Country Snapshot: Trade Overview

Quezon City - Poor infrastructure and a lack of financing hinder the country's economic expansion.

Commodities, including garments, petroleum, and coconut oil, help to generate export revenue.

Machinery, transport equipment, and steel imports are essential to improving the nation’s infrastructure.

Despite its arable farmland, the country must import some basic food products, such as rice.

The Philippines impedes trade by limiting access to its service market and restricting imports and exports.

The Philippines is one of the world’s most highly mineralized nations and consists of 40 percent arable farmland, yet the country has suffered from an inability to capitalize on its domestic assets. The Aquino administration that took office in 2010 succeeded in implementing various reforms to enhance investment and the economy expanded after weathering the 2008 fiscal crisis well. However, the country suffers from poor infrastructure and lack of financing. Agriculture is significant to the Filipino economy, but industrial production has also grown in the electronics, apparel, shipbuilding sectors. Remittances from overseas workers are also vital to the Philippines, equivalent to just under 10 percent of the country's GDP.

Trade History

The islands of the Philippines fell under Spanish control from 1521 until 1898, when the island nation came under US rule. During Spanish rule, the country depended on agricultural commodities, such as cotton, tobacco, spices, and sugarcane, as well as mineral resources, such as gold, silver, and copper.

In 1935 the Philippines began a period of transition that was interrupted by the 1942 Japanese invasion and takeover. The US and the Philippines fought against the Japanese to regain control of the nation, and in 1945 the Japanese surrendered. But the war left Manila, and a large portion of the nation’s infrastructure, destroyed.

In 1946 the Philippines became an independent nation. The years that followed saw the implementation of recovery efforts and attempts at economic diversification. Political instability over subsequent decades, however, brought with it a decline in economic growth and development.

After a severe recession in the mid-1980s, the Philippine government instituted economic reforms to spur business growth and economic development. The nation has since struggled with inadequate infrastructure, and natural resources remain untapped due to extraction barriers such as financing. The economy relies primarily on its services sector and the export of electronics. 

Top Export Partners

China purchases 19 percent of all Philippine exports. Singapore and Japan purchase 13 percent each, Hong Kong 8 percent, Germany 4 percent, and South Korea 4 percent of all Philippine exports.

Major Export Products and Services

Exports account for close to 30 percent of the nation’s GDP. The Philippines’ export market relies heavily on electronics and semiconductors, which account for nearly 60 percent of the market; however, electronics represent a relatively low value-added commodity. Export commodities, including garments, transport equipment, petroleum, and coconut oil, make up the remainder of the Philippine export market.

Top Import Partners

Japan accounts for 19 percent of imports to the Philippines. The US provides 14 percent, China 12 percent, Singapore and Hong Kong each purchase 9 percent, and South Korea and Thailand purchase roughly 5 percent each.

Major Import Products and Services

Capital goods account for approximately 30 percent of all imports coming into the Philippines. Electronic components, which support the nation’s important electronics’ industry, represent a chief import. Machinery, transport equipment, and steel also contribute to the nation’s import market, essential to improving the nation’s infrastructure. Other top imports include textile fabrics, plastic, chemicals, and grains.

Barriers to Trade (Tariff and Non-Tariff)

Barriers to trade in the Philippines range from high tariffs and quotas to restrictive licensing requirements. The nation restricts access to its services market and imposes restrictions on imports and exports. Additional non-tariff barriers to trade include non-transparent regulations, restrictive labeling requirements, inconsistent customs procedures and administration, and widespread corruption.

Major Ports

Major ports of the Philippines include Bataan, Cagayan de Oro, Iloilo, Batangas, Cebu, Manila, Bugo, Davao, and Subic Bay.

Article written for World Trade Press by Nicole Long.
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