EXPORTS of semiconductors and electronics could contract less than 10% this year, better than expected, as the industry’s inventory correction runs its course, an industry group said.
Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said the association “had projected a 10% contraction, but there is a possibility, and I am seeing a glimpses” the contraction could moderate, Mr. Lachica told reporters on the sidelines of the 2nd Advanced Manufacturing Workforce Development Alliance Stakeholder Forum on Wednesday.
He said that the contraction could be smaller than expected due to improving demand.
“The two main reasons for the contraction are inventory correction and our product mix in the Philippines,” he said, noting that the industry is making progress in adjusting inventory levels.
He said however that officially, the 10% contraction forecast remains unchanged.
Electronic products remained the top Philippine export in the first seven months, totaling $23.88 billion. This was 2.5% ahead of the year-earlier pace.
In 2023, the Philippines exported $41.91 billion worth of electronic products. A 10% decline this year equates to an export total of around $37.72 billion.
Mr. Lachica said that the Philippines is somewhat disadvantaged in terms of product mix because some companies are not as aggressive in switching to new products and technologies due to the incentives rationalization carried out by the previous government.
Mr. Lachica has lobbied for the restoration of the 5% gross income earned (GIE) incentive that locators of the Philippine Economic Zone Authority used to enjoy before the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act took effect.
The 5% GIE was paid in lieu of all national and local taxes.
Meanwhile, the Senate adopted and ratified a bicameral conference committee report on a bill that seeks to amend the CREATE Act, which the President is expected to sign soon. — Justine Irish D. Tabile