THE Philippine semiconductor industry has established itself as a key global player but remains weighed down by regulatory bottlenecks, the Organisation for Economic Cooperation and Development (OECD) said in a report.
Government-led strategy and investment incentives for tapping renewable energy can spur more growth, it added.
“Nevertheless, the OECD analysis suggests that there is room to improve labor productivity and address infrastructural and regulatory bottlenecks,” the OECD said in a report, “Promoting the growth of the Semiconductor Ecosystem in the Philippines,” issued on Dec. 9.
OECD said the Philippines “has a vibrant and diverse semiconductor industry,” coupled with a young English-speaking workforce and strong links between the industry and academia.
“With these advantages, the Philippines should be well-positioned to benefit from investments in the semiconductor industry deployed in the near future,” it said.
Notwithstanding the passage of the Ease of Doing Business and Efficient Government Service Delivery Act in 2018 and new efforts to cut red tape, the OECD said, “some concerns about the regulatory climate remain, affecting investor confidence,” chief among them the onerous procedures for obtaining local business permits.
The OECD also noted the slow permit process for acquiring controlled chemicals used in semiconductor manufacturing.
“Government agencies should be incentivized to co-ordinate, ensure consistent, streamlined regulatory application and minimize burdens on relevant firms,” the report added.
The OECD proposed more digitalization of government processes and data-sharing agreements, such as those already in place between the Bureau of Customs and the Philippine Economic Zone Authority.
The report noted that energy costs were one of the highest in Southeast Asia and outages occur often.
The report said extending fiscal incentives to firms that invest in energy efficiency projects under the Renewable Energy Act of 2009 and the Corporate Recovery and Tax Incentives for Enterprises Act is a crucial step, as are concurrent efforts enabling foreign investment in the industry.
“However, the Philippines could learn from lessons abroad when considering instruments designed to encourage investment in renewable energy,” it said, noting production grants are a common mechanism to support the renewable energy ecosystem.
The report also highlighted the need to equip people with the necessary skills for the industry to meet projected demand.
“Provide a concrete work plan and timeline to reach the goal of 128,000 semiconductor engineers and technicians by 2028,” it said. — Aubrey Rose A. Inosante
