Philippines textile urged to diversify to survive MFA end

The Philippine garment and textile industry will need to consolidate and diversify if it is to survive once the international multi-fibre arrangement (MFA) is phased out in January, an industry executive said on Tuesday.
Chona Felix, divisional head for trade policy with the Garment and Textile Export Board, told AFP that the ending of the agreement would have an impact on the local Philippine industry.
Garments and textiles are the Philippine's second biggest revenue earner next to electronics and contribute about eight percent to the country's total export earnings.
Last year garment and textile exports were worth 2.8 billion dollars.
According to Felix there are over 1,000 garment and textile manufacturers in the Philippines employing over 400,000 people.
"There is no questioning the fact that the industry will have to consolidate and diversify if it is to survive," she said.
"Many of the small to medium-sized manufactuers will probably leave the industry while the bigger firms consolidate, and we hope, absorb some of the workers who will find themselves out of work."
Felix admitted that many industry players are not sure just how big an impact the ending of the MFA will have and said "many are adopting a wait and see attitude.
"There is no way the local industry can compete with China in say basic garments but we can diversify into other areas of the industry which require value added skills and services, and into niche areas."
Some 76 percent of garment and textile exports from the Philippines go to the United States.
The MFA, established in 1975, allocates quotas of clothing and textiles that developing nations with cheap labour can export to rich countries.
A study by McKinsey consultants for DHL released in India this month showed China could account for half the world's clothing and textile exports by 2008, up from 21.6 percent in 2000, with the ending of the MFA.
The rest of Asia would see their share of the world trade fall to 20.1 percent in 2008 from 31.9 percent in 2000, according to the report.