Electronics firms hard-pressed to achieve $53.7 billion export target

MANILA, Philippines — The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) expressed difficulty in achieving $53.7 billion in electronics exports under the new export development roadmap, citing global economic and geopolitical issues.

In an interview with ANC yesterday, SEIPI president Dan Lachica said that under the newly launched Philippine Export Development Plan (PEDP) 2023-2028, the country hopes to grow electronics exports to $106 billion by 2028, accounting for 40 percent of the country’s total exports.

“But the thing is, we’re facing a major handicap even in 2023 because the projection is $53 billion. That target may be at risk for 2023,” Lachica said.

The $53.4 billion target for this year under the PEDP is 9.4 percent higher than the $49.09 billion exports registered last year.

“Hopefully we take some action, discuss what we could take to get back with that plan. I’m hoping again for proactive government conversations with them that would help them understand what the issues are,” Lachica said.

Under the PEDP, the country’s electronics and electrical exports are targeted to grow to $61.1 billion in 2024, $70 billion in 2025, $80.3 billion in 2026, $92.4 billion in 2027 and $106.4 billion in 2028.

In a Viber message to The Star, Lachica highlighted the issues currently affecting  the industry.  These include the 15 percent decline in electronics exports as of April due to “global economic factors, geopolitical conditions, supply chain challenges,” among others.

Figures from SEIPI’s website showed that electronics exports fell by 15.3 percent to $9.97 billion, 15.29 percent lower than the $11.77 billion electronics exports in the same period last year.

The decline was driven by the 74.8 percent decrease in automotive electronics exports to $9.27 million.

Despite the current contraction in electronics exports, Lachica said SEIPI is still retaining its five percent export growth target for this year.

“But you know, with the way the industry goes, the market changes. We’re still holding on to the five percent growth. We’re still being optimistic and hopefully, the demand will turn around, you know, when we approach the holidays and all that,” Lachica said. “But admittedly, it’s been tough.”

Lachica said the industry also continues to see the impact of the Russia-Ukraine war and other geopolitical factors.

“And of course, soaring costs in logistics, high cost of power and labor to consider the holidays,” he said.

Asked what could be done by the government to boost electronics exports, Lachica highlighted the need to address issues in incentives rationalization and workforce skills development.

“We hope to seek an audience with the Office of the President and Secretary Frederick Go,” Lachica said, referring to the presidential adviser on investment and economic affairs.

Lachica said earlier that their group had already spoken with the Department of Trade and Industry (DTI) and the Department of Finance (DOF).

He said that with the high operating costs in the Philippines, the local industry is at a disadvantage compared with neighbors Vietnam, Thailand and Malaysia, which have been significantly more successful in attracting FDIs.

Last year, Lachica said five companies opted to bring their $3.6 billion worth of investments to Vietnam, Thailand, and China instead of the Philippines due to concerns on the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), particularly the rationalization of fiscal incentives.

Under the CREATE, changes were made to the grant of incentives to make these performance-based, targeted, time-bound and transparent.

Qualified exporters will be able to enjoy four to seven years of income tax holidays, followed by 10 years of five percent special corporate income tax or enhanced deductions under the law, while domestic enterprises will be able to enjoy four to seven years of ITH to be followed by five years of enhanced deductions.