Despite the lower reciprocal tariffs imposed by the Trump administration, the Philippine garments sector could end up less competitive than its ASEAN neighbors, which have higher U.S. tariffs, because of logistical hurdles being faced by Philippine exporters.
Maritess Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines (CONWEP), said at the Philippine Manufacturing Team zoom that port infrastructure is one of the garment industry’s disadvantages.
Agoncillo blamed the country’s port infrastructure setup, which uses the feeder vessels to move the goods to mother vessels causing a longer haul.
“Our ports, our logistics, we don’t have mother feeder, we have feeder ships,” she pointed out. She added that there is a move by the Bataan local government to make its port capable of allowing mother vessels, instead of feeder vessels, to carry shipments in the next few years.
Aside from the port infrastructure, CONWEP cited the wage increases as another industry deterrent. Agoncillo noted that three regions – 3, 4, and 7, the nucleus of manufacturing operation in the country, bearing the brunt of high labor cost.
She noted that Region 4 had a 50 percent salary increase in the last three years. CONWEP has urged for a review of the wage formula, which is based on inflation rate.
“We need some stability on that,” she said. In addition, she cited the issue of skills among workers, calling for skills upgrading.
In saying this, Agoncillo noted that the Philippines’ geographic location is an advantage against its neighboring and competitor ASEAN countries such as Cambodia, Myanmar and Vietnam, which share borders with China. Exports from these countries also risk of being lumped together with China’s higher tariffs and additional non-tariff barriers for ASEAN counterparts. “Our geographic location can work for us because they share a border with China,” she pointed out.
At present, the Philippine wearables industry is facing additional 17 percent Trump tariff, although second lowest among the U.S.’s trading partners in the region. This is on top of the domestic industry’s current average tariff position of between 15-37 percent for apparel, textile, travel goods, footwear, and leather goods.
