A bigger role for exports as growth driver

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Part One

MY fondness for traveling has been an important factor behind the success of my business in achieving the widest geographical reach when it comes to developing residential communities—Vista Land & Lifescapes is now present in 125 cities and municipalities in the Philippines.

My trips abroad keep me abreast of developments in other lines of business, such as retail, and allow our operations to be up-to-date and on a par with international standards and practices.

As an integrated property developer, Vista Land also develops and operates shopping malls, department stores, supermarkets and other retail establishments, as well as office space for the business-process outsourcing industry.

In visiting other countries I also look for lessons from the changing trends in global trade, which I hope to relay to domestic industries, particularly those in the export sector.

While I have returned to the private sector after more than two decades of public service as an elected official, I continue to pursue my personal advocacy to help my countrymen, including Filipino entrepreneurs.

It was during a visit to a trade fair in Europe several years ago that I learned that water was already an important export commodity. In the global markets, water is not simply H2O, and not just the crystal-clear fluid that comes out of the faucet.

The exhibit booths for water products at that trade fair were a colorful display of drinking water in different colors and flavors.

Philippine companies are now only catching up with this trend, which I discussed in this column a few years back, as an example of how we can, and should, diversify our products to increase exports.

These came back to mind last week when I saw an article published by the World Bank on its web site. The article was written by Birgit Hansl, the bank’s lead economist and program leader for equitable growth, finance and institutions for the Philippines in East Asia and the Pacific Region.

The article contains some observations that I think is important in boosting our exports and related to what I discussed during my previous columns.

The article, titled “The Philippines: Resurrecting Manufacturing in a Services Economy”—the country’s economy has been performing well, but trends in recent export performance could serve as early warning signs.

Hansl cited these worrying trends, based on the World Bank’s Philippines Economic Update report, as follows:

  • The Philippines has become a supplier of intermediate goods to China, exposed to demand fluctuations, and has not penetrated new markets;
  • The Philippines has not diversified its exports basket, if only to move away from sophisticated products, with little domestic transformation; and
  • This move will make future upgrading and innovation more difficult, as illustrated by the low export survival rates, including for sophisticated products.

For purposes of this discussion, I want to focus on export diversification, both in terms of the basket of products and the markets for Philippine exports.

A German supermarket did something last week, which proved that even a highly developed economy needs diversification.

In a story published online by Yahoo! News UK, Andy Wells reported that the Edeka Supermarket in Hamburg removed on August 19 all products from other countries, and temporarily sold only products made in Germany.

As a result, most of the shelves in the supermarket were empty. The story quoted an Edeka spokesman as saying: “Edeka stands for diversity, and we produce a wide range of food in our assortment, which is produced in the different regions of Germany. But it is together with products from other countries that we create the unique diversity that our customers value.”

While the supermarket’s move was aimed against the growing racism in Europe, I believe it also showed the importance of diversification, even in trade. Consumers in foreign markets look for wide choices in products, including those imported from other countries.

In the Philippines a simple trip to the groceries or the nearby supermarkets will show foreign products competing with Filipino producers even on items that are traditionally made here. Mothers used to buy the ground meat of the coconut from the local market, and squeezed it at home to make coconut milk or gata.

It is now more convenient to buy canned coconut milk produced by local companies, but other Asian countries are also exporting different brands of the same product to the Philippines. Even the nata de coco, which many believed was a Filipino invention, is now produced in other countries and competes with local brands.

Sometimes, foreign brands of these two products even dominate the homemade items.

To be concluded

For , e-mail mbv.secretariat@gmail.com or visit www.mannyvillar.com.ph.

 



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