Group seeks subsidy for garment producers

Foreign Buyers Association of the Philippines (FOBAP) President Robert Young said in an interview that the industry seeks government subsidies in power and labor costs, like what other governments in Asia offer to attract investments from garments producers. (Pixabay photo)

MANILA — A group has urged the government to offer subsidies for manufacturers in the garments sector in order to revive the local industry.

Foreign Buyers Association of the Philippines (FOBAP) President Robert Young said in an interview that the industry seeks government subsidies in power and labor costs, like what other governments in Asia offer to attract investments from garments producers.

Young said the government can locate companies in the industry in one free trade export zone that would offer lower power and labor costs.

“We can be located in one area, concentrated, like a free trade export zone and the electricity will be somehow lower. We’re not asking for free, at least lower than the rest of the guys,” he said.

“Number two, the labor cost should be subsidized also. Offer a special type of salaries for these people,” he added, noting that this zone for the garments manufacturers could be located in a province.

Young mentioned that the Philippines was once the top garments manufacturer in the world. But since the quotas and preferential tariffs on garments and textiles imported by developed countries such as the United States, Canada, and some European nations were phased out, revenues of the Philippine garments industry had declined.

He also cited that other countries in the region like China, Vietnam, and Bangladesh, among others, become competitive in getting these garments manufacturing companies by offering lower power and labor costs and by giving generous incentives.

With these factors, importers can buy a T-shirt in these countries for as low as USD1 per piece, while buying it from the Philippines would be at USD2 per piece.

Moreover, Young said the local industry will be supporting the plan of the US and the Philippines to enter into a free trade agreement (FTA).

He said the Philippines-US FTA would be an advantage to Philippine-based garments manufacturers that are exporting to the US, as the FTA would give zero duty on these products entering the US market.

Currently, the Philippine government has been pushing for the inclusion of garments in the US Generalized System of Preferences (GSP), wherein the Philippines is a beneficiary.

The US government has extended the renewal of GSP from one year to three years.

In July 2017, the US expanded the inclusion of products in its GSP to travel goods, which added 23 new tariff lines under the special trade preference program.