Japan quake to affect electronics sector

MANILA, Philippines - The government is projecting that 20 percent of business belonging to the electronics sector will be affected by the earthquake and tsunami in Japan.

In an interview with reporters, Board of Investments (BOI) managing head Cristino L. Panlilio said they are estimating that 20 percent of the firms in the electro-nics sector will take a hit. There will be some retrenchment in the affected firms, he said.

Panlilio met with Semiconductor and Electronics Industry in the Philippines Inc (SEIPI) president Ernesto Santiago late Tuesday afternoon to discuss the impact of the crisis.

“The Japanese crisis is getting bigger than expected. We want to be prepared now,” Panlilio said. “We are studying the situation very carefully now.

“We want to asses the impact on industries concerned and the disruption on the employment, the level of livelihood and the way of life,” he added.

Panlilio noted that 20 percent of the electronic firms operating here are directly importing from and exporting to Japan. As such, he said exports of these firms are expected to go down although they still cannot quantify by how much.

Panlilio said 20 percent of the $30 billion electronics exports goes to Japan. Total Philippine exports is $51 billion. The electronics industry makes up a huge chunk of this figure with a contribution of $30 billion.

In addition to this, Panlilio said there is a certain percentage of local exports with parts and components that come from Japan.

As for new investments from Japan, Panlilio said they are expecting a slowdown.

Earlier, SEIPI said the major impact on Japan’s semiconductor production is not likely to be direct damage to production facilities, but disruption to the supply chain. Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed, and shipping products out, SEIPI said.

Likewise, the group said a prolonged abnormalcy in Japan will certainly affect the material supplies in the Philippine electronics industry as incidentally, most of the electronics industry locators in the Philippines are Japanese-owned companies.

SEIPI reported that Japan’s revenue in 2010 accounted for 13.9 percent of the global electronics equipment which includes manufacturing of all electronics equipment such as computers, consumer electronics devices and communication gear. Japan produced $ 216.6 billion worth of electronics equipment in 2010, compared to $ 1.6 billion worldwide.