More handicraft companies are relocating to the provinces as the rising cost of doing business in Metro Manila causes them to lose their competitive edge.

“To keep operating in Metro Manila would be a suicide. You have a very expensive environment here, you have the highest electricity, water and labor cost,” said Dennis Orlina, president of the Philippine Chamber of Handicraft Industries, Inc. (PCHI).

Orlina said bringing business operations in the provinces can be a practical alternative, as they expect to reduce their operation cost by as much as 20 percent.

“With this, we can be more competitive. It is a lot easier to monitor operations in a cheaper work environment,” he said.

Orlina said some of Manila companies are transferring to the Cottage Industry Technology Center (CITC) located in the provinces.

The CITC is a line agency of the Department Trade and Industry (DTI) that provides production-related training and technical assistance for furniture, gifts and housewares, fine jewelry and leather footwear industries all over the country.

Orlina said the Philippine Economic Zone Authority (PEZA) recently approved CITC’s accreditation being a PEZA zone.

An enterprise registered with PEZA and operating within a PEZA zone gets to enjoy certain tax incentives, he added.

“We can encourage local producers to be exporters, we can now train especially our members who are just producing and not exporting,” he said.

Orlina also cited other benefit of relocating in the provinces. Handicraft business owners can be more involved in the value chain –the farmers-, which can improve their supply chain.

To mitigate the impact of high electricity cost on their operations, he bared that they are embarking on a project using bamboo as an alternative to fuel.

“If we can come out with electric generating plants using charcoal bamboo, we would have reduced our electricity cost even in the provinces,” Orlina said.

With these cost-cutting measures being implemented, Orlina said industry players are optimistic of achieving a 10-percent increase in export sales in 2012 from last year’s $90-million revenues.

— Danielle Venz, REPOSTED FROM PHILEXPORT News and Features

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