Exporters urged to tap domestic firms for raw material sourcing

·2 min read

WITH low consumer spending and increasing production costs weighing down exporters, the export sector is hoping to collaborate with domestic industries to supply them with locally sourced raw materials.

Mactan Export Processing Zone Chamber of Exporters and Manufacturers (Mepzcem) president Santhana Krishnan Vaidiswaran said this is one aspect of the supply chain that should be studied, especially as exporters continue to be crippled by costly imports due to the pandemic.

“Another area which needs to be looked at by companies exporting from here is how we can cut down our reliance on imports from many raw materials. Our costs increase. It’s not just based on the purchase price of stock in the originating country but also because of the trade in and the time and place to move them. We definitely have seen it increase now,” he said during an online forum hosted by the Cebu Chamber of Commerce and Industry.

He said an arrangement with domestic industries can potentially lower costs while at the same time generate much-needed economic activity for these companies.

“There’s an opportunity for domestic industries to really support exports on those specific skills and product requirements that have so far not been catered to,” he said.

In a cost benefit analysis conducted by the National Economic and Development Authority about the country’s tax incentives from 2016 to 2018, it revealed that registered business enterprises under the Peza cover 94.5 percent of all exports. They also have the most imports ranging from 92.7 percent to 97 percent.

Industry-wise, the manufacturing sector was highly dependent on imports, comprising around 96 percent.

“It would be a win-win situation both for exports and domestic industries because exports can now have a cheaper source compared to what we’re doing right now and then the domestic industries can develop their capability to support us and that’s going to stay on and be a sustainable growth initiative,” Vaidiswaran said.

Peza said the manufacturing sector is 90 percent operational in the country amid the coronavirus pandemic. (JOB)