The textile and garment sector in the Philippines is a vital part of the country's economy. It has 320,000 employees, making it the largest employer in the manufacturing sector with 11% of the national total. An additional 700,000 people are employed as home-workers and small sub-contractors. The industry expanded rapidly during the 1960s and 1970s but has recently experienced a decline. This has been due mainly to tougher conditions in export markets and a failure to invest in new manufacturing technology. Exports have been a key driver of growth in the past. The country used to be one of the largest sources of imported garments for the major markets of North America and Western Europe when exports from its major competitors were held back by quotas. However, the arrival of a new world trade regime at the beginning of 2005 has caused serious damage to the country's international competitiveness. As a result, China and other Asian countries are capturing an increasing share of these markets. Even so, in 2005 the textile and garment sector was the Philippines' second largest source of export earnings with a 6.2% share, although this was down sharply from 10% in 1997. There is an urgent need for the industry to restructure into larger manufacturing units, and to re-equip itself with modern high-tech machinery in order to secure greater economies of scale, higher productivity and an improvement in its competitiveness. On an encouraging note, there has been a substantial increase in foreign investment in the past five years. Much of this has come from other Asian producers who, more and more, are regarding the Philippines as an attractive location for textile and garment activities. Research and investment is also going into the development of indigenous fibres-such as abaca, banana, pineapple and silk-in order to ease the country's serious lack of locally sourced raw materials. | 
