By Justine Irish D. Tabile, Reporter
THE quality of physical infrastructure and policy will help determine how Philippine trade performs in the face of ongoing supply-chain diversification, a logistics company said, citing the results of a study.
The DHL and New York University’ (NYU) Stern School of Business 2025 DHL Trade Atlas identified the Philippines as among the countries expected to post rapid trade growth over the next five years, alongside India, Vietnam, and Indonesia.
“If we look at the Philippines, it has a diverse and growing economic landscape. Manufacturing, in particular semiconductors and electronics, and automobiles are picking up, with year-on-year import and export numbers of the country increasing,” Ken Lee, chief executive officer for Asia-Pacific at DHL Express, said at a briefing on Friday.
“I think all factors are pointing to the Philippines as one to watch,” he added.
He cited the need for countries to stay innovative in their strategy and proactive in seeking out new pathways to growth.
The DHL Trade Atlas analyzes trade growth in two dimensions: speed, or the trade volume growth rate, and scale, which is the absolute increase in trade volume.
Steven A. Altman, senior research scholar and director of the DHL Initiative on Globalization at NYU Stern, said that the trade volume growth rate for the Philippines is 7.4%, India 7.2%, Indonesia 6.7%, and Vietnam 6.5%.
“For absolute volume increases, the way we do that is that we take the current dollar value and then we apply a volume growth rate to it. So, you can think of this as growth that’s in current US dollar terms,” Mr. Altman said at the briefing.
“For India, this would be $484 billion. For Indonesia, it is $195 billion. For Vietnam, it is $271.8 billion. And for the Philippines, it is $87.8 billion,” he added.
However, the Philippines could realize more limited benefits from supply chain diversification, than Vietnam, Indonesia, and India.
“There is a noticeable diversification of supply chains. Beyond China, businesses are increasingly looking to place their operations in a wider range of locations for various reasons, such as cost considerations, risk diversification, and access to new markets,” said Mr. Lee.
“This shift is leading to greater developments in alternative manufacturing locations like Vietnam, Indonesia, and India,” he added.
According to the report, the Philippines, which has a manufacturing sector focused more on electronics, is projected to rank 15th on the speed dimension over the next five years and 30th on the scale dimension.
“These encouraging forecasts for India, Vietnam, Indonesia, and the Philippines suggest the importance of investments in physical infrastructure and supportive policy measures required for these countries to achieve their trade growth potential,” according to the report.
“While these countries all have especially favorable trade growth prospects, they have also faced infrastructure and other capacity-related constraints in the past,” it added.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act will help address the constraints.
“This is through the enhancement of the incentives for foreign direct investment (FDI) to better compete with other ASEAN or Asian countries,” he said via Viber.
The enhanced incentives under the CREATE MORE Act, he said, include lower corporate income tax of 20% (from 25%), clarity on value-added tax exemptions, and the deductibility of electricity costs, among others.
“It would also help if the country would support more high-tech economic zones similar to Silicon Valley and more research and development facilities to cater to higher-end electronics and semiconductors to service the global supply chains,” he said.
“A more developed infrastructure would help attract more FDI and tourists into the country, as well as lower the cost of electricity and further ease doing business at the national and local government unit levels,” he added.