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Trade Portfolio and Historical Trade Flow Analysis: Philippines and Association of South-East Asian Nations
In Partial Requirements for International Trade
Written by: Ranelle Jasmin Asi
Aljanet Jandoc
Submitted to: Dr. Marissa Maricosa Paderon
Director European Studies Program
March 25, 2015
HISTORICAL BACKGROUND
Association of Southeast Asian Nations (ASEAN)
The ASEAN community is composed of ten members: Brunei, Cambodia, Indonesia, Lao PDR,
Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The union was established on August
1967 under the ASEAN declaration or Bangkok Declaration which was initially composed of five
countries (including the Philippines). By 1999, the community becomes complete with five additional
countries.
ASEAN was formed for beneficial purposes. The countries involved in the community wanted to flourish
their economy or linkages by collaborating with the others. By doing so, not only trade will increase, but
also other forms of assistance for development. Training, research facilities in the educational,
professional and technical areas are also provided to other members that would require more help in those
fields. Trade, communications, and living standards of countries that need further development will be
pulled up due to the collaboration. In conclusion, the community gains from the assistance of each
member which maintains a beneficial cooperation.
PHILIPPINES
The Philippines is one of the five founding members of the ASEAN community and is classified
as a middle-income country that is currently experiencing a rapid growth where it was labelled as the
rising tiger of Asia. By 2012, the country’s GDP grew by 7.1% which completely surpassed economists’
forecasts. Due to this situation, opportunities for industry growth emerged which gravitated investors to
business process outsourcing, electronics, agriculture, renewable energy, infrastructure and shipbuilding.
Amidst the strong growth, the Philippines is still faced with major problems. The country becomes
vulnerable to external crises due to its outward-orientation or trade dependence which rely heavily on
manufactured products. There is no trade diversification and foreign direct investment inflows.
Figure 1a: Philippine Trade and Growth Rates (1970-2012) in US $ Million
Source: http://unctadstat.unctad.org/
From Figure 1a, the Philippine’s growth of trade is almost consistently increasing where the
imports and exports are almost similar in pattern. The sudden decrease in 2008-2010 was caused by a
financial crisis but the Philippines quickly recovered by 2012 when GDP jumped over growth
expectations.
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Figure 1b: Total Trade of Philippines with Major Partners
Source: http://unctadstat.unctad.org/
Figure 1b above shows which bloc the Philippines trade the most during 1996 to 2012. Initially,
majority of the Philippines’ trade was with the United States, Japan and Europe. By 2002, trade with
ASEAN countries quickly rose up due to the official implementation of the community which eventually
surpassed the other trading blocs by 2004 or 2005.
Figure 1c: Philippines’ Unemployment Rate, Inflation Rate, and GDP annual growth
Source: www.wits.worldbank.org
Figure 1c shows the unemployment rate gradually going down to level almost near the inflation
rate. GDP’s growth noticeably increased from around 2002 until the sudden dip at around 2008 and 2009.
By 2012, GDP soared up again.
For 2013, Japan, United States and China have the biggest share of Philippines exports. Out of
the 9 ASEAN country partners, only Singapore has high demand for imports from the Philippines which
is 7.44 percent share as seen below.
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Unemployment Rate
Inflation Rate (ConsumerPrices, Annual %)
GDP annual growth (percapita)
Figure 1d. Share to Total Philippine Exports, by Major Country of Destination, 2013
Source: World Integrated Trade Solutions
Table 1. Philippine Exports by Major Commodity Groups (FOB value in million US$)
Commodities 2000 2004 2008 2009 2012
% to Total
(2012)
Total Export to the World 37,757 39,681 49,078 38,436 51,995
Coconut Products 570 716 1,348 801 1,364 2.62%
Sugar and Products 57 79 80 112 177 0.34%
Fruits and Vegetables 534 601 735 701 1,205 2.32%
Other Agro-Based Products 493 476 612 529 807 1.55%
Forest Products 1/ 42 34 34 33 59 0.11%
Mineral Products 650 796 2,498 1,470 2,265 4.36%
Petroleum Products 436 380 1,240 293 465 0.89%
Manufactures 34,360 35,525 40,999 33,605 45,067 86.68%
Source of basic data: National Statistics Office
For 2012, ranking first is the share of manufacturing which comprises 88 percent of total
Philippine exports. This is consistent from time period 2000 to 2012. Under this commodity, electronic
products constitute half of the country’s exports.
Mineral and coconut products rank next to manufacturing but the distribution shares are already
insignificant relative to manufacturing. Furthermore, sugar and products which are included in the
sensitive list shows insignificant shares relative to other given commodities.
Table 2. Manufactured Commodity Exports (Share to Total Exports)
Commodities 2000 2004 2008 2009 2012
% to Total
(2012)
Electronic Products 26,754 26,722 28,502 22,182
22,557 43.38%
Other Electronics 1,004 1,145 1,426 1,417 2,433 4.68%
Garments 2,563 2,171 1,952 1,541 1,594 3.07%
Textile Yarns/Fabrics 250 238 194 147 170 0.33%
Footwear 76 34 31 22 16 0.03%
21%
15%
12%8%
7%
37%
Japan
United States
China
Hong Kong, China
Singapore
Others
Travel Goods and Handbags 177 39 95 66 60 0.12%
Wood Manufactures 212 122 918 821 2,159 4.15%
Furnitures and Fixtures 381 294 221 138 180 0.35%
Chemicals 328 448 1,130 978 1,943 3.74%
Non-Metallic Mineral
Manufactures 134 165 211 156 145 0.28%
Machinery & Transport
Equipment 714 1,604 2,116 1,950 5,314 10.22%
Processed Food and Beverages 278 498 943 987 1,447 2.78%
Iron and Steel 25 58 263 124 253 0.49%
Baby Carrier, Toys, Games and
Sporting Goods 165 128 143 128 239 0.46%
Basketwork, Wickerwork, and
Other Articles ofr Plaiting
Materials 95 67 42 38 43 0.08%
Misc. Manufactures Articles,
n.e.s 219 234 331 291 1,534 2.95%
Others 985 1,559 2,480 2,618 4,979 9.58%
Source of basic data: National Statistics Office
Figure 1e. Distribution of Philippine Imports by Commodity Classification, 2012
Source of basic data: National Statistics Office
47 percent of the Philippine commodity import from the world comprises of raw materials and
intermediate goods used in industries, followed by mineral fuels and lubricant, and capital goods.
19%
47%
21%
12%
1% Capital Goods
Raw Materials and IntermediateGoods
Mineral Fuels and Lubricant
Consumer Goods
Special Transactions
Table 3. Philippine Major Trading Partners: 2012 (F.O.B. Value in Million U.S. Dollars)
Country
Imports from
Value % Share
Total 62,128.66 100.0%
Total of Top Ten Countries 45,192.27 72.7%
1. Japan 1/ 6,469.60 10.4%
2. United States of America 2/ 7,123.94 11.5%
3. People's Republic of China 6,680.35 10.8%
4. Singapore 4,405.07 7.1%
5. Republic of Korea 4,525.95 7.3%
6. Taiwan 4,855.25 7.8%
7. Hong Kong 1,465.66 2.4%
8. Thailand 3,461.41 5.6%
9. Indonesia 2,766.54 4.5%
10. Saudi Arabia 3,438.51 5.5%
11. Others 16,936.39 27.3%
Source of basic data: National Statistics Office
1/ includes Okinawa
2/ includes Alaska and Hawaii
Note: Components may not add up to total due to rounding
Table above shows that the top 3 origins of Philippine imports based on percentage share are United
States, China and Japan in that order. Amongst the ASEAN member countries, Singapore, Thailand and
Indonesia are included in the top 10 list.
Table 4. Major Philippine Imports from EU and ASEAN: 2012 (F.O.B. Value in Million U.S.D.)
Economic Bloc/Commodity Value % Share
European Union (EU) 4,643.41 100.0%
Electronic Products 1/ 1,389.85 29.9%
Transport Equipment 681.10 14.7%
Industrial Machinery and Equipment 445.77 9.6%
Medicinal and Pharmaceutical
Products 390.21 8.4%
Paper and Paper Products 125.55 2.7%
Association of Southeast Asian
Nations (ASEAN) 14,208.48 100%
Electronic Products 1/ 3,361.64 23.7%
Mineral Fuels, Lubricants and
Related Materials 2,514.38 17.7%
Transport Equipment 1,668.39 11.7%
Plastics in Primary and Non-Primary
Forms 644.72 4.5%
Industrial Machinery and Equipment 507.10 3.6%
Source of basic data: National Statistics Office
In 2009, Singapore is the origin of electronic products, mineral fuel and lubricants, and industrial
machineries and equipment from 2009 up to 2010. Thailand is also one of the ASEAN import sources of
electronic products and transport equipment (NSO).
Table 5. Distribution of Total Philippine Trade with Major Partners/bloc, 1986-2012
Year Japan US China Europe ASEAN
1996 20.63 25.32 2 13.7 12.8
1997 19.13 25.95 1.92 14.23 13.08
1998 17.41 27.96 2.74 14.75 13.54
1999 16.18 24.82 2.44 14.07 13.67
2000 16.13 22.89 2.03 13.38 15.31
2001 17.03 21.01 2.73 13.91 14.76
2002 16.42 20.94 3.42 12.45 15.82
2003 17.56 18.97 5.17 12.06 17.51
2004 18.25 18.05 6.19 12.72 18.16
2005 17.27 18.49 7.95 12.39 18.16
2006 15.37 17.14 8.37 13.5 18.63
2007 13.39 15.41 9.2 13.36 19.81
2008 13.54 14.57 9.16 12.47 20.5
2009 14.2 14.57 8.3 13.98 20.77
2010 13.76 12.6 9.67 11.02 25.31
2011 13.75 12.18 11 10.74 20.56
2012 13.93 12.39 10.95 10.19 20.47
Source of basic data: 1996-2010 Comtrade, 2011-2012 DTI
From 1990s to present, majority shares of Philippine trade were conducted with United States and
Japan but respective shares are declining overtime. Noticeably is the increasing growth of Philippine trade
with ASEAN overtime
HISTORICAL TRADE FLOW ANALYSIS
Figure 2a: Philippines’ Export Propensity and Import Dependence with ASEAN
Source: www.wits.worldbank.org
Philippines’ import dependence is decreasing from 2010 to 2013 while the export propensity
started increasing. This shows that the Philippines is currently in a good position since the country doesn’t
depend too much on the products from other countries and exports for goods are high.
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Import dependence (M/GDP)
Export Propensity (X/GDP)
Figure 2b: Growth rates of imports and exports
Source: www.wits.worldbank.org
The import growth rate is steadily decreasing and has reached a negative number. Although the
export growth rate had a deep fall from 2010 to 2011, it is going back up again by 2013 which somewhat
adds up with what we analyzed from Figure 2a.
Table 1: Top products for trade and revealed comparative index
Product label 2001 2002 2003 2004 2005 2006 2007 2008
Vegetable
plaiting
materials,
vegetable
products
0.246 0.265 0.189 0.103 0.148 0.358 0.425 0.62
Lac, gums,
resins, vegetable
saps and extracts
3.504 3.01 3.676 4.093 3.139 3.144 4.732 6.194
Electrical,
electronic
equipment
3.374 3.655 3.707 3.725 3.621 3.46 3.361 3.527
Manufactures of
plaiting material,
basketwork, etc.
14.575 11.017 10.491 9.88 12.778 12.561 7.476 5.695
Edible fruit,
nuts, peel of
citrus fruit,
melons
2.791 2.721 2.828 2.78 2.948 3.084 3.005 3.436
Source: www2.econ.uu.nl/users/marrewijk/research/balassa.htm
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Export Growth Rate
Import Growth Rate
These are the top five products that the Philippines have a comparative advantage in with respect
to ASEAN countries. The highest RCA is for manufactures of plaiting material or basketwork, second is
lac, gums, resins, vegetable saps and extracts, third for electrical and electronic equipment (which is the
highest RCA when Philippines is compared to the world).
Table 2: Comparison between ASEAN Countries (Balassa Index or RCA)
Comparison between ASEAN Countries (Balassa Index/RCA)
2001 2002 2003 2004 2005 2006 2007 2008
Vietnam
Vegetable plaiting materials, vegetable products nes 12.922 7.882 6.119 5.275 4.215 5.062 3.029 2.286
Lac, gums, resins, vegetable saps and extracts nes 1.178 0.599 0.603 1.07 1.372 1.112 0.522 0.343
Singapore
Manufactures of plaiting material, basketwork, etc. 0.032 0.027 0.026 0.036 0.033 0.031 0.027 0.026
Lac, gums, resins, vegetable saps and extracts nes 0.403 0.316 0.304 0.293 0.311 0.318 0.393 0.369
Malaysia
Manufactures of plaiting material, basketwork, etc. 0.028 0.009 0.026 0.01 0.014 0.037 0.05 0.023
Lac, gums, resins, vegetable saps and extracts nes 0.016 0.013 0.049 0.045 0.067 0.073 0.088 0.144
Indonesia
Manufactures of plaiting material, basketwork, etc. 7.021 6.432 5.686 5.285 4.131 4.049 3.381 2.318
Lac, gums, resins, vegetable saps and extracts nes 1.217 1.216 1.112 1.027 1.154 1.216 1.91 1.093
Thailand
Manufactures of plaiting material, basketwork, etc. 0.541 0.581 0.584 0.668 0.656 0.603 0.48 0.33
Lac, gums, resins, vegetable saps and extracts nes 0.802 0.602 0.697 0.792 0.599 0.811 0.442 0.448
Philippines
Manufactures of plaiting material, basketwork, etc. 14.575 11.017 10.491 9.88 12.78 12.56 7.476 5.695
Lac, gums, resins, vegetable saps and extracts nes 3.504 3.01 3.676 4.093 3.139 3.144 4.732 6.194
Source: http://www2.econ.uu.nl/users/marrewijk/research/balassa.htm
We compare the Philippines with othe ASEAN countries. We can see that the Philippines has a
condiderably higher RCA in terms of plaiting products compared to the others. At this point, our results
partly conclude that the Philippines should focus on producing and trading these products next to
electronics. The authors recommend to identify which ASEAN countries has demands for these products.
Figure 2e: MFN Simple Average % for all products
Source: www.wits.worldbank.org
The figure above proves the benefit that the Philippines and other ASEAN countries gained from
joining the community. By 2002 or around the time ASEAN was officially implemented, tariffs
decreased for most of the countries. The lowest drop was for Vietnam, Thailand and Philippines. Tariff
for the Philippines went up again by 2004 but is still considerably lower than the initial position.
POLICY ISSUES
Labour Mobility and Migration
Labour migration is already a reality in ASEAN with millions working in other member states
both legally and under irregular conditions.
Net senders for labour: Cambodia, Lao Democratic People’s Republic, Myanmar, Indonesia, Viet
Nam and the Philippines. Net receivers: Singapore, Thailand, Malaysia and Brunei Darussalam
(Capannelli, 2013). Philippines is a major labour exporter, but the majority of Filipino labour migrants go
outside the ASEAN region. Top migration destination is the United States with more than 2 million
permanent migrants. Flows of skilled labour in ASEAN have increased but remain small in comparison to
the unskilled or semi-skilled labour migration. The majority of emigrants have only primary education.
In Indonesia, Myanmar, Cambodia, Thailand and Lao PDR, unskilled migration outstrips skilled
migration significantly.
Child Labour
According to Heyman and McNeil (2013), “Many Asian countries, particularly in East Asia and
the Pacific, have experienced strong economic growth in recent decades. This has important and positive
consequences for children and families, who have more resources at their disposal to meet and surpass
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Brunei
Cambodia
Indonesia
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
basic needs. However, the region has few protections for those children and families left in poverty
compared to most of the world. Together, the economic and social policy conditions may contribute to
widening gaps in the experiences of children and families.”1
Poor children are less likely to attend school but more likely to labor due financial constraints, performing
hazardous works that are damaging children’s health (Heyman and McNeil, 2013).
Table_ Regional Highlights
Hazardous Work 3 countries in East and the Pacific have no national
minimum age for hazardous work; an additional 10
countries in this region permit hazardous work
before a child turns 18
Full-Time Work 5 countries in East Asia and the Pacific and 3 in
South Asia permit children as young as 13 to work
full-time
Applying the Balassa Index for 2008, the country’s strong position in exporting commodities with
other trading partners coincides with the industries where these poor children are working. There are
about 40,000 children who are performing the worst forms of Child Labor such as mining, quarrying,
deep sea fishing and agricultural work. Notably, children laborers exposed in commercial sexual
exploitation and overseas domestic employment.2
Philippines is a source of children trafficked for commercial sexual abuse to neighboring
countries such as Malaysia, Singapore, Hong Kong, South Korea, Japan and Middle East. It is also the
largest in the world earning more than US$ 1billion a year from child pornography operated in the
country by foreign nationals from Japan, America, Australia, and Britain (Women and Gender Institute
[WAGI], 2012).
Based on 2011 NSO Survey, there are 5.492 million working children ages 5 to 17 years old and
out these working children, 3.210 million are child laborers. Of the 3.210 million, 2.99 million are in
hazardous labor.3
CONCLUSION
Joining the ASEAN community garnered benefits for trade such as decreased tariffs to improve
trade relations with other countries and increased economic growth which can attract foreign investors.
From the data in the paper, the Philippines mainly focus on exporting manufactured goods and electronics.
From the computed revealed comparative index or balassa index, the Philippines has an advantage in
producing plaiting materials and vegetable products compared to other ASEAN countries. The
researchers conclude that the Philippines should produce and export what they have an advantage in
instead to maximize production and trade. The underlying problem here is that the authors could not
gather data on what countries have high demand on plaiting materials.
1 Heymann, Jody and Kristen McNeil. 2013. Changing Children’s Chances: New Findings on Child Policy Worldwide. Los Angeles: University of California, Los Angeles (UCLA). (pp.2-27) 2 Women and Gender Institute [WAGI]. 2012. “National Situationer of Girl Children in the Philippines.” Quezon City: WAGI, Miriam College. 3 National Statistics Office. (2012). 2011 Survey on Children
BIBLIOGRAPHY
Association of South East Asian Nations Website. February 10, 2012.
http://www.asean.org/news/item/macroeconomic-indicators (accessed March 11, 2015).
Balassa Index. http://www2.econ.uu.nl/users/marrewijk/research/balassa.htm (accessed January 2015).
Department of Trade and Industry. www.dti.gov.ph/ (accessed January 2015).
National Statistics Office. http://web0.psa.gov.ph/ (accessed January 2015).
Pasadilla, Gloria O. "Social Security and Labor Migration in ASEAN." ADB Institure Research Policy ,
November 2011.
Sarah Huelser, Adam Heal. "Moving Freely? Labour Mobility in ASEAN." Asia-Pacific Research and
Training Network on Trade, June 2014, Brief No. 40 ed.
UN Comtrade . unstats.un.org (accessed January 2015).
United Nations Conference on Trade and Development . unctad.org/en/pages/Statistics.aspx (accessed
January 2015).
World Integrated Trade Solutions. http://wits.worldbank.org/ (accessed January 2015).
Heymann, Jody and Kristen McNeil. 2013. Changing Children’s Chances: New Findings on Child Policy
Worldwide. Los Angeles: University of California, Los Angeles (UCLA). (pp.2-27)
Women and Gender Institute [WAGI]. 2012. “National Situationer of Girl Children in the Philippines.”
Quezon City: WAGI, Miriam College.
National Statistics Office. (2012). 2011 Survey on Children