The Philippine microelectronics industry : strategies for ASEAN competitiveness / Fermin G. Castillo, Jr. 6

Thesis (Ph.D.) -- Pamantasan ng Lungsod ng Maynila, 2006.;A dissertation presented to the faculty of the Graduate School of Management in partial fulfillment of the requirements for the degree Doctor of Business Administration. 56

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ABSTRACT: The study examined what areas in the microelectronics industry can the Philippines improve on to create competitive advantage over our foreign competitors, which is the main topic of this study. Among other concerns are the areas under competition, economic indicators and its nature that affects our industry both internal and external. The use of descriptive statistics is the principal foundation in developing this dissertation. The findings are very useful and valuable for both microelectronics companies and industry associations including government agencies in strategic business planning. The paper presents the current status of the industry according to the strategic business marketing variables namely: geographic, demographic, sustainability, accessibility and actionability and problems of the Philippine Microelectronics industry. Specifically, the study seeks to answer the following questions: 1. What is the current status of the Philippine Microelectronic Industry in terms of the following: 1.1. Geographical; 1.2 Demographic; 1.3 Sustainability; 1.4 Accessibility, and 1.5 Actionability? 2. What are the Strengths, Weaknesses, Opportunities and Threats of the Industry according to the variables in terms of strategic marketing: 2.1 Geographical, 2.2 Demographic, 2.3 Sustainability, 2.4 Accessibility, 2.5 Actionability? 3. How does the Philippine compare with other ASEAN countries in terms of the following export competitiveness tools: 1.1 Net Export Ratio (NER) and 1.2 Revealed Comparative Advantage (RCA)? 4. To what extent do the problems that confront the industry affect its competitiveness in the ASEAN region? 5. Based on the findings of this study, what strategic marketing and economic approaches can be recommended to the industry to enhance the competition in the ASEAN region? The researcher conducted the study from March 2005 up to July 2006. There are 80 out of 105 member companies of both SEIPI and EAIPI that served as the respondents in the study. Therefore, 76.20% of the members are the respondents that percentage is very reliable and high as far as the industry is concerned. The study used the historical and descriptive methods of research. Data were collected through self-report wherein information has been asked from the Microelectronic firms by means of questionnaires. The researcher also touched the statistical data for comparative purposes that were provided by the embassy concerned, PIDS, NEDA and NSO. The Statistician's interpretation was also needed so that the figures, data and pertinent information of the study will be accurate and precise. The researcher discovered the Strengths, Weaknesses, Opportunities and Threats of the Philippine Microelectronics Industry and converted such analyses into tactical approach, which combined the economic indicators in determining whether our microelectronics is among the best in the Southeast Asian Region. CONCLUSIONS: On the basis of the foregoing findings, the following concluding statements were drawn and summarized: 1. Speaking of the current status of the microelectronics industry, the following appears as the condition of the industry. 1.1 In terms of Geographical, the Philippine is in the best position for the microelectronics industry business because we are located in the strategic region in Asia where our country serves as transshipment ports throughout the world. Currently in terms of its manufacturing and assembly we can match other rivals in the ASEAN Region. 1.2 In terms of Demographic, the Philippines has a lot of things to offer and show the world what outstanding talents we have. Research findings highlight our labor to be among the best in the industry today. 1.3 In terms of Sustainability, the microelectronics industry is very competitive in the areas of innovation and product development. What is important is that we identify resources and use them in order to maximize the effective and efficient things at hand. 1.4 In terms of Accessibility, the microelectronics industry is at its best in the export industry and serves as a frontline of the Philippines in the ASEAN and WTO respectively. From raw materials, customs laws including import and export policies/ regulations were complied with. 1.5 In terms of Actionability, the microelectronics industry has its major players in the industry today and still growing and expanding through the years. As a matter of fact, the players in the industry increase their exports share in the world market and help create employment in our country and the transfer of technology is flowing. 2. As to identified Strengths, Weaknesses, Opportunities and Threats of the Industry according to the variables in terms of strategic marketing. The researcher identified key areas that will create its competitive advantage over rivals. As to Investment, Philippines has its competitive investment climate according to the foreign counterpart, as you could see based on the statistics presented in the discussions. Being the pioneer in the microelectronics in the region, other ASEAN countries are geared towards matching what we have. The researcher identified key areas where we can have our advantages to them and convert it into world market share. As to the Political/ Economic Climate, Philippines is in the critical scenario where there are lot of stabilization and rallies; however, such activities do not affect the business directly as long as the ports and airports are open, then the movement of microelectronic product continues. A favorable and good climate for investment is also important factor in order for us to be on top of the market through the coming years. As to the PEZA locations, there are about 189 locations all over the Philippines and is still growing. What is important in the establishment of such location is that the locality should be prepared for that industrial set up. In the ASEAN Region this is the trend as far as creation of export processing zone and foreign investors are looking for that ideal site for their business and trade. Such move will eventually generate exports for us. In return, we will benefit for a long time since the rate of importation had reached the 0% and taxes for such products just come and go. A good relationship with the foreign investors will give the Philippines its high market share and ranking in the microelectronics and electronics as a whole. As to Export Growth, since the nature of microelectronics industry is export oriented we will be the leader among other products as shown in the statistics from 1975 to 2005. Such growth provides very significant effect as to the prioritization of this industry with other related industries. What is important is that we must establish strong supporting and allied industries that will back up our export because the microelectronics industry is cyclical in nature. As to Type of Workers, we have the competitive workforce available in the manufacturing sector, and the number significantly increased due to expansion and increase in sites all over the Philippines. As to types of workers, we can match other ASEAN countries in terms of labor. As to the Nature of Employment, due to labor intensiveness of this sector of manufacturing, labor is sacrificed with contractualization or even project basis. Multinational corporations must have corporate social responsibility in favor of our labor resources because they benefit from our competitive manpower resources. As to the Basis of Payment, our manpower is very competitive in the ASEAN and the rest of the world. Some major companies are tapping Vietnam and China as their strategy for cheap labor assembly. With that move we cannot argue the fact that our labor is considered cheap. However, our labor has additional things to offer; aside from assembly, we are easy to be trained, English speaking and multi-skilled. As to the Cost Competitiveness, we are at par with other countries in terms of this issue because there are other benefits that we can provide them like skills and talents which we have. Filipinos value quality in terms of the output, and as a matter of fact, majority of multinational corporations are based here in the Philippines because of the many positive commendations they have for Filipinos.

As to the Trainings and Seminars, there are lot of government agencies which offer industrial and productivity seminars/ trainings and lectures based on the needs of the corporations. They even offer in house trainings and competitive packages that will enhance and upgrade the skills and talents of our manpower. As to Education, our educational system must adopt a curriculum based on the industry needs. There must be a dialogue between the academe and the industry with regard to this matter. A strong foundation in the educational system in the industrial sector will benefit not just the microelectronics industry but also other related industries since they are in the same business. As to the Innovation Policies, the government should have an active role for the implementation of activities to convert such plans into output. What happened right now is that there are a lot of plans but the budget is not being considered. We must allocate funds for these innovation policies. Competition in this industry is rampant and we will be in the losing end if we will not do something. As to the Science and Technology, coordination with other government agencies and bureau is important. Collaboration with the academe is very significant also in determining the plan of action and the inputs of the industry concerned are also needed in this matter. A partnership with the industry association related to microelectronics and innovation policy so that our Science and Technology will be able to adjust to the current trends and updates in technology today. As to the Importation of Raw Materials, due to the incentives that the multinat

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