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A world-class exporter of high-tech products

Article - July 20, 2011
Forty years ago, the Philippines had only traditional agricultural exports. That started to change in the1970’s when the Philippine electronics industry got under way, spurred by industrialized
By the second half of the 1990s, electronics had overtaken agriculture as the leading export industry, and for years now the Philippines has been one of the world’s main exporters of high-tech products.

The global economic crisis hit the electronics industry hard, and exports fell by more than 28% to $22 billion in 2009. Since then, however, the industry has rebounded, posting an increase in exports in 2010 of more than 41% to over $31 billion – a record-breaking export value.

Today the electronics sector, which is dominated by multinational corporations, remains the largest contributor to the economy, accounting for 61% of total exports last year. Semiconductors are the leading product, and Japan is the largest customer.

Electronics from the Philippines were in high demand last year, and made a major contribution to an overall record-breaking performance, with the Philippines posting its highest export revenues for 11 years. According to the Department of Trade and Industry, total revenues grew by almost 34%, reaching in excess of $51 billion. In addition to high-tech products, the garments and textile industry reversed years of stagnation to achieve growth of almost 12%, bringing in $1.6 billion.

The Export Development Council attributes this to the recovery of the economies of some of the Philippines’ major markets, notably the United States, Japan, and Hong Kong, as well as to the ongoing growth of China.

Gregory Domingo, Secretary of Trade and Industry, says the strong showing in 2010 demonstrates that the export strategy of enhancing competitiveness and opening market access through trade agreements is “on track”. The Philippine Export Development Plan 2011-2013 targets a doubling of total exports to $120 billion by 2016.

Data published earlier this year by the United Nations’ Commission on Trade and Development (UNCTAD) showed that since the global financial crisis the Philippines and other Asian exporters have continued to take market share from Western countries in high-tech goods and components. According to UNCTAD, “...the global financial crisis has led to significant shifts in world trade of ICT goods towards Asia.”

The pace of export growth is forecast to slow this year through disruption of the semiconductor supply chain following the devastating earthquake and tsunami in Japan. However, the National Economic and Development Authority (NEDA) expects the impact on the export earnings of the electronics industry to be temporary.

At the Department of Trade and Industry, Mr. Domingo recently expressed confidence that overall exports could grow by more than the government’s target of 10% this year. Non-electronics industries contributed around 10-12% growth in the first quarter of the year, with a 100% increase in coconut oil exports, and furniture exports up by 50%.

The Semiconductor and Electronics Industries in the Philippines (SEIPI) forecasts that its sector will grow by 8-12% this year, despite the situation in Japan.

This confidence is shared by Sergio Ortiz-Luis, chairman of the Philippine Chamber of Commerce and Industry and president of the Philippine Exporters Confederation, who says that the exports target for 2016 still stands.

“There is uncertainty due to the disaster in Japan and the conflict in the Middle East, but these are temporary,” he says. “We are confident that Japan would pick up after the middle of the year.”