Philippines eyes ASEAN, Europe as alternative markets

Philippines eyes ASEAN, Europe as alternative markets

MANILA (Reuters): The Philippines would be focusing on Europe and the Asia-Pacific as alternative export markets this year amid economic slowdown in major trading partners the United States and Japan, Trade Secretary Manuel Roxas said on Wednesday.

"We are focusing on Europe. That's why we are undertaking a mission to Europe in the middle of this year. We are also focusing on our neighbors here in ASEAN (Association of Southeast Asian Nations), building on opportunities that AFTA (the ASEAN Free Trade Area Agreement) provides," Roxas told a meeting of foreign journalists.

The Philippines announced on Tuesday that its February exports eased 3.3 percent from a year ago to $2.805 billion -- the first year-on-year drop since October 2000. Exports were down 2.9 percent against January's $2.889 billion.

The drop in exports prompted the government to adopt a more cautious view of economic growth this year. Socio-economic Planning Secretary Dante Canlas told reporters on Tuesday the country was unlikely to achieve the higher end of its 3.8-4.3 percent gross domestic product growth target for 2001.

The bulk of Philippine exports are made up of electronics components, often shipped as parts for finished products. Garments are its second top export product.

"Both of these product categories are severely affected by the slowdown in the two largest markets, which is Japan and eventually the U.S.," Roxas said.

"The forecast of the semiconductor association is a flat (growth in) 2001 versus 2000. That's their best case forecast and that assumes that there will be some sort of rebound in the third quarter of this year in the United States."

The association failed to achieve its 2000 export target of $35 billion and recorded about $32 billion worth of exports last year, the trade secretary said.

He said as a way to cope with slower growth in exports, the Philippines was looking into developing IT-related services and giving more attention to small and medium enterprises, especially those with capabilities for exports.

He also said the country's method for compiling trade statistics needs to be revised to highlight trade in these IT- related services, as they tend to be lumped in the services account which includes banking and insurance deals.

While the Philippines and other economies are struggling to deal with the sluggish U.S. economy and weaker regional currencies, Roxas said the country was in a better position than before to cope with the situation, which some fear may be the start of another Asian financial crisis.

Private companies have restructured their balance sheets and reviewed foreign denominated borrowings since then and "are much in a better position to withstand such a similar dynamic", he said.