The Semiconductor and Electronics Industries in the Philippines Inc. said Tuesday the industry suffered $4 billion in losses during the peak of the community quarantine period from March to August, when the government moved contain the spread of COVID-19.
SEIPI president Dan Lachica said while the industry was expecting a 5-percent growth for 2020, the pandemic resulted in a double-digit decline in sales. “We are in a 15-percent contraction,” he said.
He said aside from the health-related problems, the pandemic caused issues on supply, production and delivery.
Lachica said about $500 million of transferred volume might not be recovered at all. “That is why we requested for a moratorium on any incentives rationalization until we recover lost ground from pandemic,” he said.
SEIPI, other industry groups and the Philippine Export Zone Authority asked for the preservation of tried and tested incentives in the proposed Corporate Recovery and Tax Incentives for Enterprises bill, which was previously known as the Corporate Income Tax Incentives Reform Act.
The groups pushed for the inclusion of the so-called “grandfather rule,” or the retention of incentives enjoyed by companies, as proposed by Senate President Pro tempore Ralph Recto.
“Let me make it clear that SEIPI supports CREATE’s proposed immediate reduction of corporate income tax. However, we are concerned about CREATE’s proposed incentives rationalization,” Lachica said.
“SEIPI supports PEZA’s position to retain the current incentives and separate the incentives for domestic versus export industries like electronics,” he said.
He said the semiconductor industry might see massive lay-offs in the coming years if investors would cancel expansion plans, freeze investments or close shop.
The industry employs 350,000 direct workers. With a multiplier of eight, the industry covers about 3 million direct and indirect workers, he said.
About 37 percent of PEZA investments are from the electronics industry.
The semiconductor and electronics industry is also the largest contributor to the manufacturing sector. Electronics exports reached $43.32 billion in 2019 and accounted for 61.60 percent of the commodity exports.