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 countrys 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
250000
200000
Trade
Balance
Total Trade

150000

Import

100000

Export

50000

1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012

Source: http://unctadstat.unctad.org/
From Figure 1a, the Philippines 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.

Figure 1b: Total Trade of Philippines with Major Partners

30

Trade Value

25
Japan

20

US

15

China

10

Europe

ASEAN

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

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
25

20
Unemployment Rate
15
Inflation Rate (Consumer
Prices, Annual %)

10

GDP annual growth (per

capita)

-5

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Source: www.wits.worldbank.org
Figure 1c shows the unemployment rate gradually going down to level almost near the inflation
rate. GDPs 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.

Figure 1d. Share to Total Philippine Exports, by Major Country of Destination, 2013

Japan
21%

United States

37%

China
15%

Hong Kong, China

Singapore

7%

8%

12%

Others

Source: World Integrated Trade Solutions

Table 1. Philippine Exports by Major Commodity Groups (FOB value in million US$)
Commodities
Total Export to the World
Coconut Products
Sugar and Products
Fruits and Vegetables
Other Agro-Based Products
Forest Products 1/
Mineral Products
Petroleum Products
Manufactures

2000
37,757
570
57
534
493
42
650
436
34,360

2004
39,681
716
79
601
476
34
796
380
35,525

2008
49,078
1,348
80
735
612
34
2,498
1,240
40,999

2009
38,436
801
112
701
529
33
1,470
293
33,605

2012
51,995
1,364
177
1,205
807
59
2,265
465
45,067

% to Total
(2012)
2.62%
0.34%
2.32%
1.55%
0.11%
4.36%
0.89%
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 countrys 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%

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
Non-Metallic Mineral
Manufactures
Machinery & Transport
Equipment

328

448

1,130

978

1,943

3.74%

134

165

211

156

145

0.28%

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
Misc. Manufactures Articles,
n.e.s

95

67

42

38

43

0.08%

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

1%
12%

Capital Goods
19%

21%

Raw Materials and Intermediate

Goods
Mineral Fuels and Lubricant

47%

Consumer Goods
Special Transactions

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.

Table 3. Philippine Major Trading Partners: 2012 (F.O.B. Value in Million U.S. Dollars)
Imports from
Country
Value
Total
62,128.66
Total of Top Ten Countries
45,192.27
1. Japan 1/
6,469.60
2. United States of America 2/
7,123.94
3. People's Republic of China
6,680.35
4. Singapore
4,405.07
5. Republic of Korea
4,525.95
6. Taiwan
4,855.25
7. Hong Kong
1,465.66
8. Thailand
3,461.41
9. Indonesia
2,766.54
10. Saudi Arabia
3,438.51
11. Others
16,936.39
Source of basic data: National Statistics Office

% Share
100.0%
72.7%
10.4%
11.5%
10.8%
7.1%
7.3%
7.8%
2.4%
5.6%
4.5%
5.5%
27.3%

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
100.0%
European Union (EU)
4,643.41
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)
Electronic Products 1/
Mineral Fuels, Lubricants and
Related Materials
Transport Equipment
Plastics in Primary and Non-Primary
Forms
Industrial Machinery and Equipment
Source of basic data: National Statistics Office

14,208.48
3,361.64

100%
23.7%

2,514.38
1,668.39

17.7%
11.7%

644.72
507.10

4.5%
3.6%

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
1996
20.63
25.32
2
13.7
1997
19.13
25.95
1.92
14.23
1998
17.41
27.96
2.74
14.75
1999
16.18
24.82
2.44
14.07
2000
16.13
22.89
2.03
13.38
2001
17.03
21.01
2.73
13.91
2002
16.42
20.94
3.42
12.45
2003
17.56
18.97
5.17
12.06
2004
18.25
18.05
6.19
12.72
2005
17.27
18.49
7.95
12.39
2006
15.37
17.14
8.37
13.5
2007
13.39
15.41
9.2
13.36
2008
13.54
14.57
9.16
12.47
2009
14.2
14.57
8.3
13.98
2010
13.76
12.6
9.67
11.02
2011
13.75
12.18
11
10.74
2012
13.93
12.39
10.95
10.19
Source of basic data: 1996-2010 Comtrade, 2011-2012 DTI

ASEAN
12.8
13.08
13.54
13.67
15.31
14.76
15.82
17.51
18.16
18.16
18.63
19.81
20.5
20.77
25.31
20.56
20.47

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
0.12
0.1
0.08
0.06

Import dependence (M/GDP)

Export Propensity (X/GDP)

0.04
0.02

1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

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 doesnt
depend too much on the products from other countries and exports for goods are high.

Figure 2b: Growth rates of imports and exports

160
140
120
100
80
60

Export Growth Rate

40

Import Growth Rate

20
0
-20
-40
-60

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
Vegetable
plaiting
materials,
vegetable
products

2001

2002

2003

2004

2005

2006

2007

2008

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

14.575

11.017

10.491

9.88

12.778

12.561

7.476

5.695

2.791

2.721

2.828

2.78

2.948

3.084

3.005

3.436

Manufactures of
plaiting material,
basketwork, etc.
Edible fruit,
nuts, peel of
citrus fruit,
melons

Source: www2.econ.uu.nl/users/marrewijk/research/balassa.htm

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
Lac, gums, resins, vegetable saps and
extracts nes

12.922

7.882

6.119

5.275

4.215

5.062

3.029

2.286

1.178

0.599

0.603

1.07

1.372

1.112

0.522

0.343

Singapore
Manufactures of plaiting material,
basketwork, etc.
Lac, gums, resins, vegetable saps and
extracts nes

0.032

0.027

0.026

0.036

0.033

0.031

0.027

0.026

0.403

0.316

0.304

0.293

0.311

0.318

0.393

0.369

Malaysia
Manufactures of plaiting material,
basketwork, etc.
Lac, gums, resins, vegetable saps and
extracts nes

0.028

0.009

0.026

0.01

0.014

0.037

0.05

0.023

0.016

0.013

0.049

0.045

0.067

0.073

0.088

0.144

Indonesia
Manufactures of plaiting material,
basketwork, etc.
Lac, gums, resins, vegetable saps and
extracts nes

7.021

6.432

5.686

5.285

4.131

4.049

3.381

2.318

1.217

1.216

1.112

1.027

1.154

1.216

1.91

1.093

Thailand
Manufactures of plaiting material,
basketwork, etc.
Lac, gums, resins, vegetable saps and
extracts nes

0.541

0.581

0.584

0.668

0.656

0.603

0.48

0.33

0.802

0.602

0.697

0.792

0.599

0.811

0.442

0.448

Philippines
Manufactures of plaiting material,
basketwork, etc.
Lac, gums, resins, vegetable saps and
extracts nes

14.575

11.017

10.491

9.88

12.78

12.56

7.476

5.695

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
30
Brunei

25

Cambodia
20

Indonesia
Malaysia

15

Myanmar
10

Philippines
Singapore

Thailand

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

Vietnam

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 Peoples 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

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 childrens health (Heyman and McNeil, 2013).
Table_ Regional Highlights
Hazardous Work

Full-Time 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
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 countrys 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.

Heymann, Jody and Kristen McNeil. 2013. Changing Childrens 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
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Heymann, Jody and Kristen McNeil. 2013. Changing Childrens 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