The Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI) turned optimistic seeing a lower contraction this year and a full turnaround by 2022.
Dan Lachica, SEIPI president, said the industry upgraded its projection for 2020 from a decline of 15 percent to just 5 percent.
Lachica added by next year, the industry could grow by 7 percent assuming a favorable outcome of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill as well as the availability of a vaccine against the new coronavirus disease 2019 (COVID-19)
The revised forecast, arrived at by SEIPI board officials at a recent meeting, takes into account the effects of COVID-19 and higher cost of operations such as shuttle, logistics, among others.
Exports of electronics and semiconductor products rose for the second consecutive month in September in what was seen as a sign of recovery.
Exports in the first nine months of the year were still down 11.4 percent to $26 billion from $29 billion in the same period in 2019.
The industry recorded about $4 billion (P200 billion) in lost business through August due to pandemic-induced slowdown in global demand.
SEIPI has expressed support to the immediate reduction to 25 percent of the corporate income tax (CIT) rate under the proposed CREATE but is concerned about the proposed incentives rationalization and its effects on the competitiveness of the electronics industry.
SEIPI said the industry in the beginning of the year was on track to grow 5 percent but due to the pandemic,
about $500 million worth of volumes which were transferred to other countries may not be recovered.
SEIPI estimates job losses in the group in the first year of the implementation of the incentives rationalization could reach 38,000 (direct) and another 266,000 (indirect) as companies are seen shifting their operations to Vietnam. – I. Isip