Dec 25, 2015
The electronics industry, which accounts for 50 percent of the country’s total exports, has maintained its forecast of a flat growth for the entirety of 2015 on soft exports demand.
The Semiconductor Electronics Industry of the Philippines Inc. (SEIPI) said exports growth this year has been maintained at 0 to five percent.
Initially, SEIPI projected that exports could grow to 5-7 percent this year. This was eventually scaled down to 3-5 percent and further revised to 0-5 percent.
The flat growth has been attributed to soft demand driven by unpalatable events in China, EU, and Japan.
The lower growth forecast for 2015 belied expectations of robust global electronics demand following the conclusion of the expanded information technology agreement (ITA 2) where the Philippines is among the 80 signatory WTO member countries.
Electronics exports staged a turnaround in 2014 with an encouraging 8 percent growth fuelling expectations that exports growth could firm up this year.
Indeed, electronics exports kicked off the year on the right footing until it hit a 7.4 percent decline in May for $2.35 billion as against $2.54 billion in May the previous year. The country’s total exports in May slowed down by 17.4 percent to $4.899 billion from $5.931 billion in May last year.
The slump in exports in May was largely due to the slowdown in the economies of China and the impact of the difficulties in Greece which affected on the economic performance of the entire EU.
Trade and Industry Secretary Gregory L. Domingo already conceded that the 10 percent exports growth target this year is no longer achievable.
Earlier, SEIPI President Dan Lachica has noted of an absence in new electronics investments inflow into the country.
Lachica said he met with several groups exploring expansion in the Philippines but nothing definite yet.
“We all look forward to a better year,” Lachica said when asked about prospects for next year.
On the WTO-ITA2 deal, Lachica said this would definitely lower trade barriers among the signatory countries, lower cost, and enhance competitiveness.
But the reduction in tariffs on over 200 electronics products has little impact on the Philippines’ electronics exports, which is over 40 percent made up of low-value semiconductor/wiring harness products.
“The ITA impact on electronics is not as big compared to other goods,” he said.
Meantime, the Philippine Economic Zone Authority that houses most of the electronics companies in the country, said the agreement will definitely benefit its registered enterprises.
“It wil definitely benefit our electronics and semicon export enterprises including printer manufacturers, and medical devices manufacturers,” he said.
Sergio Ortiz-Luis Jr., President of the Philippine Exporters Confederation (PhilExport), said that any tariff cuts on electronics items is positive to the overall exports.
“In as much as almost half of our exports is electronics, any privilege given or recognition will help our exports,” Ortiz-Luis told reporters.
Ortiz-Luis noted that while automotive exports have been growing, exports of semiconductor products, mostly low value products, still account for more than 40 percent of the country’s electronics exports.
The country’s merchandize exports posted a negative 5 percent in the first months of the year making it difficult to hit the sector’s 8-10 percent growth target for the year, he said.
“It is already impossible to hit our growth target this year.
For us to hit the growth goal, we have to grow 15 percent on the average for the rest of the year,” Ortiz-Luz said.
Source: Manila Bulletin