MANILA – Lower inbound shipments of capital goods pulled down merchandise imports, offsetting year-on-year gains in mineral fuels and lubricants, raw materials and intermediate goods and consumer goods in June 2014, according to the National Economic and Development Authority (NEDA).

The value of imported capital goods recorded a 27.2 percent decline, from US$1.4 billion in June 2013 to US$1.0 billion in June 2014. This marked its fifth consecutive month of contraction since February 2014.

“Efforts should be firmed up to encourage businesses to invest more on capital goods. These are crucial for increasing the global competitiveness of domestic firms in the Philippines,” said Economic Planning Secretary and NEDA Director-General Arsenio M. Balisacan.

Total payments for imported goods in June 2014 amounted to US$4.7 billion, down by 3.6 percent from US$4.9 billion in June 2013. In view of the lower imports growth relative to the 8.3 percent expansion in exports from January-June 2014, trade-in-goods deficit narrowed to US$1.5 billion from US$2.2 billion a year ago.

“The decline in the country’s imports of capital goods is a concern that needs to be addressed,” Balisacan said. “In part, the problem of port congestion in Manila may be a contributing factor and should be expeditiously resolved. Logistical issues result in additional cost to both producers and consumers, especially for raw materials and capital goods intended for production as well as food and other non-durable items for consumption,” he added.
Balisacan noted however that on a cumulative basis, the performance of merchandise imports for the first semester of 2014 remains in line with current economic conditions.

“The 5.4 percent growth in import payments for the first semester of 2014 is a significant turnaround from the 3.4 percent decline recorded in the first semester of 2013. From January-June 2014, import payments reached US$31.3 billion from US$29.8 billion in the same period in 2013,” he said.

The People’s Republic of China remained the top source of the country’s imports with a 17.2 percent share, amounting to US$809.6 million. Second was South Korea with a share of 9.8 percent, followed by Japan (9.6%), United States of America (7.6%), Singapore (6.8%), Saudi Arabia (5.8%) Thailand (5.5%), Malaysia (5.3%), Taiwan (4.7%) and Russia (4.3%).

The value of imported goods from ASEAN member countries accounted for about 23.3 percent (US$1.1 billion) of the country’s total merchandise imports while the European Union supplied US$357.8 million or about 7.6 percent of the country’s total import requirements in June 2014.