The country’s trade gap narrowed by more than 50 percent year-on-year in October as both exports and imports dropped, the Philippine Statistics Authority (PSA) reported on Thursday.
Preliminary data from the state-run statistics agency showed that the balance of trade in goods in the 10th month reached a shortfall of $1.78 billion, down 50.3 percent from $3.57 billion a year earlier. It is, however, wider than the $1.70-billion gap in September.
This resulted from outbound shipments falling by 2.2 percent to $6.20 billion in October from $6.34 billion in the same month in 2019, and inbound ones dropping by 19.5 percent to $7.97 billion from the year-earlier $9.91 billion.
Despite the substantial contraction, Acting Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement that there were positive takeaways from the data.
He noted that merchandise exports to China and Southeast Asia grew by 15.2 percent and 10 percent to $944.7 million and $1.02 billion, respectively.
“Moreover, capital goods imports increased in October, compared to September 2020, suggesting that business activities have been responding to the government’s approach for a targeted and gradual reopening [of the economy] and increased mobility,” Chua said.
But more could be done to help accelerate the country’s recovery from the coronavirus pandemic, according to the acting National Economic and Development Authority (NEDA) chief.
“As traditional means of connecting buyers to suppliers are limited at the moment, the government and the private sector need to work together to harness digital platforms and alternative means to source from, and supply to, the country,” he said.
Chua said the NEDA continued to partner with relevant agencies and lawmakers to push for proposed amendments to the Public Service Act to open more opportunities and spur investments in critical infrastructure that can increase the productivity and competitiveness of exporters, as well as enhance access to online platforms for businesses and government services.
“Improving communication infrastructure to encourage investments in digital solutions and services, as well as logistics reforms, such as rationalizing the freight system, establishing strategic warehousing and cold-chain systems to bring down costs and improve the competitiveness of manufacturers and exporters, will play a key role in ensuring a rebound of the country’s trade sector,” he added.
A calibrated and gradual resumption of business operations with strict implementation of health and safety protocols remain crucial for recovery, Chua said, and “fundamental to these efforts is the provision of safe and regular transport to allow for worker mobility.”
“Improving the overall climate for businesses to foster entrepreneurship and competitiveness through the recent passage of the Corporate Recovery and Tax Incentives for Enterprises bill will accelerate economic recovery by reducing our corporate income tax (CIT) rate and restructuring the country’s fiscal incentives system,” he added.
Approved on the second and third reading in the Senate on November 26, Create provides an outright 10-percentage-point cut in the country’s CIT rate, lowering it from 30 percent to 20 percent for local businesses with net taxable income equivalent to P5 million and below, and with total assets (excluding land) not exceeding P100 million. Other corporations will benefit from their CIT rate being lowered to 25 percent from 30 percent.
The measure also modernizes fiscal incentives by making them performance-based, targeted, time-bound and transparent.
WITH A REPORT FROM MAYVELIN U. CARABALLO