go through Justin Ireland D. Table, reporter
The semiconductor and electronics industry of the Philippines Foundation (SEIPI) hopes to see at least export growth this year, as more investment is expected amid incentives and lower U.S. tariffs.
“We've been shrinking for two consecutive years. Now we're expecting flat growth, but we're optimistic and we might see some modest growth,” Seipi President Danilo C. Lachica told reporters Interval of Friday's activities.
“It could be a unit increase, maybe a 1-2% increase, just not flat,” he added.
Electronics were the highest commodity exports in the Philippines last year, accounting for 53.4% of its total exports.
In 2024, the Philippines exported $39.1 billion in electronic products, down 6.7% from $41.91 billion a year ago.
Mr Lachica said the industry is very optimistic this year as foreign companies are increasingly interested in positioning in the Philippines, due to business recovery and corporate tax incentives to maximize the use of the revitalization of the economy (create more) bill.
“There is a lot of interest because creating more is a big upgrade…but the first thing to overcome is that if we are going to know the country in the Philippines, then we have to promote our country,” he said.
“Then the second thing is…we need to show improvements in our operating costs, whether it’s power or logistics.”
But, he said, even if the investment is much higher, it will not immediately translate into an increase in manufacturing exports.
“But the good thing is that you are driving growth engines with these investments, which will eventually generate jobs and generate supply chains. So we look forward to that.”
Meanwhile, Mr Lachica said the 17% tariff rate imposed by the U.S. could encourage some companies in other countries with higher tariffs to see the Philippines for expansion.
Philippines exports to the United States face 17% tariffs, the second lowest tariff among the Federation of Southeast Asian Nations (ASEAN) members, behind Singapore's benchmark rate of 10%. Higher tariffs have been suspended until July.
“While we enjoy this best location, it's worrying about the intrinsic value of our exports. We are in assembly testing and packaging on the backend. That's why I'm looking to see commercial fabs.”
Seipi had previously proposed to the government to build a laboratory-scale fab, which is estimated to cost about $10 million.
“A lot of people still think we don’t need a fab…our suggestion is a desktop fab. [because] We are working hard to develop our integrated circuit design industry. ” he said.
He added: “We need a government agency to help us, a person who understands it. Then, it will be a combination of government funds and bank funds.”
According to Mr. Lachica, SEIPI will send proposals to the Department of Science and Technology as early as the end of May.
While the 17% tariff rate is lower than other ASEAN members, Mr Rachika said the Philippines should still negotiate a lower tax rate.
“We want to lower it further. Because … we don't know if it will stay 17%. After the negotiations, it's said and done everything, maybe other countries will even come out later.” “That's why we can't put anything on the table. We have to seize this opportunity as soon as possible, not negotiate later.”
Business Secretary. Cristina A.
Mr Rachika said the Philippines will have to exercise caution as the electronics sector imports 30% of raw materials from China.
“If China is slapped by rising tariffs, then their retaliation may block its export of materials.
“So if this escalates, 30% of our imports from China could be severely affected.”
If this happens, he said the Philippines will have to develop other sources.
Rafael Fernandez de Mesa, head of economic heritage at Aboitiz Infracapital, said tariffs would bring uncertainty and volatility, which could be “good for the Philippines”.
He told the panel: “Why do I think this is good? Because as a business, you are trying to manage this risk and volatility, and in an industry that is truly a global landscape, you need to diversify the risks and that's what the Philippines has to do.”
He added: “In a world of uncertainty and volatility, I think there will be more movement towards the Philippines. That's what we're starting to see in a month and a half: renewal, more accelerated interest.”
