Thursday, 4 June 2009

Philippine electronics sector on way to recovery

Electronics already ‘hit the bottom’
Ben Arnold O. de Vera
Manila Times

THE Philippines showed green shoots of recovery in May, with investments in the country’s economic zones growing, and makers of electronics, the country’s main export product, seeing signs of returning demand.

Lilia de Lima, Philippine Economic Zone Authority (PEZA) director-general, told reporters on Wednesday that investment pledges last month reached P9.75 billion, up 18.19 percent from P P8.25-billion in the same month last year.

The agency earlier reported that its first quarter investment pledges plunged 51 percent from P27.7 billion last year to P13.7 billion this year.

De Lima said May marked the first month when PEZA posted positive growth figures, following a slump in investments, exports and employment generation in the first four months of this year.

“We are seeing some light at the end of the tunnel,” she said.

The incentive-giving agency approved a total of 48 projects last month, compared with 34 a year ago.

Projected employment of the approvals also jumped 119 percent, as PEZA-approved investments last month are expected to create 6,351 jobs, compared with the 2,900 promised for last year’s registrations, de Lima said.

Exports from PEZA registered enterprises, however, went down last month, as locators shipped out $178.6-million worth of goods, compared with $218.9 million in the same month last year.

De Lima said the information technology sector boosted investments in ecozones last month.

Despite the global economic slowdown, she said PEZA is maintaining its growth targets of 10 percent in investments, 5 percent in exports, and 5 percent in employment this year.

Ernie Santiago, Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) president, said the sector, which accounts for at least 60 percent of the country’s exports, has already “hit the bottom” in the first quarter of this year.

Louie Macatiag, Association of SEIPI Finance Executives chairman, said inventory building and restocking activities among firms that depleted inventories, are bringing in back orders.

Artemio del Rosario, Association of SEIPI Personnel Administrators chairman, said most companies have resumed six-day operations, and some have rehired displaced workers.

“I have not heard of companies still on reduced work schedules now,” he said.

Del Rosario said between 20 percent and 30 percent of the industry’s about 462,000 workforce was affected by the global economic slowdown.

Santiago said the consumer electronics segment would also beef up the demand.

He said semiconductors and electronics exports are slowly but surely inching up to a positive month-on-month growth rate—0.76-percent in January, one percent in February, and 9 percent in March.

“We are in the early stages of recovery,” said Isagani Ong, Association of SEIPI Purchasing Managers chairman.

SEIPI expects the second quarter of this year to be better than the previous quarter, officials said. But Santiago said the industry maintains its forecast of minus 20 percent growth overall this year.

He said the electronics industry accounts for about a third of the global gross domestic product, so it is natural for this sector to recover. “Electronics is the global driver and electronics business will definitely be back,” he said.

The SEIPI head said investments in this sector have dipped, as most companies are reluctant to invest now because of the ongoing global financial crisis.

He said investments in the domestic semiconductors and electronics sector went down year-on-year, to just $40 million in the first five months, from $200 million last year. This sector generated a total of $400-million worth of investments last year.

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