Value of Philippines electronics exports hits record in 2021

The Philippines' electronics sector, the country’s largest exporter, shipped out US$45.92 billion worth of goods last year. - Bloomberg

MANILA (Philippine Daily Inquirer/Asia News Network): The country’s electronics exports totalled nearly US$46 billion worth last year — an all-time high — after 2020 disrupted its pre-pandemic winning streak of record annual revenues for three years in a row.

The electronics sector, the country’s largest exporter, shipped out $45.92 billion worth of goods last year, a 12.9 per cent growth from 2020, said the Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) on Wednesday.

Seipi broke its all-time export revenues every year from 2017 to 2019, until the pandemic halted this momentum with disruptions in the supply chain, data showed.

Seipi recorded $36.5 billion worth of exports in 2017, followed by $37.57 billion in 2018, and then by $43.32 billion in 2019.

In 2020, however, this dropped by around 6 per cent to $40.67 billion. At almost $46 billion in 2021, the sector accounted for more than 60 per cent of the country’s total exports of goods worth $74.64 billion.

When asked to comment on the new record high despite the pandemic, Seipi president Danilo Lachica said in a Viber message on Wednesday (Feb 2) that this was driven by the demand for new technologies that are used in telemedicine, work-from-home arrangements, and artificial intelligence, among others.

Seipi is currently expecting to grow its export revenues this year by another 10 percent, a top official said in a recent general membership meeting.

The country could still do much more, however, if it could attract as much new investments as its peers in South-East Asia. Lachica said in December last year the group hopes the next administration would give the Philippine Economic Zone Authority (Peza) more room to attract foreign direct investments.

Doing so, however, would require revisiting Duterte’s newly enacted corporate tax reform law called CREATE, or the Corporate Recovery and Tax Incentives for Enterprises Act. It was passed in March last year, after nearly three years of deliberations and uncertainty in the investment climate.

The CREATE law lowered the corporate income tax while rationalising tax incentives. Moreover, it had also set a threshold for investments that can be approved by investment promotion agencies (IPAs) like Peza.

Under the new law, IPAs can only approve a project worth below P1 billion. If the value exceeds the amount, the project would have to be approved by the Fiscal Incentives Review Board, which is headed by the Department of Finance.

“I just hope the next administration can revisit that especially the ability to attract investments in the same scale as our Asean (Association of Southeast Asian Nations) neighbours because they are our competitors,” Lachica said during a business event in December last year.

“If ever, and this is going out on a limb, I would like to request the next administration to revisit the ability of Peza to attract and approve investments,” he said.

When the Inquirer later asked Seipi if it wanted to raise the threshold to give Peza more room, Lachica said: “That’s a good first step, but beyond just setting a limit, I think we really need to study why our neighbours are getting more foreign direct investments and once we understand the root causes, act accordingly.”