Local factories that make clothes for export have not benefited from the ongoing US-China trade war, as the companies looking for alternative manufacturing sites tend to choose Myanmar over the Philippines, an industry group said. This is according to the Confederation of Wearable Exports of the Philippines (Conwep), whose factories make clothes for international brands such as Polo and Fossil.
Its data showed that the sector’s exports dropped 4 percent from January to July this year to $542 mn, compared to the same period a year ago. Last year, exports of the local apparel industry dropped 16 percent to $927 mn, after a flat growth the year before. The sector was expected to grow 10 to 20 percent last year.
This year, the group was expecting a 15-20 percent growth from the trade war, as global companies aimed to set up shop in parts of Southeast Asia instead of China to avoid being a casualty of the growing tensions. But the expected transfer of manufacturing sites to the Philippines has not happened.
“If we’re seeing the same trend, I think [we’d see] continuous decline. [We’re] not enjoying the trade war. That’s a very big sign. Why is there no growth?” Conwep Executive Director Maritess Jocson-Agoncillo said.
The group employs 60 percent of the apparel industry’s 180,000 workers, who are in factories mainly located in economic zones. Even then, these workers are still paid more than their counterparts in Southeast Asia. The monthly wage of an apparel factory worker in Myanmar working eight hours a day costs $85 to $95.
Vietnam and Cambodia have relatively higher monthly wages at $146 to $167, and $147 to $170, respectively, Conwep data showed. The same worker in the Philippines, meanwhile, has a monthly average of $190 to $274. Cushioning the impact of the high cost of doing business in the country are the current tax incentives, she said.
Conwep presented the figures in a roundtable discussion earlier this week with other industry groups that would be affected by the Citira, or the Comprehensive Income Tax and Incentive Rationalization Act.
The bill seeks to lower the corporate income tax, which is currently one of the highest in Southeast Asia.
But it has drawn a lot of criticism because it will also mean the rationalization of tax incentives, which critics fear will lead to job losses after companies fail to cope with the rising cost of doing business.
Conwep estimates over 110,00 workers — in apparel, textile, travel goods, and footwear industries — will be displaced in 12 to 18 months once the bill is passed. The group is asking for a grandfather rule, wherein the bill will only apply to incoming firms but exempt existing companies. “The cost of doing business is already very tough on us, and then now you have this,” she said.