Indigenous products and labor value

AMADO P. MACASAET

‘There is nothing wrong in making a country a sweat shop of developed economies. Jobs are created in sweat shops.’

STATISTICS from the Bangko Sentral indicate increasing reliance on indigenous products for export growth. Which could very well mean that the economy has practically lost its competitiveness in manufactured exports that extensively use imported components.

There is plenty of room for growth in exporting products assembled in the Philippines such as electronics and garments and apparel. They hardly incur any cost. Adept Filipino hands assemble the raw materials. They are re-exported as finished products. The economy earns the labor value of the products.

The figures show that of the $29.186 billion in export value earned from January to July this year, 14 percent or more than $4 billion was accounted for by indigenous materials and products assembled in the Philippines.

The value of electronic product exports declined by 12.58 percent to $14.891 billion which is about half of total earned during the period. This number is deceptive because in reality, the country earned not more than 25 percent or $3.72 billion representing labor value and minimal local content.

It should occur to us that the small local content is also made from imported components.

As far as electronic products exports are concerned, the economy earns foreign exchange through the sweat of Pilipino hands.

There is nothing wrong in making a country a sweat shop of developed economies. Jobs are created in sweat shops.

It must be noted that exports of woodcrafts and furniture hit more than one billion dollars largely because of the increase by almost 68 percent. This export has very large local content. The sorry part is the fact that furniture makers import wood components.

This shame would not have been heaped upon us if the state had controlled or prevented the rape of the forests. We are paying for sins committed largely during the time of President Diosdado Macapagal when the Philippines was the biggest exporter of round logs to Japan.

It was in Macapagal’s time that the government came up with a wood processing program. The plan never went beyond the manufacture of plywood. At that time, the woodcrafts and furniture exporters were using Philippine wood as raw materials.

The figures from the BSP show that there are huge potentials in developing indigenous materials for the export market. Value of desiccated coconut exports went up to almost $160 million increasing by an incredible 102 per cent.

Again, there is a sorry part in coconut products exports. The country is behind Indonesia in coconut production. It used to be for many years the top exporter of coconut products in the world.

The trees are old. The replanting program of Eduardo Cojuangco was abandoned on suspicion that hybrid coconut he was propagating in Bugsuk Island in Palawan was diseased.

Indeed we do not have diseased trees. We only have old trees that produce fewer nuts. Cojuangco admitted that the hybrid variety is prone to diseases. His idea was a continuing replanting program since production of hybrid nuts slows down after 30 years.

But during the productive period, the yield was estimated to be twice as much as the native San Ramon variety which at that time was already too old to make the Philippines perpetually competitive in the world coconut export market.

Pineapple and pineapple products recorded export values of close to $160 million posting an increase of 35.5 percent.

Value of tuna exports reached more than $175 million. There was a decline of 10 percent., The decline will likely continue because Philippine seas are getting polluted and government does not control the catch of tuna to make room for bigger production.

Seaweeds and carageenan earned $125.6 million, increasing by 85.5 percent. Again, the danger is these products are not inexhaustible. Pollution of the seas will make them disappear faster.

As a function of rising prices and higher production, value of gold exports hit $264.6 million, posting an increase of 225 percent. The dollars earned from gold, largely considered as a by-product principally of Philex Mining. Exports of copper concentrate supposedly the main raw material was placed at $192.9 million.

Minerals are depleted as they are taken out of the bowels of the earth. But that is not the biggest problem at the moment. What bugs the mining industry and discourages foreign investments is the activism of NGOs which claim without proof that the mining industry is polluting the atmosphere.

What is the longer term future of the export industry? It does not look bright. As frequently said, demand for the country’s export products depends on the economic situation of trading partners. The situation does not look good at the moment.

As things now stand, there is near complete dependence on overseas workers for foreign exchange. Their remittances swelled foreign exchange reserves above the total foreign debt.

Given this situation, the self-adjusting mechanism of the economy that steadily turned to the service sector provides the best hope for longer term growth.

Economic regulators should have a healthy appreciation for the low interest rate regime and the demonstrated preparedness of the banking system to go heavy on small scale lending and micro-finance.

The wealth of this country is people, more than 10 million of whom are making a living doing professional and menial jobs abroad. But they are also a curse because the economy cannot develop fast enough to give them jobs.

The developed economies to which we supply domestic help cannot absorb all the idle bodies of Filipinos.