This article examines critical factors of international trade in the Philippines. These features include change in policy, rise of stakeholders, and use of incentives to boost exports and international investment. In addition, this article details the key imports and exports of the Philippines.
International Trade in the Philippines
The Philip pines is slowly making a name as a booming market in international trade. With its increasing GDP and soaring foreign investment, the archipelago has become one of the prime targets for businesses.
In previous centuries, the Philippines was considered as one of Asia’s most successful centers for trade. The entire archi pelago was regularly visited by traders from India, China, and even the Middle East from the first millennium until the early 20th century.
Unfortunately, the trade scene in the country fell into hard times. In the mid 20th century, around 80 percent of the country’s trade was with the US. This trade relationship declined when the Japanese took control of the country.
Now, the country is on its way to mirror the same success it once had. Below you will find more about the international trade scene in the Philippines today.
Why Is It on the Rise?
The Philippine economy is opening itself by offering greater opportunity to foreign investors in the trade sector. Here are some of the factors which are helping to elevate trade in the Philippines.
The Philippines is one of the most active supporters of the World Trade Organization. While it aims to develop the country itself, it also hopes to realize the goals of the ASEAN economic integration. Countless trade reforms have been enacted in the country to improve its trade sector.
Additionally, the country is also a member of the ASEAN Free Trade Area and has lowered many international tariffs.
There are quite a number of non-governmental and governmental organizations which promote exports. These groups can also help companies enter new trade markets.
For example, the Bureau of Export Trade Promotion, the Philippine Exporters Confederation and the Philippine International Trading Corporation has created numerous initiatives to develop the country as a prime destination for foreign exports. Furthermore, the Philippines has worked with countries such as the United States to open the gates for increased imports and exports.
The country offers numerous incentives and benefits to attract foreign investment. In fact, the Philippines has more than 300 ecozones, which includes some industrial estates, free trade zones, and export processing zones.
Ecozones make it possible for companies to get preferential tax treatment because they are not included in the customs territory. This makes it possible to import products and other goods without customs duties. Furthermore, certain businesses can avoid travel fees and local taxes depending on the circumstances.
In 2017, the Philippines shipped around $6 3.2 billion of goods around the world. In the first half of the year, the value of goods was estimated to be $32.9 billion. About 66.4 percent of exports were delivered to Asian countries, while North American importers got 16.3 percent and another 15.4 percent of exports went to Europe.
There has been an 11.5 percent increase in the value of exports since 2013. There has also been a 12.3 percent gain compared to 2016. Exported services and goods from the country total 32.1 percent of the gross domestic product (GDP).
In 2017, the top products that were exported from the Philippines included electrical machinery and equipment which totaled 44.8 percent of exports this amounted to $28.4 billion. The next top export product was machinery which includes computers. Other top exports were optical, technical, and medical apparatus.
The top ten exported products totaled a staggering 80.4 percent of its global shipments.
In 2017, the Philippines was able to import around $98.5 billion worth of goods from all over the world. This was a 49.9 percent increase since 2013 and a 14.6 percent increase from 2016. In the first six months of 2018, imported goods totaled $54.7 billion.
Additionally, 80.4 percent of total imports were from Asian countries. About 8.9 percent was from North America, and 8.1 percent was from Europe.
Just like in the country’s top exports, electrical machinery and equipment nabbed the top spot of Philippine imports totaling $21.5 billion (21.9 percent of total imports), followed by machinery including computers, mineral fuels such as oil, vehicles, and iron and steel.
Here is the process required to import goods into the Philippines.
First, businesses are required to secure an import clearance certificate from the Bureau of Internal Revenue. Then, they need to register with the country’s Bureau of Customs and set up a client profile registration system (CPRS) account. Each import clearance certificate is valid for three years and the accreditation from the CPRS needs to be updated each year. This process takes up to 15 days to complete, and would total around $20.
Because the country follows the United Nation’s Standard International Trade Classification (SITC), tariffs on imported goods can range from 0 to 65 percent, while imported goods from sectors that have high domestic production can have higher tariffs. Non-agricultural goods usually feature a tariff of 6.7 percent.
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