The World Bank (WB) has identified high cost of trade as one of the constraints that need to be addressed for the Philippines to be competitive in the global value chains (GVCs) of the three industry clusters being pushed by the Department of Trade and Industry (DTI).
The World Bank was referring to the Industrial, Manufacturing, and Transport (IMT), Technology, Media, and Telecommunication (TMT) and Health and Life Science (HLS) clusters identified for promotion.
“There are some areas that the Philippines has opportunities to improve. The Philippines (is) at the bottom compared to regional peers like Indonesia, Vietnam and Malaysia, Thailand…the Philippines actually has done relatively well in IMT, but not so well on HLS and TMT,” said Jaime Frias, economist at the World Bank at the first Industrial Digital Transformation Conference yesterday.
Frias said the Philippines is still not really taking full advantage of the opportunity in the shifts from China’s imports in the trade tensions between the US and China.
“Vietnam is the one that benefits,” Frias said, adding there are priority actions critical to the success of export manufacturing in the Philippines.
These include investment policy, skills know-how, logistics, transport and connectivity, and intellectual property protection and contracting enforceability.
“The Philippines has high cost of trade,” Frias said adding the World Bank is working with the government to modernize customs to facilitate exports and imports.
Frias said when it comes to trading services, the Philippines shows “quite a bit of restrictions” that it lags compared to competitors in the region like Vietnam, Indonesia or Malaysia when it comes to logistics and transport.
“For a country that is an archipelago like the Philippines, transport infrastructure should be well performing. There is quite a bit of work to be done here in the implementation of the liberalization of the service sector and connectivity or both,“ Frias said. Irma Isip
