Don’t look now, but an industry that used to generate $300 million a year from exports is now in dire straits, and urgently needs government support.
This is the furniture manufacturing industry, which is largely dependent on exports, and they are requesting the Department of Trade and Industry to help them.
What is the problem?
The furniture exporters have received an unprecedented volume of cancellation of orders from abroad due to fears of a recession that altered spending patterns and drove down demand in two of the Philippines’ biggest markets.
The industry now expects orders for furniture from the United States and Europe to slump by 25 percent this year from about $200 million in 2021.
Before the pandemic, Philippine exports of furniture, such as wooden tables, chairs, desks and cabinets, amounted to $300 million.
Local furniture makers cannot export more because of the lack of international certification of the wood used for furniture.
It is the Forest Stewardship Council (FSC), a Germany-headquartered nonprofit organization set up in 1993 to promote responsible management and sustainability in the world’s forests through certification that is recognized in many countries as part of their environmental policy.
FSC certification ensures that wood products come from responsibly managed forests that provide environmental, social and economic benefits. It has certified more than 80 million hectares of forests in over 100 countries.
Since most local furniture suppliers in the Philippines get wood from sources that are not certified by the FSC, the United States and European countries do not want to buy furniture made with those materials.
Philippine furniture makers wanting to tap export markets have to buy wood from nearby countries such as Vietnam, Indonesia and Malaysia where FSC certification is available.
So how can the national government help the industry?
It can do so by coordinating with the FSC to set up a local office in the Philippines to ease the regulatory burden on exporters.
This would help eliminate or at least reduce the need for local furniture makers planning to export their products to import FSC-certified wood from other countries.
Local furniture makers must fully accept this certification requirement so they can have more exposure to the international market.
The Philippines has some 15,000 furniture firms, of which more than 80 percent are in the small and medium enterprise (SME) category, employing some 800,000 workers. They are concentrated in the National Capital Region, Cebu and Pampanga.
Furniture exports from the Philippines peaked in 1999 when local firms shipped more than $381 million to foreign buyers.
This went on a downtrend due to the world financial crisis that dampened global demand and stiffer competition from other countries such as China.
Can the DTI help them recover from the slump?