(25 February 2021) – The continuing challenges brought by the COVID-19 pandemic and the evolving global trading environment highlight the need for supply chain diversification.  Diversification not only mitigates risks but allows for the ability to rapidly respond to unexpected opportunities created in the wake of regional and global disruptions.

“Make it Happen in the Philippines EMS Industry 4.0: Connected Factories & Supply Chain Development in Asia” featured EMS COMPONENTS ASSEMBLY, INC., which offers advanced electronics manufacturing solutions and rapid line and production startups through a wide range of technical component competencies and facilities.  With the recent implementation of SAP S4HANA, the EMS factory can link with various ERP systems giving companies’ a direct extended factory in the Philippines.  The EMS Group supply chain partners provide parts and component localization opportunities for GSP duty and tax-free incentives (USA and EU).  Among its clients are in the automotive, aerospace, military, consumers, industrial and medical industries.

Mr. Ferdinand Ferrer, Chairman and CEO of EMS Group of Companies, is a proud Filipino who returned to the Philippines after 22 years of working in the US, Canada, Europe and China in the military and aerospace electronics industry.  He is also a catalyst in the Philippine manufacturing industry with leadership roles in  the Employers Confederation of the Philippines (ECOP), the Confederation of Philippine Manufacturers of PPE (CPMP),  the Federation of Economic Zone Service Providers (FEZSP),  the Philippine Exporters Confederation (PhilExport), the Philippine-Japan Economic Cooperation Committee (PHILJEC), the Philippine Chamber of Commerce and Industry (PCCI), and the Semiconductor and Electronics Industries in the Philippines (SEIPI).

An extended factory in the Philippines will help you diversify operations and mitigate risks.

The Philippines is a natural gateway to the East-Asian economies and able to ship in major trade destinations.  With an average travel time of 3-4 hours by plane to China, Japan, Korea, Taiwan, Thailand, Singapore, Indonesia, and Vietnam, the Philippines is a critical entry point to over 600 million people in the ASEAN Market and 2.2 billion people in the RCEP market (ASEAN plus China, Japan, Korea, Australia, and New Zealand).

Among all the manufacturing industries in the Philippines, electronics is the most entrenched in the regional/global production networks having existed since the 1950s when US and Japanese electrical companies came in to produce home appliances. The back-end processes of semiconductor assembly in the 1970s introduced by US-based companies have likewise led to the continued upgrading and innovation in the sector as top electronics companies such as Fairchild, Texas Instruments, ON Semiconductor, IMI, Tsukiden, Wistron, and Dyson continue to thrive in the Philippines.   

The recent signing of RCEP, the upcoming reduction of corporate income tax from 30% to 20%, and the generous incentives for companies bringing in innovative and high-tech products further bolster the Philippines as a country of choice for high-tech manufacturing.  The Philippines is embracing industry 4.0 technologies as it incentivizes and develops the supporting digital infrastructure for drones, autonomous vehicles, smart home devices, micro satellites, virtual reality devices, digital health services, wearable solar devices, augmented medical devices, 3D printers, and collaborative robots.

The Philippines EMS industry formed a coalition that can support foreign companies by providing them a roadmap coming into the Philippines. The EMS group has a dedicated line (hosting or incubation) that not only serves as rapid and risk-free entry to the Philippines but also provides IP protection for customers.  As shared by the EMS group, it was observed that after 2 to 3 years of partnership with Philippine EMS firms, these companies decide to expand their presence in the Philippines and set-up their own facilities.

In recent years, foreign companies with existing manufacturing base in Asia has partnered with the Philippines as they look for secondary manufacturing locations.  These companies have generated savings of 20-23% on labor and 30+% on GSP.  With the reduction of corporate tax, companies will further strengthen their position, expand market share, have peace of mind, and provide higher profits for the shareholders. – Perry Ferrer

Make it Happen in the Philippines

The Philippines is creating the EMS ecosystem and upgrading its position in the electronics global value chain. The combination of manufacturing experience, presence of global electronic companies, highly skilled workers, and the Philippines’ comparative advantage in IT makes it a very good partner for countries looking at a manufacturing hub in Southeast Asia.

The Philippines is focusing policies and programs towards creating an innovation ecosystem. Our artificial intelligence (AI) roadmap will soon be launched that aims to make the Philippines an AI center for excellence in the region. It will focus on the continuous development of Filipino talent such as engineers, data scientists, and STEM-related professions, as well as strengthen government-academe- industry collaboration. We expect more design and R&D investments in the Philippines and stronger linkages with our manufacturing industries, thus building an agglomeration of companies that will grow our EMS ecosystem. – DTI Undersecretary Rafaelita Aldaba.

The recorded version of the webinar is available on demand at https://www.youtube.com/watch?v=HmwvOA5FLT4

The webinar series is organized by The Philippine Trade and Investment Centers (PTICs) in New York, Los Angeles, San Francisco, and Washington, together with the Philippine Board of Investments (BOI).♦

Date of Release: 19 March 2021