Electronics exports seen to grow steady

MANILA, Philippines — The electronics and semiconductor industry expects exports to post a five to six percent growth this year, the same pace projected last year, amid concerns on government’s plan to tweak incentives given to investors. 

“During our November board meeting, we agreed on another five to six percent growth, driven by automotive electronics and industrial products, but tempered by concerns with the final version of TRAIN (Tax Reform for Acceleration and Inclusion) 2 provisions on incentives,” Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) president Dan Lachica said in a text message, when asked for an outlook on how much electronics exports would grow this year. 

TRAIN 2 or the Tax Reform for Attracting Better and Higher Quality Opportunities (TRABAHO) bill, approved on third and final reading at the House of Representatives, seeks to reduce the corporate income tax gradually to 20 percent by 2029 from 30 percent at present, and modernize fiscal incentives given to investors. 

Part of the changes in the incentives regime under the proposed measure is to remove the five percent tax on gross income earned (GIE) paid by firms registered with the Philippine Economic Zone Authority (PEZA) in lieu of all national and local taxes after they have utilized their income tax holidays. 

SEIPI is concerned about the changes being proposed through TRAIN 2 or the TRABAHO bill as many of its members are registered with the PEZA and enjoy the five percent GIE incentive. 

Lachica said earlier investments of some member companies have either been put on hold or transferred to other countries given concerns on the TRABAHO bill. 

He said the SEIPI wants to keep the status quo for PEZA as it has been effective in attracting investments to the country. 

For last year, he said the industry was on track to meet the six percent growth projection for electronics exports. 

“While major expansions were stymied by concerns with the proposed changes in investment incentives, demand for components and devices required by new technologies such as IoT (internet of things), AI (artificial intelligence), VR (virtual reality), AD and Smart devices, sustained growth for the short term,” he said. 

The country’s electronics exports hit an all-time high of $32.70 billion last year.

Electronics are the country’s biggest merchandise exports. 

Data from the Philippine Statistics Authority showed the country’s electronics exports went up 5.20 percent to $31.71 billion in the January to October period from $30.14 billion a year ago.