MANILA, Philippines — Electronic exports are seen contracting by single digit this year with companies putting off the introduction of new products and technologies, according to an industry group.
Dan Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI), said the country’s electronic exports could post a contraction below 10 percent this year.
In 2023, the Philippines electronic exports were valued at $41.91 billion.
Latest data from the Philippine Statistics Authority showed electronic products remained the country’s top export from January to July, rising by 2.5 percent to $23.88 billion from $23.3 billion in the same period last year.
“As you know, we are at a disadvantage now in the product mix because there were several companies that were not as aggressive putting in new products here and new technologies because of the incentives rationalization of the previous government,” he told reporters on the sidelines of the US Agency for International Development and Makati Business Club’s forum yesterday.
The implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which introduced changes to the fiscal incentives regime, has led to the country losing potential investments in the electronics industry.
Lachica said that the progress in inventory correction would also support the lower contraction for electronic exports this year.
“In other words, we are seeing a resumption in demand, healthier demand. But it is still challenged especially in the semiconductor side which is 70 percent of our demand,” he said.
Earlier, the SEIPI was projecting a 10-percent contraction in electronics exports this year due to soft demand.
Asked about the CREATE to Maximize Opportunities for Reinvigorating the Economy bill, which seeks to amend the CREATE Act, he said the SEIPI would be happy with the amendments if it includes the reinstatement of the five percent gross income earned (GIE) incentive.
Prior to the implementation of CREATE, enterprises registered with the Philippine Economic Zone Authority enjoy the five percent GIE incentive without limit, after the income tax holidays they availed of for four to six years expire.