Largest exporter and importer

Jan 13, 2018

As the New Year rolls in, it is worth mentioning how some Philippine industries fared well for the year that was, in particular our electronics and semi-conductor industry. For a few consecutive years, this industry was waning slowly after being hailed as the sunshine industry for several years. It has finally rebounded, not radically but nevertheless it has regained some of its lost glory.

The Philippine Statistics Authority has yet to release the final figures for 2017, but from January to September last year, data shows that the electronics and semi-conductor industry exported a total of US$24 Billion. This represents the largest export share in Philippine export commodity, a 50.5% share of the total Philippine exports to date. How does this compare with 2016? Year-to-date, this is a 10.3% increase, a significant one indeed.

In terms of import, SEIPI ( Semi-conductors and Electronics Industry of the Philippines ) reported that they are the largest importer at 25% of total Philippine imports. Be that as it may, this industry does not intend to continue with this trend. Instead, they are working at localizing some of these imports.

These figures may augur well for the industry but SEIPI Business Lead Jaja Gaid is quick to point out that the Philippine is not quite there among the leaders in the region as far as this industry is concerned. Some of the countries in the region, though, are coming in with hefty investments like Taiwan, and Japan remains to be one of our active trading partners. Ms. Gaid shared that SEIPI was represented in the international electronics forum in France last October where the city Mayor articulated their interest in a possible partnership.

Also, in 2017, PEZA reported investments in manufacturing of over P46.6 billion, and we all know that the biggest locator in PEZA is from the electronics sector.

Going back to our point of localizing some of our imports vital to the electronics industry, SEIPI wants to do this through the development of our SMEs. If we can only localize some 10% of these imports, Ms. Jaja said, this could translate to $2 Billion in parts and materials, not to mention the fact that it will definitely stimulate activity in various parts of the country. SEIPI's manufacturing clusters are scattered all over: in Baguio, Clark, Subic, Bulacan, Tarlac, Cebu, Cavite, Batangas and Laguna. Localizing some of the parts should give our MSMEs a much bigger role in the global supply chain, and it's about time.

How do they intend to go about this? One is by networking, but here we have to be extra careful to check our limitations as to quality standards, technology readiness, even market proximity. As of now, our local suppliers only supply packaging materials and mechanical parts and it is about time that we raise the bar and broaden this in order to meet the needs of the industry because the market out there is huge. For the semi-conductor industry, there is a $436 Billion market. Semi-conductors, devices and electronics comprise 70% of our exports in this sector. Only $20 billion is from semi-conductors and $8 billion from electronics, a very small percentage of the global market of $1.7 Trillion. We are nowhere near China's share but looking at the half-full glass, there is more room for growth for the Philippines. We are becoming a bit more competitive but we have to watch out in the next few years for Vietnam, our biggest rival in ASEAN because of enviable incentives it currently enjoys.

The point, Ms. Jaja is quick to point out, is to embrace our limitations and develop our own niche market. It is pointless, for instance, to compete with Thailand now in car production. This country now hosts production facilities for many brands and in addition, they also have a big domestic market for their vehicles. However, we can look into the components of electric vehicles for instance, or the upcoming self-driving vehicles which employ sophisticated sensor technology. There is a niche for us and we simply have to find it and develop it to its fullest.

Among the challenges we need to face is the transfer of entirely new technologies. Also included here is the government's crucial role in all of these-we need to improve the ease of doing business and close the gaps in infrastructure. We need to develop new materials, develop research and development centers as well as IT design centers. Very important too is the Lab Scale Wafer application, according to Ms. Jaja. I mentioned Vietnam as our closest rival in the region because of their incentives from the government. In this country, they have full foreign ownership, low corporate taxes and low power rates as well. In contrast, foreign investors here face steep corporate taxes unless these are PEZA-registered. The Philippines also has the highest power rates in the region, next only to Japan. Equally important, Vietnam does not have half as much holidays as we have here. What is amazing is the fact that while we already have the most number of paid holidays in the Philippines, there are still pending laws in Congress for even more holidays, this on top of expanded maternity and paternity leaves. I've actually heard foreign businessmen joke about this in cocktail parties. This populist move, decried by the ECOP ( Employers Confederation of the Philippines) as oppressive to businesses, is also a big turn-off to foreign investors.

The Semiconductors and Electronic Industries in the Philippines (SEIPI) continues to be one of the most dynamic and responsive organizations in the country and continues to lead its member companies towards progress. WE hope they will pursue their plan to localize whatever parts as soon as possible so our MSMEs will finally be given the chance to have a bigger part of the global supply chain. This can only redound to a better Philippine economy.

Mabuhay!!! Be proud to be a Filipino.

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About the Author

Ray Butch Gamboa graduated from the College of Arts and Letters of the University of Sto. Tomas. It was a course that should have been preparatory to a law degree, but the call of broadcasting aborted his plans.

At the age of 16, while still a student, Butch tried his hand at disc jockeying, landing a job at Mareco Broadcasting Network's AM stations DZBM and DZLM. From there, Butch moved on with his illustrious career as a popular disc jockey, riding the airwaves of Bob Stewart's middle-of-the-road music at DZXX, and ending his disc jockeying career at ABS-CBN's DZYL and DZQL.

From there, he stayed on with ABS-CBN, covering live the proceedings at the Manila Stock Exchange and eventually entered into the world of television sales as an account manager for the premier channel of ABS-CBN Channel 2.

In the early 70's, at the outbreak of Martial Law, Butch was one of the thousands of professionals who woke up jobless when then President Marcos declared the new status of the nation. With the closure of ABS-CBN, Butch ventured into different fields outside of broadcast. He tried his hand and with ease and success at export (Costume jewelry), real estate (brokerage), and restaurants (fast food).

In 1987, after the revolution, with the broadcast industry back to its free state, and with its irresistible call ringing in his ears, Butch made his inevitable comeback and pioneered in a local motoring show, producing Motoring Today on Channel 4 and co-hosting with local motor sports' living legend Pocholo Ramirez.

After 4 years, he ventured into another pioneering format by producing and hosting Business & Leisure, which was originally aired on ABS-CBN's Channel 2. The format eventually espoused similar ones in other different channels. But the clones in due course faded away leaving the original staying on airing on Channel 4 and eventually on Shop TV on Sky Cable's Channel 13.

The following year, the pioneering spirit in Butch spurred him to produce another TV show, Race Weekend, also on Channel 4, covering circuit racing at the Subic International Raceway after the motor sport's hiatus of 17 years. But when similar shows with duplicated formats sprouted, he decided to give way and ended the program after a year, although still enjoying unparalleled viewership.

In 1998, when the local automotive industry was in a slump, Butch contributed his share to help the ailing industry by producing another popular motoring-related show, this time exclusive to the automobile and its industry—Auto Focus, which became a vehicle for local automotive assemblers and importers to showcase their products and dwell on the industry's latest technological developments.

In 2003, Butch teamed up with his brother, Rey Gamboa who was a former Shell executive and presently one Philippine Star's business columnist to co-produce and co-host the TV show Breaking Barriers on Channel 13. It is a talk show that features guests who are in the news and in the middle of controversies. The program ventures to draw deeper insights into current issues to learn how they impact to our daily lives.

Today, Motoring Today on its 28th year of service to the general motoring public still enjoys its unprecedented loyal vierwership nationwide while Auto Focus, after 16 years has firmly established its niche viewership among automobile enthusiasts and on the other hand Business & Leisure is on its 24th year dishing out current business issues and lifestyle features.

Today, aside from writing weekly columns for the Philippine Star (Motoring Today on Wednesdays and Business & Leisure on Saturdays) and executive producer / host of weekly TV shows (Motoring Today, airs Sundays on Solar Sports Channel 70, Business & Leisure, airs Tuesdays on Shop TV, Sky Cable Channel 13 and Auto Focus airs Thursdays on Shop TV, Sky Cable Channel 13, Ray Butch Gamboa is currently the Chairman and CEO of Sunshine Television Production and Marketing Services Corp., President of Gamcor Management and Development Corp., Chairman of Asia-Pacific Realty Corporation, President and Chairman of Socio-Communication Foundation for Asia and Founding Chairman of the Society of Phil. Motoring Journalists (SPMJ)