January 10, 2020
Diversifying and managing the use of energy sources in the Philippines should be further strengthened to avoid potential supply shocks amid a slow recovery of global trade, the National Economic and Development Authority (NEDA) said.
This statement is in line with today’s report of the Philippines Statistics Authority (PSA) that total merchandise trade continued to decline, dropping by 5.3 percent in November 2019. Both exports and imports of goods fell by 0.7 percent and 8.0 percent, respectively, in the same month.
Exports declined due to lower shipments of agro-based products, petroleum products, and the flat growth in manufactures. Imports also decreased because of lower inward shipments for unprocessed and semi-processed raw materials, including manufactured goods.
“Global trade growth is poised to a slow recovery despite the easing of trade tensions between China and the US. The heightened conflict between the US and Iran and its impact on oil prices could result in increased cost of production for domestic-oriented as well as export-oriented firms,” said Socioeconomic Planning Secretary Ernesto M. Pernia.
The Philippines still imports majority of its petroleum supply from the Middle East region, particularly Saudi Arabia, United Arab Emirates, and Kuwait. This is despite indications that the country’s trade exposure to the leading trading partners in the Middle East are small relative to the country’s total trade.
“However, looking at the structure and pattern of imports of crude petroleum to the Philippines indicate that the country has diversified its source of crude petroleum in recent years, such that the level of vulnerability to supply shocks has been slightly reduced,” the Cabinet official said.
The Philippines has increased its inward shipments of petroleum oil from other territories, particularly, South Korea, Malaysia, and Russia.
“In the long term, strengthening the capability of the country to provide alternative fuels and tapping new and advanced energy technologies are effective steps to diversify and manage the country’s utilization of energy sources, as well as insulate the domestic economy from potential supply shocks that would have far reaching ramifications,” said Pernia.
In its sectoral plans and roadmaps, the Department of Energy identifies a number of initiatives towards increasing the country’s energy resources. These include geothermal, hydro, solar and wind, among others, which will substantially lessen the country’s dependence on petroleum.
Pernia added that on top of these initiatives on energy sources, the government should also continue developing industries and encouraging investments in key sectors to provide more employment opportunities for Filipinos.
“The promotion of innovation and continuous support to entrepreneurs will provide better and quality jobs that will entice professionals currently working abroad to relocate to the country even in the absence of conflict,” he said.