The Philippine electronics industry is projecting a 7 percent rebound in exports this year back to the 2019 level at $43.3 billion on strong demand following shortages of automotive electronics for some of the world’s car giants and the prospects of more favorable incentives provision under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law.
Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) President Dan Lachica said the “Seven percent growth projection bodes well for the industry recovery, especially coming out of a contraction in 2020.”
Lachica said this would be a big turnaround from the projected 5-10 percent contraction in exports in 2020 because of the impact of the COVID-19 pandemic that disrupted global supply chains.
The Philippine Statistics Authority (PSA) normally releases the final exports performance in a year two months after or by February 2021. As of November, the country’s electronics exports figure was at $35.8 billion level.
Assuming, 2020 contracted by 5-10 percent this should translate to $41.13 billion-$38.9 billion exports from $43.3 billion in 2019. Hence, the 7 percent growth projection this year could reach $43.09 billion, almost the same level in 2019. Semiconductor accounts for 70 percent of the country’s overall electronics exports.
Lachica explained that the shortage in automotive electronics was actually triggered by the shutdown if not the impairment of the supply chain early in March to April last year. “But since then, we’re starting to recover,” he said.
Some of the global electronics firms in the country that also supply components for the automotive industry include Texas Instruments, Amcor, and Rohm, among others.
Aside from strong demand in automotive electronics, Lachica said “We have also seen strong demand for industrial/commercial as well as medical electronics.”
With the pandemic continues to haunt economies, Lachica said “I don’t think we can actually claim a normal supply chain, but certainly the industry is doing its best to augment its capacity, so we can provide the needs of the global market, whether it’s automotive medical electronics or industrial, commercial products.”
Despite the global situation, Lachica said that demand has recovered because of the needs of the times like distance learning or working from home that requires electronics components for data hardware and cybersecurity and the automotive, especially for electric vehicles, as well as medical electronics.
Actually, he said, the demand has always been there it just slowed down a bit and is starting to recover.
In terms of investments, Lachica said that the Philippines has not really captured the relocations and expansions of electronics firms that mostly went to Vietnam.
But he expressed hope that once the CREATE Bill is passed into law it will incorporate attractive features that would be more favorable in attracting investments.
“We have to be competitive given our high operating costs. We have to be competitive with Vietnam and incentives is one way to offset our high operating costs,” he added.
In addition, he expressed hope that the new US Administration of President-elect Joe Biden will continue to support investments in the Philippines. He noted that analysts are divided in terms of risks on how the new US president will handle relations with China. Biden is seen to be friendlier to China as opposed to Trump’s open belligerence against its economic rival.