By Justine Irish D. Tabile, Journalist
PHILIPPINE EXPORTS of semiconductor and electronic products are anticipated to remain unchanged in 2025 due to a decline in demand, according to the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI).
SEIPI President Danilo C. Lachica announced that the board reaffirmed its previous expectation of a 10% decrease in semiconductor and electronics exports this year.
“We just concluded our board meeting last week. The 10% contraction projection for 2024 remains the same, while exports in 2025 are stagnant,” he mentioned in a Viber message on Monday.
Mr. Lachica expressed that exports are likely to stagnate in 2025 as the semiconductor and electronics sector is impacted by a “challenging business climate and diminished demand.”
Exports of electronic products constituted 55% of the Philippines’ total exports totaling $55.67 billion during the January-to-September timeframe.
Within the first nine months, the Philippines exported $30.6 billion in electronic products, representing a 2.2% decline from the $31.28 billion recorded a year prior amid weak demand.
When asked for insights, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the prospective protectionist policies of US President-elect Donald J. Trump and trade conflicts could impact Philippine exports, including electronic goods.
“Trump’s protectionist measures could result in elevated tariffs, while trade conflicts might hinder global trade and economic or business activities,” Mr. Ricafort stated in a Viber message.
In a report dated Nov. 25, GlobalSource analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac indicated that Mr. Trump’s proposal of imposing 60% tariffs on Chinese products and up to 20% tariffs on goods from other nations could negatively affect the Philippines’ exports to the US.
“The US is a key market for Philippine exports, accounting for an average of roughly 16% of total export trade over the past five years,” the analysts stated.
“Although the share of total exports has slightly tapered off due to the trade diversification strategy of the Philippine government in recent years, a further decline in exports to the US would certainly not be favorable for the nation,” they added.
Earlier, Mr. Lachica mentioned that the country requires more investments to enhance its export portfolio and increase its global competitiveness.
“One observation I heard during our trip to the US is that the Philippines has become complacent regarding the semiconductor and electronics industry, referring to prior administrations,” he stated in a panel discussion during the National Exporters Week on Dec. 4.
“In fact, we are witnessing substantial capital flight from the electronics sector due to incentive rationalization,” he noted.
Mr. Lachica shared that the “positive news” is that the Marcos administration is addressing the challenges regarding incentive rationalization through the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) initiative.
Last month, Mr. Marcos signed the Republic Act No. 12066 or CREATE MORE Act, aimed at enhancing the country’s fiscal incentives policies.
The CREATE MORE Act expanded the maximum period for availing tax incentives to 27 years from 17 years and reduced the corporate income tax for registered business establishments.
Mr. Lachica acknowledged government efforts to lower power and logistics costs through the Luzon Economic Corridor.
The Luzon Economic Corridor is being implemented through a trilateral agreement among the Philippines, US, and Japan. This effort is part of a larger partnership backed by the G7 Partnership for Global Infrastructure and Investment.
“Therefore, we are quite hopeful, at least from the industry’s viewpoint, to assert that the Philippines is making a comeback,” he stated. “Naturally, there are additional challenges we must tackle. However, the business landscape has improved, infrastructure is developing, and power supply is getting better, which I believe is a strong message to our partners to reassess the Philippines.”