with this, Diana H. Santos, President Emerita of the Garment Business Association of the Philippines (GBAP), has reaffirmed their support through a letter to the Department on the Philippines’ joining the RCEP. 

“We opine that the Philippines would be at a trade disadvantage if we are not part of the aforementioned partnership”, she wrote. 

The RCEP Agreement entered into force on 01 January 2022 for 10 Signatory States, namely – Brunei Darussalam, Cambodia, Lao PDR, Singapore, Thailand, Viet Nam, Australia, China, Japan, and New Zealand. The Agreement will be implemented by South Korea on 01 February 2022. 

The RCEP agreement was ratified by President Rodrigo Roa Duterte last 02 September 2021 and is under Senate deliberations to secure concurrence. 

Committed to bring more foreign investors to jumpstart the economy after badly hit by the pandemic, the Philippine government, through its lead investments promotion arm–the Board of Investments (BOI), in partnership with the Japan Hygiene Products Industry Association (JHPIA) organized an online briefing with JHPIA members to promote investment opportunities in the Philippines for manufacturers of PPE, hygiene products and medical supplies based in Japan. The webinar showcased the competitive advantage of the Philippines as a manufacturing base for companies not only from Japan but also from neighboring markets such as Taiwan, South Korea and Malaysia.  

The Philippines currently has an active and productive PPE manufacturing sector, with 300 businesses engaged in the textile and garments industry and a highly skilled workforce of 510,000 capable of efficiently producing PPEs. On a monthly basis the Philippines is now producing over 80 million face masks, 10.2 million pieces of medical-grade coveralls and 65,700 face shields. 

The Philippines also has a large and well-established chemical and chemical products sub-sector, the second largest contributor to manufacturing GVA with a value of $8.6 billion and employing over 200,000 people. The Medical Supplies industry in the Philippines is estimated to contribute at least $165 million in sales annually. With the sudden increase in demand for disinfectants, including rubbing alcohol, hand sanitizers and cleaning materials, local companies which have been traditionally engaged in the production of alcoholic beverages, personal care, and food manufacturing transformed their facilities to produce sanitizers, disinfectants and similar products.  

With the high global demand for PPE, hygiene products and medical devices amid worldwide shortages caused by the Covid-19 pandemic, the Philippine Government has developed programs to provide financing support and additional fiscal and non-fiscal incentives to assist companies which include the unhampered movement of goods and personnel and reduced corporate income tax. To date, 42 production lines including textile factories, garment plants and yarn spinning mills have been repurposed to manufacture PPE, and over 1.5 million liters of alcohol, sanitizer and hand spray are now produced monthly in the Philippines.  

Lanie Dormiendo, OIC Director of the Philippines’ Board of Investments said: “Our large population, rich talent pool and access to key markets open up various opportunities for Japanese manufacturers of PPEs, hygiene and other related products as they explore business expansion or diversification. Our country can serve both as their market and manufacturing base for exports. Throughout this unprecedented global health emergency, the Philippines has proven itself as a manufacturing hub for PPE and other medical supplies vital to fighting the pandemic. We did not impose import or export restrictions and even assisted foreign manufacturers and exporters including Japanese firms at the height of the lockdowns enabling them to continue their factory operations.” 

Ferdinand Ferrer, Vice Chairman of the Coalition of Philippine Manufacturers of PPE (CPMP) adds: “Heeding the call of the government to repurpose manufacturing to produce medical grade PPE products and fabric, CPMP was established to strengthen the growth of our local PPE manufacturers and sustain our supply chain. We are open to partnerships and investments from our Japanese counterparts to explore more opportunities and further develop our capabilities.” 

The Japanese face mask manufacturer Yokoisada is one of several international businesses to successfully set up operations in the Philippines.  

Yuki Yokoi, CEO of Yokoisada comments: “The strategic location of the Philippines has been a great advantage for our company because our main markets are in East Asia and ASEAN. There is also available skilled and English-speaking workforce. During the lockdown, the DTI-BOI has assisted us in the transit of our employees, movement of cargoes, and sourcing of raw materials. Encouraged by the support from the Philippine government, our company recently decided to expand and double our current production capacity with the financial assistance we received from the Japan’s government subsidy for its supply chain diversification program.”  

The BOI together with the Philippine Trade and Investment Centers in Tokyo and Osaka will host two other industry-focused webinars for businesses considering expansion or relocation to the Philippines: a multi-sector business-to-business event which will take place on 29 March, followed by a pharmaceutical industry event on May 20. For further information about the events and other support available from BOI visit: www.philippines.business.  

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