SEIPI sees 26% decline in exports this year

Published August 1, 2020, 10:00 PM

by Bernie Cahiles-Magkilat

The semiconductor and electronics industry is not optimistic of regaining the 15 percent production volume that multinational firms shifted to other plants outside the country.

Dan Lachica, president of the Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI), in a webinar presentation organized by the German Chamber of Commerce of the Philippines explained that MNCs have different plants all over the country to diversify sourcing to avoid single- country risk.

“No, I don’t think so,” he flatly said as to the possibility of bringing back the production volume the Philippines lost to other countries such as Vietnam and Thailand.

Likewise, Lachica said the industry expects a 26 percent decline in exports this year and a similar 26 percent drop in imports. The projected decline in exports is a reversal of its original 5 percent growth target.

Earlier this year, electronics firms operating in the Calabarzon area had been halted with the eruption of the Taal Volcano. This was followed by lockdown in mid-March, crippling the supply chain for SEIPI members.

Lachica was not also optimistic the Philippines can sway Japanese firms leaving out China back to Japan or to Southeast Asia. He said Vietnam has attracted the labor-intensive projects while Thailand gets the capital-intensive electronics ventures.

He urged the Philippines to focus on semiconductor integrated circuits for smart sensors and value-added IC design services.

The downturn in the electronics industry, which accounts for 60 percent of the country’s merchandize exports, is expected to take a toll on overall exports as electronics account for 60 percent of the country’s merchandize exports.

Last year, the industry exported $43 billion, up 4 percent from $41.63 billion in 2018.

The industry also contributes 22 percent to GDP from the production output, purchase of inputs and distribution of its products.

Lachica explained that a P1 increase in export sales generates at least 0.12 cents additional indirect taxes in the economy. A P1 increase in export sales also generates 0.11 to 0.25 cents additional household income in the economy.  A P1 billion increase in investments creates about 620 to 1,408 additional quality jobs to the economy. To date, the industry employs over 3 million direct and indirect workers.