By Kyle Aristophere T. Atienza, Reporter
THE Department of Economy, Planning, and Development (DEPDev) said any tariff concessions the Philippines may yet wrest from the US won’t matter much if its export industries remain underdeveloped.
“Unless you improve your productive capacity here, then even if the US or any country open up their doors as big or as wide as possible, you don’t have anything to export,” Economy Secretary Arsenio M. Balisacan told reporters.
The Philippines is undertaking continued negotiations with the US via electronic communications after it was assigned a 19% tariff on goods shipped to the US.
“The tariff was higher for Vietnam. Before Trump reduced their tariff, it was high… But the question is, do you have exports (like Vietnam does?) Do you have rice to export? Do you have coffee to export?” he noted.
“The issue is really addressing constraints to grow productivity,” he added. “We’re not competitive.”
The Philippine tariff is now level with Indonesia’s, and slightly lower than Vietnam’s 20%. Singapore was assigned the lowest tariff in the region, 10%.
Mr. Balisacan also called for equal attention to domestic issues that affect entrepreneurial growth, including weak infrastructure.
“I would like to say that we need to diversify our export markets,” he said, but not before “improving our production” and “addressing those issues that are being raised by the business community.”
The Philippines’ weak exports reflect the absence of a concrete blueprint for industrial policy, Diwa C. Guinigundo, Philippine analyst for GlobalSourcePartners, said via Viber.
“If we could produce more and achieve greater total factor productivity, any possible decline in exports to the US could very well be matched by higher sales in other markets as we aim to diversify,” he said.
“The point is not just to improve productivity in our current exports — that would enhance our global competitiveness — but to also, and equally important, to expand the whole range of products that we could manufacture and sell abroad,” he added.
“That could likely bring us higher up the value chain.”
Mr. Guinigundo urged DEPDev to pursue private sector partnerships for “technology-driven innovation in production, logistics and other services,” citing the need to deploy artificial intelligence and big data to upgrade production.
“Other important elements are of course ensuring we achieve a critical mass of connectivity, both through physical infra and communication. We also reduce the cost of doing business by having a whole variety of energy including renewable sources,” he added.
Mr. Balisacan said the 19% US tariff won’t significantly hurt growth, noting that there are other export markets and that the Philippines is in better position than many other Southeast Asian countries.
“Much more exports go to many other countries, and what happens to those exports with all this reconfiguration of tariffs matters more. Also, how imports are affected by the tariffs is really more significant in terms of quantitative impact,” he said.
“Of course, we would want to improve the terms of what we can get as much as possible with the US, but insofar as the government targets, for example, our GDP, that would have… no effect.”
Finance Secretary Ralph G. Recto on Tuesday said the government is projecting up to P6 billion in foregone revenue due to the zero tariffs on some US exports such as automobiles, wheat, soy and pharmaceuticals.
Leonardo A. Lanzona, an economics professor at Ateneo de Manila, said even though exports contribute relatively little to the economy, the US tariffs cannot be ignored as “exporting is supposed to be our exit plan for all our productivity programs.”
“We need to create more markets to sustain our productivity in the long run.”
Boosting productivity alone cannot sustain long-term industrial growth because limited competition breeds inefficiency and small demand hinders scalability, he noted.
“Exporting forces firms to improve quality to meet international standards, lower costs to compete with foreign rivals, and innovate to differentiate products,” he added.
The US accounted for about 16% of Philippine exports in the first five months, led by semiconductors and electronic products.
The US trade deficit with the Philippines widened 21.8% in 2024 to nearly $5 billion with US exports to the Philippines amounting to $9.3 billion against imports of Philippine goods of $14.2 billion.