Trade between the Philippines and 11 other Asian markets could triple by 2030, according to an industry study released by UPS.
Titled Clearing the Runway for Intra-Asia Trade, the study said UPS found that trade within these Asia 12 markets could more than double in value from $6.4 trillion in 2020 to $13.5 trillion in 2030.
Today, trade in these so-called Asia 12 accounts for 88 percent of intra-Asia trade and these markets are poised to consolidate this position further. These markets are China Mainland, Hong Kong, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand, Vietnam, Indonesia and Australia.
The study said the Philippines has an opportunity to build on rapid growth in the previous decade — particularly in the manufacturing sector — which could see trade with the Asia 12 more than triple from $113 billion in 2020 to $393 billion in 2030.
Significant opportunities for Filipino businesses are digitalization, building supply chain resilience and multilateral cooperation in international trade.
The study said manufacturing is set to drive the Philippines’ intra-Asia trade growth, citing in particular four product segments which will fuel growth.
These are retail, industrial manufacturing and automotive (IM&A), high-tech, and healthcare which accounted for 75 percent of the Philippines’ intra-Asia trade in 2020.
The study said the IM&A segment stands to be the largest by value in 2030, more than trebling from 2020 levels as the country aims to serve as a global and regional hub for the automotive and electronics sectors.
Trade in the high-tech segment, which constituted 41 percent of the country’s intra-Asia trade in 2020, could more than double in value, riding the wave of digitalization which will create significant demand in this segment across Asia.
According to the study, Philippine-based businesses can plan for both headwinds and opportunities by diversifying supply chains into resilient trade routes and targeting high-value and high-growth trade routes, such as IM&A, healthcare, and retail trade with economies like Japan, as well in the high-tech segment with Hong Kong and Vietnam.
While intra-Asia trade holds significant potential, there exist a number of barriers that, unless addressed, may stagnate trade within the Asia 12. Filipino businesses surveyed indicated tariffs and other punitive measures as the top barrier, followed by shortage of labor and skills in the logistics industry, and lack of harmonization of standards.
UPS said noted a significant room to digitalize the Philippines’ logistics network, with many companies — including micro, small and medium-sized enterprises (MSMEs) — still relying on costly and time-consuming paper-based processes. While the COVID-19 pandemic has accelerated adoption of digital technologies within the Philippines, adoption of digital payments and digital supply chain tools has fallen behind.
“MSMEs play a vital role in both the manufacturing and employment economies of the Philippines — it’s in all our interests to do what we can to build a thriving small business community and the rapid growth of e-commerce is a huge opportunity to do that,” said Russell Reed, managing director UPS Philippines. Irma Isip
