23 Joint Meeting of the Chinese-Philippines Business Council (CPBC) and Philippine-Chinese Business Council (PCBC) PRESENTED BY: GEORGE T.

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1 23 Joint Meeting of the Chinese-Philippines Business Council (CPBC) and Philippine-Chinese Business Council (PCBC) PRESENTED BY: GEORGE T. BARCELON

2 344 Economic Zones Nationwide 71 Industrial and Export Processing Zones 231 IT Parks and Centers 19 Tourism Ecozones 2 Medical Tourism Parks 21 Agro-Industrial Parks

3 LOCATOR INVESTMENTS BY NATIONALITY ( ) % Japanese % Filipino % American % Dutch 7.59 % British 3.72 % Korean 3.29 % Singaporean 1.57 % German 0.89 % Taiwanese 0.88 % Swiss 2.88 % Others

4 LOCATOR INVESTMENTS BY PRODUCT SECTOR ( ) % Electronics / Semiconductors % 8.98 % 8.43 % 5.92 % 4.51 % 2.25 % 1.58 % 1.20 % % Information Technology Services Metals/Fabricated Metal Products Tourism Transport (Shipbuilding, Aerospace, Car Parts, Equipment) Electrical Machinery and Apparatus Medical, Precision and Optical Instruments Rubber and Plastic Products Medical Tourism Other Manufactures

5 WHY PHILIPPINES

6 PHILIPPINE STRENGTHS The Philippines is Fastest Growing Among the ASEAN-6 countries: Fastest Growing Economy 100 Million Population Youngest Population GDP Growth ( ) Population Median Age Philippines 6.63% 100,000, Singapore 3.57% 5,469, Thailand 3.67% 67,725, Malaysia 5.40% 29,901, Indonesia 5.53% 254,454, Vietnam 5.53% 90,730, ASEAN % 91,236, Source : World Bank and CIA World Fact Book

7 PHILIPPINE STRENGTHS GSP + granted to Philippines by E.U. Parliament on Dec. 19, 2014 Philippines is the only E.U. GSP+ beneficiary country among ASEAN Zero Tariff on 6,274 products destined for Europe with 40% local content

8 PHILIPPINE STRENGTHS U.S.A. listed the Philippines as GSP- Eligible Beneficiary on October 2015 Zero Tariff on 3,500 products lines destined for the USA except textiles and apparel, watches, footwear, work gloves, and leather apparel.

9 PHILIPPINE STRENGTHS Investment Grade Credit Rating

10 The Filipino Work Force 1 million Filipinos reach working age every year, and half of them are college graduates.

11 Foreign Investor-Friendly Policies Basic rights of Investors are guaranteed: Right to remit profits Right to pay foreign obligations Right to repatriate investments 100% Foreign ownership of companies

12 Incentives 1. Income Tax Holiday (ITH) 6 to 8 years for pioneer project 4 to 6 years for non-pioneer project 2. After the ITH - Special 5% tax on gross income less allowable deductions in lieu of all national and local taxes

13 Incentives 3. Tax and duty free importation of capital equipment, spare parts, supplies and raw materials 4. Domestic sales allowance of up to 30% of total sales (Note: Sale by Ecozone Manufacturers of solar panels and LED lighting system to other PEZA enterprises are considered indirect export and not local sale.)

14 Incentives 5. Zero Value Added Tax (VAT) Rate on all local purchases to include telecommunications, power and water bills 6. Exemption from payment of local government taxes and fees

15 Incentives 7. Employment of foreign nationals 8. Special visa for foreign investors and immediate family members 9. Unequalled service by PEZA

16 PEZA is a Non-Stop Shop Provides 24 hours a day, 7 days a week of continuous service The Director General and other top officials are on call 24 hours a day, 7 days a week

17 Less Linguistic/Communication Problems (%) Source: 2014 Survey of Japanese-Affiliated Firms in Asia and Oceania, JETRO

18 Easy To Hire Local Staff (General Worker/Staff/Clerk) (%) Source: 2014 Survey of Japanese-Affiliated Firms in Asia and Oceania, JETRO

19 High Quality of Employees (General Worker) (%) Source: 2014 Survey of Japanese-Affiliated Firms in Asia and Oceania, JETRO

20 High Employee Retention Rates (%) Source: 2014 Survey of Japanese-Affiliated Firms in Asia and Oceania, JETRO

21 Tax Incentives (Corporate Tax Holidays etc.) (%) Source: 2014 Survey of Japanese-Affiliated Firms in Asia and Oceania, JETRO

22 Number of Strikes/Lockouts (Unit: Number) Country China ,379 Indonesia Philippines Thailand Vietnam Sources: China: China Labour Bulletin Indonesia: Ministry of Manpower and Transmigration Philippines: National Conciliation and Mediation Board Thailand: Department of Labour Protection and Welfare Vietnam: Vietnam General Confederation of Labor

23 5 OF THE WORLD S TOP 20 SEMICON and ELECTRONICS SALES LEADERS ARE OPERATING IN THE PHILIPPINES Source: IC Insights 2014 / SEIPI

24 MAJOR SMS and EMS PLAYERS IN THE COUNTRY Notes: SMS Semiconductor Manufacturing Services EMS Electronics Manufacturing Services Major Players Per Sectors: - Semiconductor (Components / Devices) - Computer Related Products / EDPs - Office Equipment - Consumer Electronics - Telecommunications - Communication/Radar - Control & Instrumentation - Medical / Industrial Instrumentation - Automotive Electronics - Aerospace - Solar / PV Source: SEIPI

25 INFORMATION TECHNOLOGY PROGRAM

26 340 PROCLAIMED PEZA INFORMATION TECHNOLOGY ECONOMIC ZONES 75 IT PARKS 265 IT CENTERS

27 1, 391 INFORMATION TECHNOLOGY ENTERPRISES as of 31 July 2016 Call Centers Business Process Outsourcing Software Development Engineering, Architectural and Other Design Services Data Encoding, Transcribing and Related Services Multi-Media Graphics, Animation, Printing IT Research and Development Other IT-enabled Services

28 TOP I.T. INVESTORS Convergys Philippines Call Center Dutch Accenture, Inc. Software Dev t. Dutch TeleTech Customer Care Call Center American JPMorgan Chase Bank N.A. Call Center American Xerox Business Services BPO Dutch Concentrix Daksh Services Call Center Dutch Telephilippines Inc. Call Center Dutch RMH Teleservices Call Center American HSBC Electronic Data Call Center British SITEL Philippines Corp. Call Center American

29 THE PHILIPPINE ELECTRONICS INDUSTRY

30 PRESENTATION OUTLINE: The Philippine Electronics Industry Industry Impact on the Philippine Economy PATHS (Product & Technology Holistic Strategy) About SEIPI

31 THE PHILIPPINE ELECTRONICS INDUSTRY

32 SECTORAL COVERAGE Philippine electronics companies engage in both semiconductors manufacturing service (SMS) and electronics manufacturing service (EMS). SMS refers to the production of electronics devices semiconductors and components from design to assembly. EMS involves the manufacture of electronics products for other companies on a contract basis, including circuit boards, electronics assemblies, and complete systems. The Philippines is home to 423 MNCs and Filipino-owned semiconductor and electronics companies. Semiconductor Manufacturing Service (SMS) Sub-sector Semiconductor and other and other components Major Players Texas Instruments, ON Semiconductor, Amkor, Analog Devices, NXP, Tong Hsing ectronics (Phils.) Sub-sector Electronic Data Processing (EDP) Equipment Office Equipment Telecommunication Communications and Radar Control and Instrumentation Medical and Industrial Automotive Electronics Consumer Electronics IC Design Major Players Western Digital Company (HGST), Toshiba and Samsung Funai (Lexmark), Canon, Brother and Epson Remec Broadband Murata Maxim Microsemi, IMI and Sonion Continental Temic, Fujitsu Ten, STMicroelectornics, IMI Bag Electronics, Ionics Xinyx Design, Analog Devices, Kyocera and ROHM Source: PEZA (October 2016) Source: PEZA (October 2016)

33 Availability of skilled workers Critical mass of global players Low attrition rate Consistent good rating of the Philippines Absence of militant labor Strong presence of industry associations in private-public dialogue Government support STRENGTHS OF PHILIPPINE ELECTRONICS INDUSTRY

34 US$ Billions The Philippine electronics industry is still the biggest contributor to the total Philippine exports, ending 2015 with US$28.92 billion exports or 49% share of the total Philippine merchandise exports Philippine Exports WITH Electronics Philippine Exports WITHOUT Electronics

35 PHILIPPINE ELECTRONICS INDUSTRY S ECONOMIC IMPACT STUDY The semiconductor and electronics industry still has the highest % impact on the country s Gross Domestic Product Impact of the Hypothetical Loss of Selected Industries on Gross Domestic Product % Drop in GDP Agriculture, Forestry and Fishery 12.1% Private Services 14.9% Semiconductor and Electronics industry 28% Source: University of Asia and the Pacific

36 SEIPI Semiconductor and Electronics Industries in the Philippines Foundation Inc. CRITICAL MASS OF GLOBAL PLAYERS The largest organization of over 284 foreign and Filipino semiconductor and electronics companies in the Philippines. Its membership include leading global players like Continental Temic, Toshiba, BAG Electronics, Epson, Amkor, Fairchild Semiconductor, Cebu Mitsumi, Knowles, Texas Instruments, HGST, Ibiden, Samsung Electro-mechanics Phils., Corp., Fujitsu Ten, Analog Devices, Cypress, Moog, ON Semi, Maxim, ROHM, Tsukiden, P. Imes, PSMC Phils., Inc., STMicroelectronics, Filipino companies such as IMI, Ionics and Fastech Synergy,

37 T.R.A.I.N.S. (Training, R&D/Roadmap, Advocacy, Information, Networking, and Services) TRAINING Competency development of operators, technicians, engineers and other industry professionals SEIPI-TESDA Training for Operators and Technicians Development of Training Regulations for operators and technicians SEIPI has an available pool of subject matter experts for both technical and soft skills trainings The eight (8) networking committees of SEIPI provide regular training programs for their specific areas of concern (purchasing, finance, HR, security, logistics, EHS, I.T. and engineering)

38 Thank you.