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The Philippine garments and textile industry was once a US$3 billion industry during the 1990s, one of the top performing sectors within the country and globally. This was facilitated by the Multi-Fiber Agreement (MFA), which set quotas on the amount of foreign-made garments entering a country to limit market disruptions while liberalizing trade with preferential tariffs on exports. However, when it was replaced by the Agreement on Textiles and Clothing (ACT) in 1995, the local industry faced a dip in performance.
The ACT meant the complete adoption of the General Agreement on Tariffs and Trade (GATT), which did away with the quota allocations set by MFA. Filipino exporters who relied on these quotas were not able to sustain, leading to downsizing and factory closures.
The pandemic further impacted the apparel export industry due to supply chain issues and canceled orders, among other delays. However, the Foreign Buyers Association of the Philippines (FOBAP) recently received bulk orders from countries who are not able to import enough fashion garments from Vietnam, India, China and Bangladesh due to minimum order requirements. This means the Philippines can play a strategic role to fill the supply gap, expanding exports by 50% to hit US$1.5 billion by the end of 2022. While 80% of exported clothing head straight to the United States at present, as the aforementioned report indicates, we can expect a growth in other markets, including ASEAN, European Union, Australia and Canada.
We dive into the possibilities and tips on how you can leverage the industry’s potential growth.
Whether you are thinking of diversifying your export business or are venturing into the apparel export industry for the first time, learning how to export successfully can bode well for your overall progress. Below, we outline the steps you can take that will help your garment exports soar as you imagined:
The first step is to identify your target market and destination, and familiarize yourself with its customs rules and regulations. For the export of clothes from the Philippines, North America and the United States are the most profitable destinations to ship fashion apparel. These two markets, statistics by the World Integrated Trade Solution reveal, only make up about 5% each of the total export share of textiles from the Philippines in 2019, but they bring in an export value worth US$610.3 million and US$585.3 million respectively. This is followed by East Asia & Pacific, Europe & Central Asia, Japan, Korea, and the United Kingdom.
Once you have identified and researched your shipping destinations, the next step is to understand each country’s specific customs and tax laws, like export restrictions, licenses and de minimis values. These will allow you to plan your finances more thoughtfully.
The Philippines have several restricted and prohibited goods for export. For instance, according to the Philippines Bureau of Customs, if your fashion business involves the export of gambling outfits and you have not received any authorization to ship them out, your packages will be held at customs as it is a restricted good under the Customs Modernization and Tariff Act (CMTA). Fashion goods printed with matters of rebellion or sedition against the Filipino government are also prohibited for exportation.
Many countries, while acting on the demands of animal rights activists, have banned the import of exotic skins and furs of specific animals as well. These countries include, but are not limited to, India, the United Kingdom, New Zealand, Switzerland, Austria, Croatia, and Sweden.
Paying attention to these no-go areas and restrictions when exporting fashion goods is important so that you don’t run into a situation where they are denied at customs. When registering your business with the Department of Trade and Industry (DTI), applying for the appropriate licenses where relevant can help ensure your export experience flows smoothly.
Another important step is registering for export with the Client Profile Registration System (CPRS) through the Philippine Exporters Confederation and preparing the necessary export documents. These documents can include:
Air waybill or bill of lading
Certificate of origin
Customs import declaration
As mentioned earlier, certain products may also require additional permissions – or licenses – from the concerned government body. For example, export of goods with animal skins will need authorization by the Bureau of Animal Industry.
Should you be exporting from a special economic zone (SEZ), you will need to register with the Philippine Economic Zone Authority (PEZA) and provide proof for customs clearance. Those operating outside of these zones will have to register with the relevant authorities according to the nature of goods exported.
Choosing the right courier service is probably the most critical step you need to take before exporting fashion apparel from the Philippines. You will want a reliable and trusted logistics partner to help you reach destinations abroad and deliver your shipments in perfect condition and in a timely fashion.
DHL Express has been operating in the Philippines for more than 50 years now, helping Filipino businesses connect with people worldwide and expand their operations. With its widespread logistics network that spans 220 countries and territories, you can be assured that your shipment will reach far-off international destinations without any issues.
Apart from offering logistics solutions, DHL Express can help you better navigate customs laws of the destination countries by providing valuable insights and assistance so that the whole process runs smoothly and efficiently. Sign up today for a business account with DHL Express and explore how we can help your fashion export business. At the same time, you can gain access to preferential international shipping rates, making our partnership more cost-effective for you.