Apparel / Textiles & Accessories

According to a report by the Philippine Business Mirror on April 26, if the strict community quarantine measures have not been relaxed, Philippine clothing exports may face a loss of US$600 million in orders, mainly because the relevant quarantine measures have seriously affected logistics efficiency.

The Philippine Association of Foreign Buyers (Fobap) stated that if the logistics delay problem remains unresolved, the Philippine apparel industry will only achieve 60%-70% of its annual revenue target (US$1.5-2.0 billion) in 2021. In other words, based on the lower limit of the target of 1.5 billion US dollars, the maximum loss may reach 600 million US dollars.

Fobap Chairman Yang explained that the logistics of Philippine garment exports have been delayed for as long as one month, sometimes even as long as 45 days. Affected by the imbalance between the supply and demand of containers, the logistics delay problem has had a substantial impact on Philippine foreign trade exports. On the other hand, due to stricter quarantine measures facing the import of raw materials, the efficiency of customs clearance of imported goods at the Port of Manila and other ports has also been affected. In addition, under strict community isolation measures, inadequate factory workers and logistical support have also made the garment export industry worse. In addition, the Philippine government has implemented a home office and on-the-job office rotation system, and the time for obtaining relevant export documents and other official documents has also become longer.

Although no manufacturer has yet to close down, the Philippine garment export industry has shown a trend of contraction. Since the outbreak of the epidemic, garment factories have been reducing production scale to minimize costs. Yang said that the garment export industry has now reduced its production capacity by 30% by adjusting the production process.

If the buyer does not accept the delay, the manufacturer can only ship it by air. But in the long run, it is difficult to sustain the cost. Because the cost of air freight is 10 to 15 times the cost of ocean freight. Yang explained that the air freight cost of each shirt is US$2, which is higher than the price of US$1.5. At present, some Fobap members are willing to supply the store at a price lower than the contract price, only to allow the store to extend the time for the relevant goods to be sold in the container.

Yang further pointed out that if the non-textile industry can develop, the clothing industry's supply chain will also benefit. Because the revitalization of the textile industry can create more employment opportunities and create more income for the country. "If the government can listen to our suggestions on revitalizing the textile industry, then we will be able to solve the problem of limited supply chains long ago.

The textile industry is the cornerstone of the garment industry, but the Philippines does not have a textile industry. Large manufacturers of cotton and commercial fabrics closed down about two decades ago. Nowadays, the Philippines has to import textiles worth about US$500 million from China, South Korea and other countries every year, and the transportation time generally takes 30 days. But if there are local suppliers in the Philippines, it doesn't have to take so long. If the money can stay in the Philippines, the contribution to the employment creation and income growth of the Philippines will also be considerable. "Yang said.

Yang called on the Philippine government to follow the example of Vietnam and India and help the Philippines revitalize the textile industry by adopting incentive measures such as expanding subsidies. According to Fobap's estimates, the Philippine apparel industry's revenue in 2020 will be approximately US$800-900 million, while in 2019 it will be close to US$1 billion.