Subsidize QMS certifications of small exporters, gov’t urged

The Philippine government can help its small to medium-scale exporters by subsidizing expenses for quality management system certifications required by markets such as the European Union (EU).

Federico Escalona, executive director of the Philippine Exporters Confederation, Inc. (Philexport)-Cebu, made this suggestion so that more small-to medium-scale exporters could penetrate the EU market.

Escalona said that the EU had given the country a gift by granting zero tariffs on strategic exports, but this had not been fully taken advantage of due to stringent requirements set by the 28-member bloc to penetrate its market.

“The problem is that they are very strict. They ask for so many requirements. Number one is the quality management system. That’s something small- to medium-scale enterprises can’t afford,” he told reporters at the sidelines of a consultation on the proposed Philippine-EU free trade agreement in Cebu City last week.

EU-GSP+

In December 2014, the EU granted the Philippines zero tariffs for 6,209 product lines under its Generalized System of Preferences Plus (EU-GSP+). Among the requirements the EU has set for countries that wish to export their products to its 28-member states is the Quality Management System (QMS) certification.

QMS certification

A QMS is a collection of business processes focused on consistently meeting customer requirements and enhancing their satisfaction, and is aligned with the company’s purpose and strategic direction.

Escalona said that a QMS is based on a company’s processes and that every process has to be documented. For high-tech and capital- or labor-intensive companies, expenses for QMS certification would be higher compared to those of SMEs.

However, he said that even SMEs have a hard time complying with this requirement due to lack of capital.

In Central Visayas alone, Escalona said that only 10 percent of exporters have the capability to secure QMS certification and have no problem penetrating the EU market.

Requirements

Other requirements set by the EU for trading with other countries under the GSP+ are sound human rights practices, absence of child labor in the company, as well as the presence of a corporate social responsibility.

“It would be a good idea if the government subsidized the small businesses in terms of quality system certification,” said Escalona.

He said that in Thailand, the government subsidizes a portion of fees required for QMS certification and makes it easier for SMEs to export products to markets such as the EU.

4th largest partner

The EU is the Philippines’ fourth largest trading partner with bilateral trade amounting to around P738 billion. On the other hand, the Philippines is EU’s sixth largest trading partner in the ASEAN region and 44th worldwide.

Among the major exports of the Philippines under the EU-GSP scheme include crude coconut oil, canned tuna, and spectacle lenses.

Negosyo centers

Trade Assistant Secretary Anna Ma. Rosario Diaz-Rebeniol, for her part, said the government knows what local exporters are going through and that they are looking for ways to help them.

“Right now, we are looking at ways to help capacitate our export sector,” she said as a response to Escalona’s concern.

She referred them to the Department of Trade and Industry’s (DTI) Negosyo Centers which are spread all over the country where they can get expert advice on exports.

Rebeniol added that they are currently looking for more experts to help boost the capacity of SMEs to penetrate the EU market.