New Zealand to double exports to PH

17 June 2014

New Zealand expects to double its merchandize exports to the Philippines by 2025 to NZ$1.5 billion, approximately US$1.3 billion, from NZ$750 million in 2013 in a bilateral trade relationship that is heavily in favor of the land of the “kiwis.”

According to New Zealand Trade Attache to the Philippines Hernando Banal II this target is part of a business growth agenda for its exports to account for 40 percent of total GDP from the current 25 percent.

Despite this one-sided growth is a huge trade deficit suffered by the Philippines, whose exports in 2013 only reached NZ$150 million, $129.951 million, for total bilateral trade of NZ$900 million. New Zealand exports to the Philippines have been growing annually at 11.3 percent, but the Philippines suffered a NZ$612-million trade deficit.

The Philippines is now New Zealand’s 12th largest export destination.

Food and beverage products made up around 80 percent of total exports to the Philippines in 2013 comprising largely of milk powder, cream, butter and cheese.

Banal explained that the sheer number of Philippine population of 100 million as against New Zealand’s 4.2 million people would be a challenging factor in the balancing of the bilateral trade.

New Zealand Ambassador Reuben Levermore, however, explained the bilateral trade should have reached NZ$1 billion including the services sector from tourism, IT and engineering services, but the figure does show that because it is difficult to capture services exports.

“It does not have to be more bananas,” Levermore said. Bananas and electronics  account for the bulk of Philippine exports to New Zealand.

He, however, said there are more ways to boost Philippine exports to New Zealand.

He cited the growing services sector of the Philippines stressing that more small and niche New Zealand IT and innovation companies are opening support and back office operations in the Philippines.

There are 100 New Zealand companies exporting to the Philippines, but there are others that have not been captured by the embassy. These companies have the potential to set up services operations here to support their exports also.

The recent New Zealand trade mission yielded new agreements in technical and consulting services related to geothermal energy, IT and healthcare systems. Lately, New Zealand shifted its exports to the Philippines from low value commodities like dairy powder, to more high-end products like yogurt and ice cream. Manufacturing great meat has also made way for the entry of premium-cut meat.

On tourism, Levermore noted that both countries have concluded an Air Services Agreement in March this year paving the way for local airlines to conduct direct flights between them.

Even in tourism, there are more Filipinos travelling to New Zealand than New Zealanders visiting Manila. Of the 25,000 two-way tourists, there are 15,000 Filipinos travelling to New Zealand as against 10,000 New Zealanders travelling to the Philippines.

The higher number of Filipinos going to New Zealand is largely due the growing number of Filipino immigrants, who are now the largest southeast Asian ethnic community in that country.

Another opportunity to improve two-way trade is the Free Trade Agreement between Asean and Australia-New Zealand. The Philippines bilateral trade level is also behind Singapore, Malaysia, Thailand and Vietnam.

“We have FTA so that should be a head start,” Levermore added.

Levermore blamed the low-level figure to the lack of awareness between two countries. To further promote bilateral relations between the two countries, the New Zealand embassy here will hold a three-day food and beverage trade fair starting this Friday.