Philippines garment exporters seeking SAVE Act

The bill, first introduced to Congress in 2009, and re-introduced in 2011, is expected to be re-introduced to Congress again this month.

Maritess Jocson-Agoncillo, executive director of the Confederation of Garment Exporters of the Philippines (CONGEP), told just-style.com that the Philippines industry is hoping that the bill will be reintroduced and will pass Congress this time, following detailed negotiations between the textile and garment industries in the two countries.

These have accelerated since mid-2012, in addition to discussions between relevant government bodies.

“We’re looking at a win-win sectoral solution wherein both the US and Philippines will benefit from the agreement,” said Jocson-Agoncillo. “The calculations include additional costs such as freight costs and the numbers involved are designed to ensure we reach a reciprocal agreement.”

Jocson-Agoncillo said CONGEP, along with the Garment Business Association of the Philippines (GBAP) and the Textile Mills Association of the Philippines (TMAP), has been in close discussion with the industry’s US counterparts such as the American Manufacturing Trade Action Coalition (AMTAC), National Council of Textile Organisations (NCTO) and American Apparel and Footwear Association (AAFA).

Duty-free access
The SAVE Act would allow duty-free access to the US for garments wholly assembled in the Philippines provided they are made from US fabric, while Philippines apparel produced using American yarn would enter the US at a reduced tariff.

US yarns and fabrics would also be granted duty-free entry to the Philippines, while a number of Philippines cut and sew garment types not produced using US fabric would also be allowed zero-duty access to the US — an area on which much of the discussions have been focused.

Jocson-Agoncillo said if the SAVE Act passes, it would probably be implemented in late 2014 or in early 2015.

She said the Act would give a major boost to the Philippines textile and garment industry, which has suffered during recent years due to low-cost competition from elsewhere in Asia.

Philippines textile and garment exports were around US$1.5bn in 2012, around the same level as in 2011 according to figures from CONGEP. But, exports have declined by 41% since 2005.

CONGEP is forecasting that if the SAVE Act is introduced, clothing and textile exports from the Philippines would grow by 25% to $2 billion over 2014 and 2015, and then by around 30% in 2017 to between $2.7 billion and $3 billion — around the same level exports were at in 2003.

The SAVE Act would help the Philippines reclaim much of the business at the low-to-middle end that it has lost over recent years, as well as maintaining the medium to high end business it now primarily produces, said Jocson-Agoncillo.

“Game changer”
She said the product area to benefit the most would be denim, and that the volume of business with Gap and Levi’s in this sector could increase dramatically.

“Denim would be the game changer,” she said, adding: “We expect that customers sourcing denim who also want items such as blouses would also source these products from the Philippines once again.”

CONGEP has discussed the SAVE Act with several key buyers, she said. Victoria’s Secret, Jones New York, Ann Taylor, Polo Ralph Lauren, Dillard’s and Tommy Hilfiger are among other major brands already sourcing from the Philippines.

Jocson-Agoncillo added CONGEP anticipates that, if the SAVE Act is passed, the Philippines textile and garment industry would gain over $1 billion worth of investment in 2014 and 2015.

It would also expect that around 150 new firms would be established during that time, with a further 250 to be established in 2016 and 2017, bringing the total to around 900.

The industry would employ a further 450,000 workers over the next five years, bringing the total to 600,000, she predicted.

The Philippines is also hoping to gain preferential access to Europe through the European Union’s revised Generalised Scheme of Preferences (GSP) coming into force in 2014.

If that happens, along with a Save Act, the proportion of Philippines textiles and garments going to the US and Europe would return to 2003 numbers at between 75-80% to the US and around 15% to Europe, said Jocson-Agoncillo.

In 2012, around 69% of the Philippines’ textiles and garments exports went to the US, with around 9% going to Europe, 5% to Japan and 17% to other markets including Australia, New Zealand and the Middle East.

For more fashion and apparel industry news, go to just-style.com

Share / Print

  • Facebook
  • Twitter
  • Digg
  • StumbleUpon
  • del.icio.us
  • Yahoo! Buzz
  • Print