Philippines Trade

The Philippines has emerged as one of the leading players in the global export market. With its rich natural resources, skilled workforce, and strategic geographic location, the country has established itself as a significant exporter across various sectors. The archipelago pacific nation has several significant trade partners that play a crucial role in its export industry. These trade partners contribute substantially to the country’s export growth and market diversification.

The United States is consistently one of the largest export destinations for Philippine goods. Major exports to the U.S. include electronics and semiconductors, garments and textiles, processed food, machinery, and coconut oil.

Japan is another important trading partner for the Philippines. It imports a wide range of Philippine products, such as electronic components, automotive parts, machinery, processed food, and agricultural products like fruits, seafood, and coconut products.

China has emerged as a significant export market for the Philippines in recent years. Exports to China include electronic products, mineral products, agricultural products, and machinery. The Philippines also benefits from China’s growing consumer market and increasing demand for various products.

Hong Kong serves as an important trading hub for the Philippines, facilitating exports to other parts of the world. Electronics, textiles, garments, machinery, and processed food products are among the major exports to Hong Kong.

International Trade

Singapore is not only a crucial trading partner but also an important gateway to other ASEAN countries. Philippine exports to Singapore include electronic products, chemicals, petroleum products, machinery, and processed food.

South Korea is a significant market for Philippine exports, particularly in electronics, automotive parts, machinery, chemicals, and agricultural products.

The Netherlands serves as a major entry point for Philippine products into the European market. The main exports to the Netherlands include electronic products, machinery, processed food, garments, and chemicals.

Germany, as one of Europe’s largest economies, is an important trade partner for the Philippines. Exports to Germany consist of electronics, machinery, automotive parts, chemicals, and processed food products.

The United Kingdom is a significant export destination for the Philippines, with major exports including electronic products, garments, machinery, processed food, and coconut oil.

Australia is an important trading partner for the Philippines, importing products such as electronic components, machinery, processed food, minerals, and agricultural products.

It’s important to note that trade patterns can fluctuate over time due to various factors such as economic conditions, policy changes, and market dynamics. These trade partners represent the current major destinations for Philippine exports, but the country continues to explore new markets and diversify its export destinations to ensure a resilient and sustainable export industry.

Philippine Exports

Electronics and semiconductors have emerged as the largest export of the Philippines due to several key factors. These factors contribute to the country’s competitive advantage in this sector and have propelled its growth in the global market. Below are some reasons why electronics and semiconductors are the Philippines’ largest export:

The Philippines has developed a strong manufacturing infrastructure to support the production of electronics and semiconductors. The country has attracted significant investments from multinational corporations, leading to the establishment of world-class semiconductor assembly and testing facilities. This infrastructure enables efficient production processes and high-quality outputs. The Philippines boasts a large pool of skilled and technically proficient workers, particularly in the field of engineering and information technology. The local workforce has undergone specialized training and education, making them adept at handling complex manufacturing processes and research and development activities in the electronics and semiconductor industry.

Strategic geographic location in Southeast Asia provides a favorable advantage for exporting electronics and semiconductors. It serves as a gateway to major global markets, including the Asia-Pacific region and North America. The country’s proximity to these markets reduces transportation costs and enables timely delivery of products, making it an attractive manufacturing and export hub.

Strong Government Support has actively supported the development of the electronics and semiconductor industry through various initiatives. It has implemented policies and incentives to attract foreign investments, such as tax incentives, streamlined business regulations, and the creation of special economic zones. These measures promote industry growth, encourage research and development, and foster innovation in the sector.

Integration into Global Supply Chains has successfully integrated itself into global supply chains, collaborating with multinational corporations that require electronics and semiconductor components for their products. The country’s manufacturers have established strong business relationships with international companies, becoming reliable suppliers of high-quality components and products.

Strong Domestic market demand for electronics and semiconductors. The rising middle class, increasing consumer purchasing power, and expanding IT and telecommunications sectors contribute to the domestic consumption of electronic devices, creating a vibrant market for local manufacturers.

The Philippines has made significant strides in technological advancements and innovation within the electronics and semiconductor industry. Research and development efforts have led to the creation of cutting-edge products and solutions, enabling local companies to stay competitive in the global market and meet evolving customer demands.

The country’s dominance in electronics and semiconductors as its largest export is the result of a combination of factors, including robust manufacturing infrastructure, a skilled workforce, favorable geographic location, government support, integration into global supply chains, strong domestic market demand, and technological advancements. These elements have propelled the growth and success of the electronics and semiconductor industry, solidifying its position as a key driver of the country’s export economy.

Philippine Trade Growth

The Association of Southeast Asian Nations (ASEAN) plays a crucial role in the Philippine export industry for several reasons.

ASEAN has established the ASEAN Economic Community (AEC), which aims to create a single market and production base among its member states. This integration provides the Philippines with easier market access to other ASEAN countries, eliminating trade barriers such as tariffs and quotas. As a result, Philippine exporters can tap into a larger consumer base within the region, boosting export opportunities.

Due to Preferential Trade Agreements within the ASEAN, countries has signed various free trade agreements (FTAs) with external partners, expanding market opportunities for Philippine exporters. For instance, the ASEAN Free Trade Area (AFTA) reduces or eliminates tariffs on goods traded among ASEAN member states. This benefits Philippine exporters by enhancing their competitiveness and reducing the cost of exporting goods to ASEAN markets.

The ASEAN countries promotes supply chain connectivity and facilitates the movement of goods within the region. The integration of transportation networks, customs procedures, and logistics systems streamlines trade flows and reduces transit times for Philippine exports. This improved connectivity enhances the efficiency and competitiveness of the Philippine export industry.

Promoting investments and encourages joint ventures among member countries helps facilitates technology transfer, knowledge sharing, and collaboration, enabling Philippine exporters to access foreign capital, expertise, and markets. Investments from other ASEAN countries contribute to the growth and expansion of the Philippine export industry.

Market Diversification offers opportunities for Philippine exporters to diversify their markets. By expanding their export destinations within the ASEAN region, Philippine exporters reduce their reliance on traditional markets and become less vulnerable to fluctuations in global demand. This diversification strategy enhances the resilience and sustainability of the Philippine export industry.

Harmonization of Standards and Regulations enhanced technical regulations, and customs procedures among member states. This alignment simplifies trade processes and reduces non-tariff barriers, enabling Philippine exporters to navigate the region’s regulatory environment more efficiently. Standard harmonization facilitates smoother trade and promotes market access for Philippine exports.

ASEAN provides a platform for information exchange, cooperation, and dialogue among member countries. This facilitates knowledge sharing on export opportunities, market trends, trade policies, and best practices. Philippine exporters can leverage this information to make informed decisions, adapt their export strategies, and explore new avenues for growth.

ASEAN’s importance to the Philippine export industry lies in regional integration, preferential trade agreements, supply chain connectivity, investment opportunities, market diversification, harmonization of standards, and information exchange. ASEAN’s initiatives and frameworks contribute to the growth and competitiveness of the Philippine export industry by expanding market access, reducing trade barriers, and fostering collaboration among member states. The ASEAN region serves as a vital market and platform for the Philippine export industry to thrive and expand its presence in the global marketplace.

Digtal Economy

E-commerce and the digitalization of the Philippines are increasingly important to the country’s export industry. This transformation is driven by several key factors, and its significance lies in the opportunities and benefits it offers to Philippine exporters.

Expanded Market Reach enables Philippine exporters to access a global market without the limitations of physical distance. Online platforms provide a digital storefront for exporters to showcase their products and reach customers worldwide. This expanded market reach opens up new opportunities for export growth, allowing businesses to tap into previously untapped markets and diversify their customer base.

Digitalization and e-commerce reduce traditional costs associated with export operations. Online platforms eliminate the need for physical storefronts, reducing rental and maintenance expenses. Moreover, digital marketing and advertising avenues tend to be more cost-effective compared to traditional marketing channels. This cost reduction enables Philippine exporters to allocate resources more efficiently and invest in other aspects of their export operations.

Enhanced Efficiency and Speed due to E-commerce streamlines export processes, making them more efficient and faster. Digital platforms automate order processing, payment collection, and fulfillment, reducing manual interventions and paperwork. This efficiency leads to faster order fulfillment and improved customer satisfaction. Additionally, digital platforms facilitate real-time communication and collaboration with international partners, enabling quicker decision-making and problem-solving.

Access to Data and Market Insights through Digitalization provides Philippine exporters with access to valuable data and market insights. E-commerce platforms generate data on customer preferences, buying patterns, and market trends. By analyzing this data, exporters can make informed decisions about product development, pricing strategies, and market targeting. These insights help exporters stay competitive, adapt to changing market dynamics, and align their export offerings with customer demands.

Connectivity and Logistics Optimization using E-commerce fosters connectivity and collaboration between exporters and logistics service providers. Online platforms often integrate with logistics systems, allowing exporters to manage and track shipments seamlessly. This integration improves supply chain visibility, reduces delays, and enhances logistics efficiency. Moreover, digitalization enables exporters to compare and select logistics providers based on cost, reliability, and service quality, optimizing their export logistics operations.

E-commerce and digitalization empower small and medium-sized enterprises (SMEs) in the Philippines to participate in the export market. Traditionally, SMEs face challenges in terms of limited resources and market access. E-commerce levels the playing field by providing an affordable platform for SMEs to showcase their products, reach global customers, and compete with larger players. This empowerment of SMEs contributes to overall export growth and economic development.

Adaptation to Changing Consumer Behavior is rapidly evolving, with more people embracing online shopping and digital transactions. By embracing e-commerce, Philippine exporters can adapt to these changing consumer preferences and provide convenient and accessible ways for customers to purchase their products. This flexibility to meet consumer demands enhances export competitiveness and ensures the sustainability of export operations.

E-commerce and digitalization are essential for the Philippine export industry as they expand market reach, reduce costs, enhance efficiency, provide valuable data and market insights, optimize logistics operations, empower SMEs, and enable adaptation to changing consumer behavior. By embracing digital platforms and technologies, Philippine exporters can unlock new growth opportunities, improve competitiveness, and thrive in the digital economy.

The Philippines’ export industry continues to flourish, driven by a combination of factors such as its abundant resources, skilled labor force, and favorable trade policies. As the country navigates the ever-evolving global market, it faces both challenges and opportunities. By addressing infrastructure gaps, embracing technological advancements, and diversifying export markets, the Philippines can further enhance its position as a competitive player in the export landscape. Through strategic initiatives, market research, and collaboration, the country can unlock new avenues for growth and ensure a sustainable export trajectory. With the right focus and continued support from the government and relevant stakeholders, the Philippines is poised to strengthen its export capabilities and expand its presence on the international stage.

Philippines Trade Statistics

TRADE (in USD billion)

YEAR

TOTAL

EXPORTS

IMPORTS

BALANCE

2012

14.54

7.42

7.12

0.29

2013

14.51

7.82

6.69

1.13

2014

14.40

8.66

5.74

2.92

2015

16.49

9.02

7.47

1.55

2016

15.82

8.66

7.16

1.5

2017 (Jan-July)

9.35

5.38

3.97

1.41

 

The US is PHL’s biggest trading partner in 2016 (out of 226 trading partners), the 2nd biggest market for PHL’s exports (out of 213 export markets and almost 16% of total PHL exports), and 3rd largest investor into the PHL. Over the past five years, US foreign investment in the PHL amounted to PHP165.93 billion.

For 2015, a major portion of the export revenue came from Electronic Products valued at USD2.84 billion, followed by Transports with total receipts of USD1.02 billion or 32.25% and 11.69%, respectively, of the total exports to US. The bulk of merchandise imports from US comprised of Electronic Products worth USD3.64 billion or 50.45% of the total imports. Fresh food was the second highest imported foods from the US, with USD687.94 million, or a share of 9.53% of the total imports from the US.

Top 5 Exports

Value (USD million)

Top 5 Imports

Value (USD million)

Electronics

2,847.32

Electronics

3,640.18

Transport

1,028.99

Fresh food

687.94

Garment/ Textile

979.26

Pet food/ animal feeds

561.51

Electricals

847.81

Processed food

433.33

Oils/fats/waxes

556.37

Chemicals

369.26

 

IPA-APPROVED INVESTMENTS

YEAR

in PHP billion

in USD billion

2011

79.85

1.84

2012

40.00

0.95

2013

55.34

1.30

2014

17.42

0.42

2015

21.74

0.47

2016

31.43

0.63

2017 (Q1)

2.43

0.05

 

Investment opportunities include IT-BPO (animation and game development); food and design driven processed products; manufacturing (electronics, food/agribusiness, aerospace, and consumer products), and infrastructure.

OFFICIAL DEVELOPMENT ASSISTANCE

  • A total of USD1,218.53 million in active grants as of 30 June 2016
  • The US is PHL’s largest source of grants (no loans) among all development partners (bilateral and multilateral). The US is fourth in overall ODA assistance to PHL.

TOURIST ARRIVALS FROM THE US

YEAR

VISITOR ARRIVAL

2011

624,527

2012

652,626

2013

674,564

2014

722,750

2015

779,217

2016

869,463

2017 (Jan-May)

83,056

 

In 2016, the US supplied the 2nd biggest inbound arrival with 869,463 visitors constituting 14.57% of the total and recording an 11.6% increase vis-à-vis its arrivals of 779,217 in 2015.

US HUMANITARIAN ASSISTANCE

  • Typhoon Yolanda: USD 143 million
  • Typhoon Glenda:  USD 150,000.00
  • Community Resilience to Flood Fund: USD 2.5M

________________________________________________________________

For more information, contact any of the Philippine trade offices in the United States:

Capital
Raymond Albert H. Batac
Commercial Counselor
Philippine Trade & Investment Center
Embassy of the Philippines
1600 Massachusetts Avenue, N.W. Washington, D.C. 20036
Phone : +1.202.4679418 / +1.2024679419
Fax :  +1.202.4679428
E-mail : RaymondAlbertBatac@dti.gov.phWashington@dti.gov.ph
Jurisdiction: Alabama, District of Columbia, Florida, Georgia, Kentucky, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia

Northeast and Midwest
Philippine Trade & Investment Center
Philippine Consulate General
556 Fifth Avenue, New York, New York 10036
Phone : +1.212.5757925
Fax : +1.212.5757759
E-mail : newyork@philippinetrade.org
Jurisdiction: Connecticut, Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Arkansas, Mississippi, Illinois, Missouri, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Wisconsin and  Eastern Canada

Northwest
Nicanor S. Bautista
Trade Commissioner
Philippine Trade and Investment Center
Philippine Consulate General
447 Sutter Street, Suite 405, San Francisco, CA 94108

Phone : +1.408.9809637 / +1.415.7732336

Fax : +1.408.9809823/ +1.415.7731813

E-mail : siliconvalley@dti.gov.ph

Website: www.investphilippines.org/siliconvalley ;www.dti.gov.ph

Jurisdiction: Alaska, Northern Nevada/Reno, Colorado, Northern California, Idaho, Utah, Montana, Washington, Oregon, Wyoming and Western Canada

Southwest
Jose Ma Dinsay
Trade Representative
Philippine Trade and Investment Center
Philippine Consulate General
Suite 602, 3250 Wilshire Boulevard, Los Angeles, California 90010
Phone : +1.213.3881029 / 3888376
Fax : +1.213.3884739
E-mail : losangeles@dti.gov.ph
Jurisdiction: Southern California covering the counties of Los Angeles, Orange, San Diego, Imperial, Riverside, San Bernardino, Ventura, Santa Barbara, Kern, and San Luis Obispo; Southern Nevada covering the counties of Clark, Lincoln and Nye; State of Arizona (covering all counties); State of New Mexico (covering all counties); and State of Texas (covering all counties)