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By Justine Irish D. Tabile, Reporter
THE Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) is anticipating at least a slight increase in exports this year as further investments are expected to be realized due to improved incentives and reduced US tariffs.
“We have contracted for two consecutive years. Now we have forecasted stagnant growth, but we are hopeful that we may witness some slight growth,” SEIPI President Danilo C. Lachica informed journalists on the sidelines of an event on Friday.
“It could be a single-digit increase, perhaps 1-2% growth, just not stagnant,” he continued.
Electronic products were the leading commodity export of the Philippines last year, representing 53.4% of its total exports.
In 2024, the Philippines exported $39.1 billion of electronic goods, declining 6.7% from $41.91 billion the previous year.
Mr. Lachica expressed that the sector is fairly optimistic this year as there is rising interest from foreign companies to set up operations in the Philippines due to the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act.
“There has been considerable interest because CREATE MORE is a significant enhancement… but the first hurdle is whether the country we will approach is aware of the Philippines, so we need to promote our nation,” he stated.
“And then the second issue is… we must demonstrate improvements in our operating costs, whether that’s related to power or logistics.”
However, he noted that even if investments surge, it will not immediately result in a rise in manufacturing exports.
“The positive aspect is that you are fueling the growth engine with these investments, which will ultimately create jobs and establish the supply chain. So, we are looking forward to that,” he added.
Simultaneously, Mr. Lachica pointed out that the 17% tariff imposed by the US could motivate some firms from other nations with higher tariffs to consider the Philippines for expansion.
Philippine exports to the US encounter a 17% tariff, the second lowest among Association of Southeast Asian Nations (ASEAN) member states after Singapore’s baseline rate of 10%. The elevated tariff has been suspended until July.
“While we enjoy this favorable position, what’s troubling is the intrinsic value of our exports. We’re focused on back-end assembly testing and packaging. That’s why I hope to see a commercial wafer fab,” he noted.
SEIPI had previously proposed to the government the establishment of a lab-scale wafer fab, which is estimated to cost around $10 million.
“Many people still believe that we do not require a wafer fab… Our proposal is a compact wafer lab [because] we aim to expand our integrated circuit design industry,” he remarked.
“We need a government agency to assist us, someone who comprehends our needs. Then, it’s going to involve a combination of government funding and bank financing,” he added.
According to Mr. Lachica, SEIPI plans to submit a proposal to the Department of Science and Technology as early as the end of May.
Although the 17% tariff is lower compared to those imposed on other ASEAN members, Mr. Lachica emphasized that the Philippines should still seek a reduced rate.
“We aim to work on further reductions. Because… we don’t know if it will stay at 17%. Once all negotiations conclude, possibly later other nations will balance out,” he stated. “That’s why we cannot leave opportunities unexploited. We must seize this chance sooner rather than later to negotiate.”
Trade Secretary Ma. Cristina A. Roque and Special Assistant to the President for Investment and Economic Affairs Frederick D. Go will be in Washington from April 29 to May 2 for tariff discussions with their US counterparts.
Mr. Lachica mentioned that the Philippines must proceed cautiously as the electronic sector imports 30% of its raw materials from China.
“If China faces excessively high tariffs, then their form of retaliation might involve withholding materials they export. For instance, rare earth elements and rare metals; already one of our members is unable to secure their supply of magnets,” he said.
“Thus, if this escalates, the 30% we import from China could be significantly affected,” he continued.
If that occurs, he stated that the Philippines will need to develop alternative sources.
Aboitiz InfraCapital Head of Economic Estates Rafael Fernandez de Mesa commented that the tariffs will generate uncertainty and volatility, which could be “advantageous for the Philippines.”
“Why do I believe it’s advantageous? Because as a business, you are attempting to manage that risk and that volatility, and in an industrial sector that is very much a global landscape, you need a diversified risk strategy, and that’s where the Philippines comes in,” he conveyed during a panel discussion.
“In a landscape of uncertainty and volatility, I believe there will be increased movement towards the Philippines. That’s what we’re beginning to observe over the past month and a half: renewed and accelerated interest,” he concluded.
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