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June21,2017

GrowthtargetstillcomfortableSEIPI

THEPHILIPPINEelectronicsindustryisholdingontoanexportgrowthtargetofaboutsixpercentthisyearas
thenegativefactorsthatweighedonsalesin2016havedissipatedanddemandfromforeignmarketshas
improved.

DaniloC.Lachica,presidentofSemiconductorandElectronicsIndustriesinthePhilippines
FoundationInc.(SEIPI),saidinvestorshaveturnedoptimistic.

Therewaselectronicsdemandlastyear,hesaid,butnotedthatPresidentRodrigoR.
DutertesformerlysurprisingtiradesagainsttheUnitedStatesandtheEuropeanUnionright
afterheassumedofficeattheendofJunelastyearhadcausedconservatismand
concernamongSEIPImembersclientsandpartners.

Theyheldbackinvestments.Theyheldbackorders.

Mr.LachicawhowasreportedinAprilassayingthatSEIPIhadyettoadjustitsgrowth
targetfortheyearmadethestatementinapressconferenceatthesidelinesofthe14th
PhilippineSemiconductorandElectronicsConventionandExhibitionatSMXConvention
CenterinPasayCity.

LatestavailablePhilippineStatisticsAuthoritydatashowelectronicsexportrevenuesgrew
11.6%annuallyto$10.098billioninthefourmonthstoApril,baringrecoveryfrom2016
thatshowedsalesslipping0.114%to$28.871billionfortheentireyearfrom2015s$28.904
billion.

Mr.LachicareiteratedSEIPIsprojectionof$3031billioninrevenuesfor2017.

HesaidthesituationhasstabilizedandthatSEIPImemberspartnersandclientswere
convincedthattheirfearslastyearwereunfounded.

Addingtotheindustrysoptimismaretalksaboutcompaniesgoingdigital,theInternetof
thingsandcybersecurity,whichhesaidcouldbeaboonforexporters.

Youregoingtoneedelectronicscomponentsforthat.Andglobally,thedemandfor
electronicsis[growing]67%,hesaid.

Allthesemakeusfeelcomfortablethatweregoingtohitthefivepercent,sixpercent
[target].

Investorshaveseenwhatshappenedlastyear,hesaid.

Itsstillbusinessasusual.Investmentscontinuetocomein.

Mr.Lachicasaidtheannualconferencethisyearhasthemostnumberofexhibitorsinits
historyat250.Chinaparticipatedforthefirsttimewith13companies,hesaid.Healsocited
countrieswithmoreexhibitors,includingGermanywith11,Taiwanwith10andSingapore
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with26.

Thatgivesindicatorsthatnotwithstandingmartiallaw[inMindanao],ResortsWorld
[incident],confidenceisverystrong,hesaid.

SunilBanwari,ONSemiconductorPhilippines,Inc.vicepresidentformanufacturingand
countrymanager,backedMr.Lachicasoptimism,citinghiscompanysfirstquarter
performance.

Thefirstquarteristypicallyalwaysslow.Forthefirsttime,thefirstquarterisstrongerthan
thefourthquarter,hesaidaboutthecompanysperformanceinthePhilippines.

Headdedthatfactorieswererunningatfullcapacity,whichhesaidwastrueformanyof
thoseinthesemiconductorindustry.Hedeclinedtogivefigures.

Beyondthisyear,theindustryismoreconcernedaboutthepossibilitythattheincentives
SEIPImembersareenjoyingwillbewithdrawninlinewiththegovernmentsmoveto
rationalizethefiscalperksitoffers.

Mr.Banwarisaidthecompanysheadofficewasconcernedaboutthecountrystaxreformbill
andthatitwastakingahardlookatitsimpactonbusiness.

TheArizonabasedcompanyemploysaround7,000workersinitsfacilityattheGoldenMile
BusinessParkSpecialEconomicZoneinCarmona,Cavite.

It(taxreform)wontaffectusthisyear,butseriouslyinthecomingyears,hesaid.

Weareexpectinganestimate40%increaseincostsforallSEIPIcompanies.

SaturninoG.Belen,Jr.,whochairsFirstAsiaVenturesCapital,Inc.,alsoraisedconcernabout
thetaxreformbill,whichtheHouseofRepresentativesapprovedlastmonth.Hisventure
capitalcompanymobilizesinvestmentsinPhilippinebasedbusinesses.

Sometimespeopleforgetthatintheelectronicsbusinessmostofouroutputisexported,he
said.

If[industryoutputisfor]localconsumption,byallmeanssubjectittothesametax.

Hesaidothercountriesarealsoofferingincentivesforexporters,andwithdrawingwhatthe
governmentcurrentlyofferstothelocalindustrywouldmakeitlesscompetitive.VictorV.
Saulon

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