POSITION PAPER ON DIVERSION OF ESF FUNDS TO CALAMITY FUND

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A POSITION PAPER

OF

THE CONFEDERATION OF PHILIPPINE EXPORTERS FOUNDATION (CEBU) INC. (UMBRELLA ORGANIZATION OF ALL THE EXPORTING INDUSTRIES IN THE CENTRAL VISAYAS REGION) ALSO KNOWN AS PHILEXPORTCEBU

ON

DTI’S PROPOSED RECOMMENDATION TO DIVERT THE UNDRAWN BALANCE OF THE P1 BILLION EXPORT SUPPORT FUND TO THE EL NINO CALAMITY FUND DUE TO THE CHANGED ECONOMIC LANDSCAPE


Background


In late 2008, after the collapse of theUSfinancial system that led to the global economic crisis, President Arroyo approved a P1 Billion Export Support Fund (ESF) as the entire export sector reeled from cancelled orders and bleak prospects ahead. The fund was established to help exporters to promote their products and build capacity in order for them to be competitive in the global markets that have shrunk considerably.

Although the government had made sincere efforts to help the export industry such as subsidized domestic fairs and other perks, to enable to exporters to unload their unsold inventories, and the leniency in Customs and Tariffs rules, the actual cash released from the pledged P1 Billion support fund amounted only to a measly P11.6 million, and almost all of it were spent for trade promotion activities.

 

Current Situation

 

Trade Secretary Peter Favila, in the March 3, 2010 issue of Business World, announced that DTI has started adjusting its policy towards export incentives and will recommend “the easing of requirements for exporters seeking tax perks while at the same time will look to discontinue the release of a support fund for the sector” because of the changing economic landscape (improving export outlook).  The National Statistics Office (NSO) also reported that the January 2010 export figure surged 42.5% compared to the same month last year. Although the sizeable jump in the export statistics looks very promising, further analysis show that the electronics and semiconductor sector actually accounted for the big bulk or 51% of the increase while strong gains were also posted by petrochemicals, vehicles, machinery, wire harnesses and coconut oil, most of which are products of multinational companies and ecozone locators and not products of SME exporters operating outside the eco zones.

 

Although there are signs of a market recovery in theUSand elsewhere, prominent economists have cautioned the market players about the sustainability of the recovery and advised investor prudence.  Although durable goods orders in theUShave inched up robustly, the rest of the leading economic indicators, particularly the unemployment figures (between the 9.7% to 10% range) and consumer confidence, have not yet shown any significant improvement.

 

In the Central Visayasregion there were more than 40 SME companies which either shut down or have suspended operations as average sales dropped by at least 50% per company. In the fashion accessories sector alone membership in the FAME Foundation dropped from 140 companies in 2008 to 63 in 2010. The industry sector associations estimate that the crisis may have caused the layoff of more than 150,000 workers in the region mainly in the subcontracting supply and value chains. Although there is concrete proof that companies are rehiring workers (classified ads in local papers), many of these workers are actually hired on short term contracts as orders from foreign buyers are also booked on short term basis.

 

Our Prayer

 

The exporters in theCentral Visayasregion jointly pray for the following:

 

  1. That the DTI abandons its plan to recommend to the Office of Budget and Management (OBM) that the undrawn balance of the P1 Billion Export Support Fund (ESF), roughly around P989 million, be reallocated to the El Nino Calamity Fund for the following reasons:

 

    1. That the export sector, outside the economic zones, have not yet fully recovered from the effects of the global financial crisis;
    2. That the export sector still needs some nurturing and all-out support in order for it to remain competitive should the global recovery filter down to the small and medium business sectors.

 

  1. That the EDC fast tracks the evaluation and processing of meritorious project proposals which have accumulated in their hands and have not moved in 12 months.

 

Signed in the City ofCebu,Philippineson 29 March 2010 by:

VENUS C. GENSON                                                         ANGELA F. PAULIN

President – Philexport Cebu                                               President – CFIF

Exporters’ Umbrella Organization                                       Cebu Furniture Group

 

 

PETE SEPULVEDA                                                         JANET CHUA

Vice President – Cebu GTH                                              President –CebuFAME

Gifts & Home Décor Group                                               Fashion Accessories Group

 

 

PORFERIO MONTESCLAROS                                         BENSON DAKAY

Secretary – MEPZCEM                                                    President

MEPZ Group                                                                   CebuSeaweed Sector

 

 

NELSON BASCONES                                                    TERESITA D. UYFANG

President – AFIME                                                         Representative

Cebu Food Group                                                           Industrial Goods Sector

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