1. Isabelita M. Pabuayon University of the Philippines Los Banos IUFRO All Division 5 Conference Forest “Production and Environment – A Productive Symbiosis” October 29-November 2, 2007 Taipei, Taiwan The Changing Structure of the Philippine Non-Wood Furniture and Handicraft Industries: Marketing, Trade and Policy Implications

2. To analyze the structural changes occurring in the Philippine non-wood furniture and handicraft industries To analyze the structural changes occurring in the Philippine non-wood furniture and handicraft industries To identify the policy implications and provide a framework for NWFP competitiveness To identify the policy implications and provide a framework for NWFP competitiveness purpose paper of the

3. Philippine Forestry Statistics, Department of Environment and Natural Resources (DENR) Philippine Forestry Statistics, Department of Environment and Natural Resources (DENR) Department of Trade and Industry (DTI) Department of Trade and Industry (DTI) Philippine Rattan Marketing Study - Pabuayon et al 1988 Philippine Rattan Marketing Study - Pabuayon et al 1988 Philippine Rattan Sector – Pabuayon et al 1996, INBAR Philippine Rattan Sector – Pabuayon et al 1996, INBAR Philippine Bamboo Sector – Rivera et al 1996, INBAR Philippine Bamboo Sector – Rivera et al 1996, INBAR Bamboo Master Plan – Pabuayon et al 1997, DTI Bamboo Master Plan – Pabuayon et al 1997, DTI State of Philippine Furniture Sector Report – Pearl2, 2004 State of Philippine Furniture Sector Report – Pearl2, 2004 Philippine NTFPs: Status and Strategies, Pabuayon, 2005 Philippine NTFPs: Status and Strategies, Pabuayon, 2005 FRAME Philippines Rattan Value Chain Study – USAID, IRG, Enterprise Works/VITA 2006 FRAME Philippines Rattan Value Chain Study – USAID, IRG, Enterprise Works/VITA 2006 sources data of

4. Livelihood for upland and rural communities and industries Livelihood for upland and rural communities and industries - 15,000 gatherers - 2,000 handicraft and 15,000 furniture manufacturers - 768,000 workers and subcontractors Foreign exchange - 98% of total NWFPs Foreign exchange - 98% of total NWFPs - B&R furniture, chairs, seats, basketware/wickerware Rural housing, materials and infra for agriculture and fishing sectors Rural housing, materials and infra for agriculture and fishing sectors Unmarketed environmental services Unmarketed environmental services howsignificant

5. Declining comparative and competitive advantage due to dwindling raw material supply and increasing labor costs Declining comparative and competitive advantage due to dwindling raw material supply and increasing labor costs Impacts on Impacts on - input sourcing and utilization - product designs - capacity utilization - market shares changing structure industry

6. All raw materials previously locally sourced, cutting permits increasing until 2000 with 370 but dropped to 32 in 2005 All raw materials previously locally sourced, cutting permits increasing until 2000 with 370 but dropped to 32 in 2005 Increasing raw material imports (estimated at 14% of current use) Increasing raw material imports (estimated at 14% of current use) inputsourcing

7. High US$1.50M Low US$0.39M

8. Major B&R imports: Raw materials

9. From 99% pure rattan or bamboo to greater use of smaller diameter and combination of rattan or bamboo and other materials (wood, metal, indigenous fibers) From 99% pure rattan or bamboo to greater use of smaller diameter and combination of rattan or bamboo and other materials (wood, metal, indigenous fibers) Greater product diversification Greater product diversification Has remained generally labor-intensive from raw material harvesting to quality control and packaging of final products for delivery to markets, some degree of mechanization in certain manufacturing stages for large firms Has remained generally labor-intensive from raw material harvesting to quality control and packaging of final products for delivery to markets, some degree of mechanization in certain manufacturing stages for large firms inpututilization

10. Capacity utilization for furniture firms from over 90% (1987 survey) to 57-77% (2004 survey) Capacity utilization for furniture firms from over 90% (1987 survey) to 57-77% (2004 survey) Predominantly small and medium-scale Predominantly small and medium-scale Majority locally-owned, others partly-owned by foreign nationals Majority locally-owned, others partly-owned by foreign nationals 60% of output from Cebu 60% of output from Cebu Employ male and female workers Employ male and female workers Up to 80 of production through sub-contracting arrangements Up to 80 of production through sub-contracting arrangements 60-90% of output for export 60-90% of output for export Target mid-range to high-end market segments Target mid-range to high-end market segments productioncapacity

11. philippines modern sunvalleyrattan

12. philippines innovative sunvalleyrattan

15. 1978-1985:  38%/yr 1995-2006:  5%/yr

17. High US$7.74M Low US$3.95M

18. High US$129M Low US$66M

19. Total US$287M Total US$275M Declining share of B&R furniture: rattan 73% of US$130M (1987)

20. High US$78M Low US$52M

21. 1997-1998 (70+ countries) N America49.12% N America49.12% C America 0.06 C America 0.06 S America 1.64 S America 1.64 E Union30.85 E Union30.85 E Europe 0.00 E Europe 0.00 W Europe 0.43 W Europe 0.43 Japan/Australasia10.72 Japan/Australasia10.72 ASEAN 1.19 ASEAN 1.19 China/Korea 1.41 China/Korea 1.41 Middle East 1.85 Middle East 1.85 Africa 0.61 Africa 0.61 Caribbean 1.90 Caribbean 1.90 Others 0.26 Others 0.26 2005-2006 (90+ countries) 66.22%+ + 66.22%+ + 0.53+ 0.53+ 1.03_ 1.03_ 14.83_ _ 14.83_ _ 0.18 + 0.18 + 1.01 + + 1.01 + + 9.10_ 9.10_ 0.74_ 0.74_ 1.29_ 1.29_ 3.60+ + 3.60+ + 0.43_ 0.43_ 1.06_ 1.06_ market diversification

22. USA61.31% USA61.31% Japan 5.10% Japan 5.10% Australia 3.37% Australia 3.37% Hawaii 2.74% Hawaii 2.74% Italy 2.42% Italy 2.42% Great Britain 2.22% Great Britain 2.22% Spain 2.21% Spain 2.21% France 2.08% France 2.08% Canada 1.79% Canada 1.79% Netherlands 1.58% Netherlands 1.58% Total84.80% top 10 markets

23. Around US$180 million export industry Around US$180 million export industry Domestic market Domestic market potential value

24. Seek new opportunities for displaced workers and small operators Seek new opportunities for displaced workers and small operators Address the declining competitiveness Address the declining competitiveness Need for more organized and concerted courses of action Need for more organized and concerted courses of action Investments in human and capital resources Investments in human and capital resources implications

25. Superior craftsmanship for medium and high-end market segments Superior craftsmanship for medium and high-end market segments Growing domestic market Growing domestic market Enhanced environmental awareness (ecotourism and green markets) Enhanced environmental awareness (ecotourism and green markets) B&R are renewable resources B&R are renewable resources Integration of plantation development in CBFMs Integration of plantation development in CBFMs Continuing R&D in production, processing and utilization Continuing R&D in production, processing and utilization Adaptation strategies in sourcing and use of alternative raw materials Adaptation strategies in sourcing and use of alternative raw materials Liberalized trade (access to markets and imported inputs) Liberalized trade (access to markets and imported inputs) Government support for SMEs Government support for SMEs challenges opportunities and

26. Cost Quality COMPETITIVENESS Flexibility Time productivity efficacy innovationvalues NWFP competitivenessframework

27. thank you