Growth target still ‘comfortable’ — SEIPI

THE PHILIPPINE electronics industry is holding on to an export growth target of about six percent this year as the negative factors that weighed on sales in 2016 have dissipated and demand from foreign markets has improved.

Danilo C. Lachica, president of Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI), said investors have turned optimistic.

“There was electronics demand last year,” he said, but noted that President Rodrigo R. Duterte’s formerly surprising tirades against the United States and the European Union right after he assumed office at the end of June last year had caused “conservatism” and “concern” among SEIPI members’ clients and partners.

“They held back investments. They held back orders.”

Mr. Lachica — who was reported in April as saying that SEIPI had yet to adjust its growth target for the year — made the statement in a press conference at the sidelines of the 14th Philippine Semiconductor and Electronics Convention and Exhibition at SMX Convention Center in Pasay City.

Latest available Philippine Statistics Authority data show electronics export revenues grew 11.6% annually to $10.098 billion in the four months to April, baring recovery from 2016 that showed sales slipping 0.114% to $28.871 billion for the entire year from 2015’s $28.904 billion.

Mr. Lachica reiterated SEIPI’s projection of $ 30- 31 billion in revenues for 2017.

He said the situation has stabilized and that SEIPI members’ partners and clients were convinced that their fears last year were unfounded.

Adding to the industry’s optimism are talks about companies going digital, the Internet of things and cybersecurity, which he said could be a boon for exporters.

“You’re going to need electronics components for that. And globally, the demand for electronics is [ growing] 6-7%,” he said.

“All these make us feel comfortable that we’re going to hit the five percent, six percent [target].”

“Investors have seen what’s happened last year,” he said.

“It’s still business as usual. Investments continue to come in.”

Mr. Lachica said the annual conference this year has the most number of exhibitors in its history at 250. China participated for the first time with 13 companies, he said. He also cited countries with more exhibitors, including Germany with 11, Taiwan with 10 and Singapore with 26.

“That gives indicators that notwithstanding martial law [in Mindanao], Resorts World [incident], confidence is very strong,” he said.

Sunil Banwari, ON Semiconductor Philippines, Inc. vicepresident for manufacturing and country manager, backed Mr. Lachica’s optimism, citing his company’s first-quarter performance.

“The first quarter is typically always slow. For the first time, the first quarter is stronger than the fourth quarter,” he said about the company’s performance in the Philippines.

He added that factories were running at full capacity, which he said was true for many of those in the semiconductor industry. He declined to give figures.

Beyond this year, the industry is more concerned about the possibility that the incentives SEIPI members are enjoying will be withdrawn in line with the government’s move to rationalize the fiscal perks it offers.

Mr. Banwari said the company’s head office was concerned about the country’s tax reform bill and that it was “taking a hard look” at its impact on business.

The Arizona-based company employs around 7,000 workers in its facility at the Golden Mile Business Park Special Economic Zone in Carmona, Cavite.

“It ( tax reform) won’t affect us this year, but seriously in the coming years,” he said.

“We are expecting an estimate 40% increase in costs for all SEIPI companies.”

Saturnino G. Belen, Jr., who chairs First Asia Ventures Capital, Inc., also raised concern about the tax reform bill, which the House of Representatives approved last month. His venture capital company mobilizes investments in Philippine-based businesses.

“Sometimes people forget that in the electronics business most of our output is exported,” he said.

“If [industry output is for] local consumption, by all means subject it to the same tax.”

He said other countries are also offering incentives for exporters, and withdrawing what the government currently offers to the local industry would make it less competitive.