Philippines joins Electronica, looks beyond manufacturing

Carol Ramoran
The country showcases its electronics industry to potential investors and buyers, and eyes going beyond semiconductor manufacturing

BACK AFTER HIATUS. The Partner Philippines Pavilion at the 2018 edition of Electronica. This is the first time the country is joining the fair after 20 years. Photo by Carol Ramoran/Rappler

MUNICH, Germany – After a two-decade hiatus, the Philippines returned to Munich for Electronica – Europe’s leading, biennial electronics fair this November.

Five companies participated under the Partner Philippines Pavilion: Ionics EMS Incorporated, Testech Incorporated, Tsukiden Electronics Philippines Incorporated, Global Circuits Sourcing Solutions, and Yongden Technology Corporation.

Ayala Corporation’s Integrated Micro-Electronics Incorporated (IMI) and GemPhil Electronics Assemblies Incorporated also had their booths at the fair.

These Filipino companies are eyeing not just investors but a better place in the electronics manufacturing global value chain following major developments in the industry.

“As a country, the Philippines hasn’t participated in quite a while,” Philippine Trade and Investment Center Berlin’s Commercial Counselor Althea Antonio said.

“But we’re glad to be back at a time when the electronics manufacturing industry in the Philippines is at its golden age. Through the Partner Philippines Pavilion, we were able to showcase the Philippines’ electronics industry to target investors and buyers.”

Not only is Electronica a fair for companies to look for buyers, it’s also an arena where they can benchmark their products with their competitors.

“[Companies] can get firsthand market insights on the prevailing demands and market trends,” Center for International Trade Expositions and Missions (CITEM) Director Pauline Suaco Juan said.

“Part of our showcase is presenting the country’s enabling and growing business environment.”

Beyond manufacturing

The electronics and technology sector in the Philippines, a discreet yet successful industry, now makes up 60% of the country’s annual exports.

Most companies participate in the components stage of the electronics value chain. However, they feel that aside from manufacturing semiconductors, the Philippines has so much more to offer.

“Currently, the industry is focused on manufacturing – particularly semiconductor manufacturing,” Ionics EMS and Electronics Industries Association of the Philippines (EIAPI) president Earl Qua said.

“As EIAPI, we would like to see more emphasis on design, value creation, and innovation. That would help the industry as a whole to become more high value and hopefully create our own brand names and products.”

Qua believes there are lots of opportunities available for the Philippines in the electronics manufacturing sector. This, especially with the ongoing trade war between the United States and China.

“We have a lot of engineers – 100,000 graduate every year. We also have skilled workers. The Philippines is a really good place to establish a manufacturing base and for other high value streams like design,” Qua added.

Challenges

Despite its success, the Philippines’ high-performing manufacturing sector faces some challenges in terms of manpower. Elmer Lapeña, president and chief operating officer of Testech, said they keep losing employees who opt to become overseas Filipino workers (OFWs).

“I think it’s one of the advantages of the Philippines. We have a lot of people – skilled people. And people also talk about the work ethic. That’s why we have very high attrition and we have a lot of OFWs. We’re recognized as excellent workers,” he said.

What can be done? For now, Lapeña said the industry will have to find a way to work around it.

“It’s something we’ll have to deal with and improve our training, hiring processes. This will continue more in the future as more countries realize that they need our skilled workers to support their businesses,” he added.

For the Department of Trade and Industry (DTI), pushing for more investments to come in to the Philippines will always be one of the best solutions to such challenges.

“The DTI, Bureau of Investments, and CITEM will continue to promote the country as an investment location which can generate more jobs,” Antonio said.

“Aside from attracting foreign investment, we are also supporting our export winners such as the electronics industry in their internationalization, by participating in trade fairs such as Electronica.”

Antonio added that the Philippines’ participation in trade fairs also brings about new learnings to small and medium enterprises.

“They are exposed to new trends and technological advancements which can serve as benchmarks in improving their own capabilities and moving up the value chain, thereby making them more competitive and relevant in the international market,” she said.

Electronica and its 3,100 exhibitors welcomed over 80,000 visitors from November 13 to 16.

As of 2017, the Philippines has ranked 9th globally in terms of exporting electronic circuit components. The country’s export product contributes to about 3% in the global value chain of the industry.

Electronics exports to the European Union (EU) have also seen a major upswing in the past couple of years, generating 3.47 billion euros worth of export sales in 2017 compared to 2016’s 2.99 billion euros. That’s a growth of 16% in just one year.

The EU remains to be the Philippines’ largest foreign investor, with 9.1 billion euros in foreign direct investments in 2016. Such investments give jobs to about half a million Filipinos. The EU is also the Philippines’ third biggest export market. – Rappler.com