MANILA – The Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) on Wednesday said that while electronics exports will be flat this year, this is still "remarkable" given the slowdown in the global economy and geopolitical tensions.
"The main reason is global economic (slowdown) and geopolitical (tensions). First, we got the Ukraine and Russia war, now we have the (Israel-Hamas) war. One way or another, we are seeing the impact on the supply chain but there's also the lower global demand," SEIPI President Dan Lachica said at a press briefing during the 18th Philippine Semiconductor and Electronics Convention and Exhibition (PSECE) at the World Trade Center Manila.
"Initially, we started the year with a growth projection of 5 percent but with the guidance of the (SEIPI) Board, we lowered that down to at least be flat," he added.
SEIPI said electronics exports reached an all-time high of USD49.09 billion in 2022.
For the first eight months of the year, data from the Philippine Statistics Authority (PSA) showed that electronics exports reached USD26.8 billion, down by 4.8 percent from the USD28.19 billion in the same period last year.
"The first two quarters we've really been clobbered," Lachica said.
He said electronics exports declined by 15 percent in the first quarter of the year, followed by another 7 percent contraction in the second quarter.
Lachica said exports in the third quarter will likely be down by 3 to 4 percent.
"So we're gonna close it flat by the end of the year. When we said that we're gonna be flat, to put in perspective, flat compared to 2022 which is USD49.09 billion, a high record for the Philippines. Reaching (that) would still be an achievement but obviously, we want to reach USD50 billion," he added.
The Philippine semiconductor and electronics sector is one of the largest contributors to the country's manufacturing sector. The industry currently employs more than 3 million direct and indirect workers.
Amid the challenging domestic and global environment, Lachica said SEIPI is in talks with the government on how to further lower costs.
"We are talking to the government every opportunity we get, we're still encouraging them to consider how we can lower those costs," he said.
SEIPI Chairman Pery Ferrer, for his part, said they are currently working with several government agencies to amend certain provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
"One of these is the provision to bring back cross-border doctrine. A lot of the locators are inside economic zones and the cross-border doctrine protects them. It is a separate customs territory," he said.
Ferrer said that aside from this, SEIPI also wants to give the incentive authority back to investment promotion agencies (IPAs).
CREATE mandates the cabinet-level Fiscal Incentives Review Board (FIRB) to oversee the grant and administration of IPAs.
The FIRB has delegated to IPAs the grant of tax incentives for registered projects or activities with investment capital of PHP1 billion and below. (PNA)