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Apparel exporters see bigger challenges ahead

Louella Desiderio (The Philippine Star) - October 11, 2019 - 12:00am

MANILA, Philippines — The Confederation of Wearable Exporters of the Philippines (CONWEP) cites challenges in meeting its growth projection for apparel exports this year as the country has not benefitted from opportunities offered by the US-China trade war with companies opting to move to Myanmar instead.

CONWEP executive director Ma. Teresita Jocson-Agoncillo said the group’s initial forecast is for apparel exports to grow by 15 percent to 20 percent this year.

She said CONWEP’s forecast is based on expectations the country could benefit from the trade war through the transfer of apparel makers to avoid tariffs being imposed by the the US and China on each other’s goods.

Apparel exports of the country, however, were down four percent to $541.87 million in the January to July period from $566.75 million a year ago.

This, as the country has not captured relocating apparel makers due to the trade war.

“If you’re seeing that same trend, I think continuous decline because I am not enjoying the trade war. That’s a very big sign why there is no growth,” Agoncillo said.

She said the country has not gained from the trade war as CONWEP would have hoped for as apparel manufacturers looking to relocate are choosing to set up operations in Myanmar due to its low labor cost.

Myanmar’s monthly wage is at $85 to $95, below Vietnam’s $146 to $167, Cambodia’s $147 to $170, and the Philippines’ $190 to $274.

Agoncillo said the proposed Comprehensive Income and Tax Incentives Rationalization Act (CITIRA) which seeks to gradually reduce the corporate income tax (CIT) rate to 20 percent from 30 percent, and introduce changes to the incentives system, is also posing threat to the sector.

Among the changes in the incentives system under the CITIRA bill is the shift of ecozone locators to the CIT from the payment of the five percent tax on gross income earned.

Agoncillo said once the CITIRA bill is passed into law, an estimated 75,000 to 112,00 workers in the sector are expected to be displaced within 12 to 18 months.

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