EDC cuts exports goal to $105 billion by 2022
THE Export Development Council (EDC) has approved a reduced target for Philippine exports to at least $105 billion by 2022 on hopes that the new tax law and the infrastructure program would improve shipments.
In a statement on Wednesday, Trade Secretary and EDC Chairman Ramon M. Lopez said the council decided to cut export targets to account for the impact of the Covid-19 pandemic and its impact on global demand. Now, the Philippines is just expected to export $105.3 billion worth of goods and services by 2022.
Under the Philippine Export Development Plan (PEDP) 2017-2022, exports were originally seen to reach as much as $130 billion by 2022.
According to Lopez, the EDC estimated an export decline of 13.6 percent for 2020, as the cycle of lockdowns prevented firms from maximizing their production. Further, supply and demand last year was brought down by the pandemic given that the country’s largest trading partners, such as the United States, also imposed quarantine restrictions.
“The positive growth of 2 percent in September and 3 percent in November last year was not enough to totally offset the decline in the first half of 2020, which was the height of the lockdown,” Lopez admitted.
“But export numbers continued to improve month on month reaching positive growth by September and November versus their same month previous years numbers. We can write off 2020 numbers, so to speak, but the rebound is expected this year 2021,” he added.
For this year, the EDC anticipates exports to jump to 12.5 percent to $91.7 billion, from the $81.5-billion projected end figure for last year.
From there on, the EDC sees a near 15-percent surge in exports of goods and services in 2022 to push shipments to a total of $105.3 billion. The worst-case scenario for the PEDP target is to hit a low end of $101.7 billion, and the best case is to breach $108.8 billion.
Lopez argued that investors will come to the Philippines as a result of the passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, as well as continuing efforts to accelerate infrastructure buildup.
“We can consider these targets as fighting targets, after intensive consultations with each export sector and stakeholder and global market prospects per sector. This also means that we shall exert all efforts in terms of policies and support programs to assist the export sector and help them achieve these fighting targets,” the trade chief said.
The CREATE measure trims corporate income tax (CIT) to 25 percent, from 30 percent, which is the highest rate among Southeast Asian nations.
Firms earning below P5 million yearly will see their CIT reduced to 20 percent. However, fiscal incentives being enjoyed by exporters operating in economic zones by nature will be lifted to introduce a new set.