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Semiconductor makers put off $1-b investments

Semiconductor and electronics companies put off $1 billion worth of potential investments in the Philippines amid the uncertainties caused by the proposed Tax Reform for Attracting Better and High-Quality Opportunities, or Trabaho bill, an industry group said Thursday.

The Semiconductor and Electronics Industries in the Philippines Inc. said prospective investors had a change of heart after learning the unclear status of the industry. The Trabaho bill, which represents the second package of the tax reform program, is being debated in Congress.

The bill proposes to overhaul the tax incentives given to companies and reduce the corporate income tax from 30 percent to 25 percent.

“We’ve been in constant communication with the Senate and Congress to vent our concerns and we intend to continue that kind of engagement with the current and the newly-elected public officials,” SEIPI president Dan Lachica said in a news briefing at the sidelines of the 15th Philippine Semiconductor and Electronics Convention and Exhibition at SMX Convention Center in Pasay City.

Lachica said with about $1 billion worth of potential investments gone, the country also lost the opportunity to create 10,000 direct jobs.

SEIPI asked the government to keep the current set of tax incentives given to locators intact.  

The group said its proposal to increase the gross income earned (GIE) ratio to 7 percent from 5 percent could be a crucial factor for investors to stay if the reduction of the corporate income tax to 18 percent was not feasible.

Lachica said the proposed 7 percent in GIE would be crucial in sustaining the support for the government’s “Build, Build, Build” infrastructure program.

The industry group said given the current lackluster foreign demand, electronics exports were expected to grow by just 3 percent in 2019, slower than the performance in the previous years.

SEIPI said the industry was even bracing for a possible flat growth this year, as the first-quarter figures were in the negative territory.  Lachica said there were indications that exports could improve in the second half.

The shrinking demand was partially due to declining orders for some smartphone parts.

Latest data from the Philippine Statistics Authority showed that merchandise exports fell 3.1 percent in the first quarter from a year ago.  Electronics, which comprised more than half of merchandise exports, went down 1.7 percent to $8.8 billion in the three month period.

Topics: Semiconductor and Electronics Industries in the Philippines Inc. , SEIPI , Tax Reform for Attracting Better and High-Quality Opportunities , Trabaho bill ,
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