Strict requirements impede SMEs from penetrating EU

CEBU, Philippines - One better way the government can help exporters is to subsidize the certification of their quality management system, said an official from the Philippine Exporters Confederation of the Philippines-Cebu.

In an interview on Tuesday, Philexport Cebu Executive Fred Escalona said the generalized system of preferences plus (GSP+) the European Union granted to the Philippines in 2014 has not been fully taken advantaged by local exporters because of strict requirements by European nations.

One of these is the need for local exporters to have quality management system certifications which, according to Escalona, are very costly to obtain.

"Only a few SMEs (small and medium enterprises) here can afford that," Escalona stressed.

While the GSP+ grant is actually beneficial to the export sector, Escalona also emphasized that exporters especially the small ones have limited capacity to enter the European market due to certification and requirement constraints.

The EU-GSP+ beneficiary status allows Filipino exporters to export over 6,000 eligible products to the EU market free of duty

The Philexport official said that unlike in Thailand, for instance, its government subsidizes the certifications of its exporters in quality management system.

In Central Visayas region, for instance, only about 10% of the exporters have these certifications, according to Escalona, making it hard for the rest to enter key foreign markets.

The cost of the certification, he said, basically depends on the size of a company's operations and the intensity of its labor and capital.  

Quality management certification is based on processes of a company.

Examples of these certifications, among others, are Good Agricultural Practices (GAP) International Organization for Standardization (ISO).

Exports 

Philippine exports had been falling for 16 consecutive months already due to slow global demand.

For the first seven months of 2016, exports totaled $31.5 billion, down 8.3% from $34.4 billion sold in the same period in 2015.

In July alone, exports registered a 13% decline to $4.7 billion from $5.4 billion last year.

Philexport's Escalona said he does not see a recovery in the exports sector at least in the medium-term.

He cited there is still a "cloud of negativeness" globally as major economies China, Japan and the US are also facing economic problems.

"We need quick recovery of these major economies," he added.

The government's export growth target for 2016 is 3%. (FREEMAN)