Food, metal products and semiconductor manufacturers said their industries are anxiously operating under a cloud of uncertainty over the fallout from the US tariff war and issues related to supply chain management, logistics, smuggling and standards.
The leaders said the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act might not generate additional investments since investors have yet to fully understand the fiscal benefits promised by the law.
These were the collective sentiment aired separately by Maritess Directo, president of the Philippine Chamber of Commerce Food Manufacturers; Earl Qua, president of the Electronics Industry Association of the Philippines (EIAP) and Jimmy Chan, president of the Metalworking Industries Association of the Philippines (MIAP) at the second roadshow on the CREATE MORE late last week in Makati City.
Qua told reporters that the semiconductor industry “is seeing a lot of disruption” to the supply chain caused by the looming US tariffs on its trading partners.
“The tariffs are creating new barriers, and we don’t know if there are counter-tariffs. Once the initial tariffs are made, there could be a cascading effect. Of course, it’s something we’re just projecting that at the moment. We cannot say (what will happen). But the fact that it’s hard to predict is an issue,” Qua said.
Qua added: “The electronics industry, being export-oriented, is more exposed to global events (such as the) new tariffs (which) are coming up. Not many companies are making big decisions at the moment. So we are looking at the potential risk of a slowdown. These are the things that we are paying attention to, as far as growth is concerned.”
Qua’s group expects the industry to deliver a flat performance of $45 billion this year from 2024.
“It’s a mixed bag; we are both benefactors and also are affected potentially negatively (by the tariffs). We’re potentially affected negatively from a global slowdown, from the impact of the trade barriers,” Qua said.
But the trade balance between the US and the Philippines compared to China, Mexico, and Vietnam is fairly balanced, he said.
The trade imbalance between the US and China is $300 billion a year, Mexico is $200 billion a year, and Vietnam is about $100 billion a year.
The Philippines has about $4 (billion) or $5 billion in its trade balance with the US.
“We’re not very high on the list of potential targets for additional tariffs,” he said.
Directo said logistics concerns hound the food industry as these account for the biggest chunk of costs aside from the input materials.
Chan said the metalworking industry faces smuggling and standards issues that are “very urgent and should be resolved” on the regulatory side.
He said roofing materials are one example where no product standards have been set.
While standards have been set for long products such as rebars, MIAP cited the proliferation of smuggled goods that do not pass inspection by the Bureau of Product Standards.
The industry leaders sought the need to clarify specific provisions on how companies can benefit from incentives offered by the law whose implementing rules and regulations were signed in February,
Maybe next year, a number of investment applications will come in. “It just takes time to take effect,” Directo said.
Chan urged the government to mount more roadshows on the law to allow investors to understand the incentives package better.
“There will be a lot of pencil pushing by companies and study the nitty-gritty. There must be many discussions on how the law could be utilized and maximized,” Chan added.
CREATE MORE, or Republic Act 12066, provides an income tax holiday, a 5 percent corporate income tax rate thereafter, and a 20-percent enhanced deduction.
