The Philippine semiconductor and electronics industry is pinning its hope on the newly-enacted Tatak Pinoy Act to bolster local parts production, potentially curbing the estimated $20 billion spent on imported components.
Semiconductor and Electronics Industry of the Philippines Inc. (SEIPI) president Dan Lachica said the law could spur increased product complexity, driving economic growth and sustainability.
“The Tatak Pinoy Act presents a golden opportunity for our semiconductor industry to enhance complexity, drive growth, and significantly boost our economy through increased local parts production,” he said at the sidelines of the Tatak Pinoy Act Forum.
A key focus is on expanding local parts production, with the industry currently importing $20 billion to $30 billion in components. Localizing this would significantly boost the economy, Lachica said.
The group said only about $320 million of the $20 billion in parts are localized, leaving ample room for growth.
The semiconductor group noted that resolving VAT reimbursement issues is crucial to incentivize local production over imports. “Companies will still want to import despite higher logistics costs if this issue is not resolved,” Lachica said.
The industry faces a projected 10-percent contraction in exports due to softened demand, though signs of improvement exist.
Exports as of May 2024 reached $20 billion to $25 billion, suggesting a potential year-end total of $45 billion, still lower than the previous year’s $46 billion.
The industry aims to regain, at least, the 2023 levels, but a conservative projection by SEIPI board members predict a 10-percent reduction due to inventory adjustments.
The industry has lost projects and customers due to incentive issues and the lack of a trade agreement.
The industry supports revisiting the CREATE law to address these challenges, including removing the ban on constructive exports, restoring the 5-percent gross income earned (GIE) and ensuring the Philippine Economic Zone Authority (PEZA) investment approval autonomy.
