The Philippine electronics industry, which accounts for 40 percent of the country’s total exports, is estimated to grow between 7% to 11% this year according to Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI).
Last year, total electronic exports were valued at $ 21.82 billion, so a modest growth of 8 percent would translate to $23.63 billion by yearend.
As background, electronics exports reached $20.95 billion for the first ten months compared with total exports of $51.77 billion.
SEIPI President Dan Lachica said while the growth is estimated at single digit, it is already quite “ remarkable” considering the obstacles that the industry and even other exporters faced like port congestion, truck ban and high cost and lack of power.
Lachica is revving up growth estimates due to high demand for their products from car parts and smartphone industries.
Lachica added that for next year, SEIPI’s projection is aligned with the 5% to 7% growth projection of Department of Trade and Industry (DTI).
The growth will be higher if there is no port congestion problem, according to Arthur Tan, SEIPI chairman.
“About 90% of the industry’s shipments are done by air as 70 percent of the nature of the industry is semiconductor (small parts only) and the industry thrives on a Just-in-time delivery. However the Electronics Manufacturing Service (EMS) sector which compromise 30 percent of the industry should be considered,” Tan said.
Most of the materials used by the EMS come by sea. Delays in inbound shipments naturally affect their shipment schedule.
Because of this congestion, several companies had to temporary shut down and set their workers home due to due to the unavailability of the raw materials. This means a loss for their sales due to non production, spoilage of perishable goods.
Lachica said that during that temporary shutdown cost companies from $ 20,000 to close to $1 million.
SEIPI also voiced out its concern about the power situation saying they still don’t see a clear roadmap on how power shortage and cost will be solved.
A clear direction and an assurance of power supply and quality are critical information especially for existing companies in the industry to decide on their expansion plans.
The industry is heavily dependent on imports. Almost 60 to 70% of our materials are imported, hence, vulnerable to shipment delays (sea and air).
The industry looks forward to the quick development of infrastructure , An infrastructure roadmap may come in handy not only for the electronics sector but the economy as a whole.
Other concerns of the industry include incidents of hi-jacking and pilferage; traffic between the companies and the ports (sea or air), congestion (delay in materials) and floods.
And there is a move to move to declare a one week holiday for the Pope’s visit.
This is a good symbolic gesture according to SEIPI but not beneficial to the industry as most companies work 24×7. The labor cost soars especially when there is a declaration of non-working holidays. This means that a company will have to increase their regular wage by. If a one week holiday is declared, this means a 30% increase in labor cost.