TRABAHO Bill could cut apparel work force by 40%

By Janina C. Lim, Reporter | October 16, 2018 – 10:58 pm

APPAREL exporters said layoffs in the industry could amount to 40% of the workforce if investment incentives are rationalized under the Tax Reform for Attracting Better and Higher-Quality Opportunities (TRABAHO) bill.

“There will be a major exodus. Our survey shows it,” Confederation of Wearables Exporters of the Philippines (ConWEP) Executive Director Maritess Jocson-Agoncillo said in a phone interview on Friday, citing the results of a survey.

Ms. Jocson-Agoncillo said the group, which accounts for nearly 70% of the country’s apparel exports, employs 150,000 people, which means up to 60,000 jobs may be at risk.

It said the potential losses in the leather goods, bags and shoe-making trades, which employ 80,000, could be 20-25%, or 16,000-20,000 jobs.

Those facing “immediate shutdown” are manufacturers of baby and childrens’ wear, undergarments, accessories, mittens and gloves, among others.

She said smaller-scale firms, which employ 1,500 workers or less, make up 20% of the apparel industry.

“Margins are tighter because products are smaller. They will feel the impact the most,” Ms. Jocscon-Agoncillo added.

Ms. Jocson-Agoncillo said the survey results were sent to the Departments of Trade and Industry (DTI) and Labor, as well as to Senators.

Asked for comment, Trade Secretary Ramon M. Lopez said the DTI is now pushing for economic zone locators to enjoy a longer sunset period for incentives and other safety net measures to reduce the possible impact of the TRABAHO Bill on jobs.

“But precisely to minimize risk on employment, we are still working with (the Department of Finance) for a longer transition period,” Mr. Lopez said in a mobile message, declining to reveal further details of the negotiations.

Ms. Jocson-Agoncillo said 95% of ConWEP members have operations in China, Vietnam, Cambodia, Indonesia and Myanmar, giving them options. Vietnam was considered the most attractive option for relocation in case of withdrawal from the Philippines, according to the survey, followed by Cambodia and Myanmar.

Ms. Jocson-Agoncillo said most of the job displacement is expected to take place in Central Luzon, Calabarzon, Mimaropa and Central Visayas.

She said bag and wallet manufacturers could enjoy an advantage because these items are included in the expanded US Generalized System of Preferences (GSP) program.

“The preferential tax rate under the GSP can mitigate (job) displacement but this can catch up once the firms utilize their tax incentives,” Ms. Jocson-Agoncillo said.

She noted that member firms producing bags and wallets are operating on their third year, on average, and can enjoy incentives for five more years after the bill’s passage.

Asked about the prospects for the apparel industry after a year, she said: “For apparel, they will hang around but I don’t think they will be able to sustain it. The sector will decline eventually.”

The group accounts for 68% of the country’s $1 billion apparel exports.

She said the $1 billion export level has been “consistent for the last 10-12 years,” which means growth has become less of a consideration for the industry than job retention.

Two months earlier the industry hosted a garment, leather goods and fabric exposition to help revive the industry.

According to the DTI, the apparel industry used to export $3 billion a year in the 1990s, which began to decline in 1995 after the World Trade Organization adopted the General Agreement on Tariffs and Trade.

This marked the beginning of the end for the Multi-Fiber Agreement (MFA), a preferential quota system enjoyed by the Philippines and other developing economies exporting to markets like the US.

In 2005, the final year of the MFA’s 10 year-phaseout, Philippine garment and textile exports were at $2.287 billion.

This dropped further to $1.402 billion in 2011. In 2016, the industry exported $1.226 billion.

Source: https://www.bworldonline.com/trabaho-bill-could-cut-apparel-work-force-by-40/