Philippines

Market overview

Having emerged from one of the world’s strictest and longest lockdowns in June, the Philippines will remain under a state of calamity until September 2021 as it grapples with the impact of the COVID-19 pandemic.

It is difficult to predict how or when businesses will resume to any greater extent, particularly with the varying state of restrictions for each area. There are likely spontaneous hard lockdowns targeting community outbreaks for some time yet.  

New Zealand Trade and Enterprise recommends exporters stay in close contact with in-market partners and be aware of potential challenges in the following areas:  

  • Travel restrictions 

  • Mass public transport closedowns or partial closedowns

  • Social distancing requirements

  • Strict hygiene and sanitation protocols

  • Working arrangements need to reconfigured

  • Strict sanitation protocols including transport vehicles to be implemented in the workplace

What are the practical steps businesses can take as a result of this information?

Please ensure you are familiar with Government proclamations and administrative/executive orders during this pandemic period. These policies can change without notice.

Please visit this link for a list of all of the new government policies some of which may affect how business can be conducted.

For more information on doing business in the Philippines, visit myNZTE - our free online portal for curated, in-depth information and guidance. 


Economy and trade

The Philippines was New Zealand's 17th largest export destination in 2019, with total goods and services exports totalling NZ$1.08 billion.

The World Bank report updated its forecast for the Philippine economy for a contraction of 1.9% this year due to the economic fallout triggered by natural disasters and COVID-19. However, the World Bank noted "there are good chances that the country can bounce back in the next two years".

In Q2 2020, the Philippines recorded its worst GDP fall on record, contracting by 16.5%. According to the Philippine Statistics Authority, investment was down 53.3%, and consumption was down by 15.5% while Government spending rose by 22.1%.

The Philippines’ economy is hamstrung by movement restrictions and the economic downturn overseas. More than 10 million Filipinos, or about 10% of the population, work abroad at any given time, with their remittances accounting for about 10% of GDP.

The decrease in remittances will directly translate to lesser domestic consumer spending.

Government debt is up, hitting P9.1 trillion at the end of June, up 15% year-on-year. The projected debt-to-GDP ratio is at 48.1% after the first half of the year.

There are now reports the Government is reviewing President Rodrigo Duterte's 'Build, Build, Build' infrastructure programme, centred around aggressive development of infrastructure projects around the country. The President has told the nation that he needs to prioritise projects that strengthen the country’s healthcare infrastructure.

In the meantime, all public and private construction projects are to resume in areas under general community quarantine as long as strict guidelines are adhered, including age and health restrictions, distancing, and new sanitisation standards.

According to NZTE’s industry sources, three of the biggest developers of retail shops, commercial and office spaces announced the suspension of all projects for 12-24 months. This sector of the construction industry will be badly hit.

Big-ticket government infrastructure projects that have already broken ground will most likely continue. However, projects that have not started yet may be subject to the risk of delays and a possible change in the political landscape after the 2022 national elections.

Key takeaways from the current situation and focus for the future include:

  • Production to favour essential goods

  • Greater role of e-commerce. The manufacturing sector may also need to consider online B2B arrangements. A survey of Philippines exporters show that only 40% have websites

  • Greater emphasis on food security

  • Agri-food supply chain disruptions to persist

  • Greater demand for technologies that prolong shelf life period

  • Consumers will demand healthy foods

  • Reduced demand from institutional buyers such as hotels and restaurants resulting in potentially lower demand for food service products

  • Online selling will persist, with social media mobile commerce (m-commerce) via Facebook and Instagram growing rapidly

  • Heightened risk of financial insolvency of some firms may delay payment to suppliers.

There is confidence from the Government that the Philippines remains in a strong fiscal position with the ability for further borrowing without endangering the Philippines debt profile, as well as confidence that the economy will rebound in 2021.

See more information about the Philippines economy in the Ministry of Foreign Affairs and Trade Market Report site.

Supply chain, logistics & freight

All seaports and airports are now open and operational, however there are still very limited commercial flights flying international and domestic routes.

What this means for New Zealand exporters:

We urge New Zealand exporters to pay special attention to logistics during these uncertain times. Communicate closely with service providers and customers to understand what is happening on the ground, and ensure you have the financial capabilities to clear customs. We expect challenges to persist after lockdowns are lifted.

Exporters of chilled/frozen goods should confirm availability of a cold storage facility prior to shipping.

Department Orders

The following three Department Orders (DOs) were issued by the Department of Transportation to alleviate the cost of logistics and to set up a central complaints office.

DO 2020-007 directs all domestic shipping lines to allot cargo space for agricultural and food products, and to give preferential rates to such cargoes. Under this DO, all domestic shipping lines must allocate "no less than twelve percent (12%) of a vessel's cargo capacity per voyage for the exclusive accommodation of agricultural and food products." It also directs all domestic shipping lines to "extend a discount of no less than forty percent (40%) from their published shipping rates" for all such cargoes.

This DO covers cargoes of agricultural and food products, raw or processed, that are marketed for human consumption (excluding water, salt, and additives as well as animal feeds), and "shipped in whatever manner or form" including roll-on/roll-off and conventional shipping.

DO 2020-008 creates the Shippers' Protection Office (SPO), intended to protect and assist shippers, both international and domestic, against unreasonable fees and charges imposed by international and domestic shipping lines. This DO applies to all complaints and issues related to the rates, charges, practices, and operations of international and domestic shipping lines in the Philippines. Note that before the SPO was created, no government agency monitored and regulated the local fees and charges imposed by international shipping lines.

DO 2020-009 prescribes a minimum free storage time period of eight days from the date of discharge for cargoes unloaded by international shipping lines. This is up from the current five days of free storage time given by foreign carriers to shippers and importers, and seeks to help port users avoid high demurrage costs. The change applies to all international shipping lines unloading cargoes in any port throughout the Philippines.

Useful links:

Government support

The four pillars of President Duterte's socio economic strategy against COVID-19 can be found here.

A ₱165.5 billion fund for pandemic response and recovery was passed in September 2020. Bayanihan 2 or the “Recover as One” Act includes the following major allocations:

  • ₱10 billion – procurement of RT-PCR testing and extraction kits, supplies, and enhancement of the Department of Health’s (DOH) capacities;

  • ₱15 billion – cash-for-work program for the poor, and the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) program of the Department of Labor and Employment (DOLE);

  • ₱17 billion – DOLE’s programs on unemployment, including involuntary separation assistance for freelancers, self-employed workers, and displaced overseas Filipino workers (OFW);

  • ₱50 billion – government financial institutions: Landbank (P30 billion), Development Bank of the Philippines (P15 billion), and the Philippine Guarantee Corporation (P5 billion), for low-interest loans to micro, small, and medium enterprises;

  • ₱17 billion – the Plant, Plant, Plant agricultural program, including cash subsidies and interest-free loans for farmers;

  • ₱17 billion – Department of Transportation programs for the provision of interest rate subsidies and temporary livelihood to displaced transport workers;

  • ₱10 billion – Department of Tourism programs to assist tourism-related businesses hit hard by the pandemic.

  • ₱3 billion for assistance to state universities and colleges, specifically for the development of “smart campuses” to implement flexible learning methods.

Travel

Entry to the Philippines is banned to all travellers except those who are Filipino nationals, spouses or children of nationals, and residents returning from abroad. They may be subject to quarantine for a maximum of 14 days or COVID-19 testing upon arrival, covered by passengers.

Before departing, travellers should make themselves aware of any specific requirements in place for their port of arrival.

Philippines travel advisory: Safetravel.govt.nz

Tradeshow and event information

All mass gatherings are prohibited under the current community quarantine directives. All major trade shows and events are either cancelled or postponed.

If you have questions about an event not listed here, please contact the organisers in the first instance or get in touch with NZTE for further advice.


Sector insights

As is to be expected, numerous sectors have been impacted by the COVID-19 pandemic. Below you'll find information on any COVID-19 effects across important sectors and industries in the Philippines.

Construction

The Philippine construction sector has been hit hard by the lockdown, as reflected in cement sales. According to the Asia Pacific Executive Brief of August 2020 (PDF), cement sales fell 4.1% year on year in Q1 2020, and then plunged 40% year on year in the first two months of Q2.

Fixed investment for construction grew by 11% per annum growth for the decade to 2019, helping lift GDP growth to 6.4% per annum. Future growth will depend on the damage done to public finances by COVID-19, and on market support for private financing options.

Additional resources

Below you can find information and contact details for other New Zealand government and international agencies regarding their response to COVID-19.

New Zealand Government agencies

Covid19.govt.nz
COVID-19 helpline for businesses
Business.govt.nz
New Zealand Customs
Ministry for Primary Industries (MPI)
New Zealand Export Credit (NZEC)
MFAT Export Helpline
MFAT Safetravel
Callaghan Innovation
Immigration
Ministry of Health
WorkSafe New Zealand
myNZTE

Global agencies

World Health Organization (WHO)
Centers for Disease Control and Prevention (CDC)

Contact NZTE

We're available to talk to you about any issues your export business is facing due to COVID-19.

For existing NZTE customers, please contact your New Zealand-based Customer Manager.

If you're unsure who to contact or haven't worked with us before, you can call NZTE on 0800 555 888 or email below and one of our Customer Advisors will help you.