Businesses take stock of Japan crisis

Published by rudy Date posted on March 16, 2011

PHILIPPINE businesses have begun counting the possible economic costs of Japan’s worst disaster since the Second World War, with electronics exporters warning of disruption in their raw material sourcing.

“A prolonged abnormalcy in Japan will certainly affect the material supplies . . . as, incidentally, most of the electronics industry locators in the Philippines are Japanese-owned companies,” Ernesto Santiago, Semiconductor and Electronics Industries in the Philippines Inc. (Seipi) president, said in a statement on Tuesday.

“Seipi member-companies reported that the major earthquake that hit Japan last Friday caused railways servicing northeastern Japan and Tokyo to a ground halt and closure of airports. Cargo planes did not accept shipments and have implemented an embargo . . . due to damages to their warehouses and heavy backlog caused by last Friday’s incident,” Santiago said.

“The major impact on Japan’s semiconductor production is not likely to be direct damage to production facilities, but disruption to the supply chain. Suppliers are likely to encounter difficulties in getting raw materials supplied and distributed, and shipping products out,” he said.

Japanese firms last year comprised 13.9 percent of global electronics revenues and about a fifth of global semiconductor production, Santiago said.

Almost a fifth of Seipi members are Japanese companies while roughly a fifth of last year’s Philippine electronics exports were manufactured by Japanese firms.

Also on Tuesday, the Philippines’ largest telecom company moved to assuage concern by business process outsourcing (BPO) firms over business continuity and network resiliency issues after the massive earthquake that hit Japan last week.

In a statement, Philippine Long Distance Telephone Co. (PLDT) said its network connections to the US remain operational despite the 8.9 magnitude earthquake that hit northeastern Japan.

Over the weekend, disruptions to segments of the China-US Cable Network, Japan-US Cable Network, East-Asia Crossing Network, C2C cable system and FLAG cable system caused widespread telecommunications problems to many intra-Asia and Asia-to-US connections.

Partly owned by Japan’s NTT group, PLDT said its Asia-America Gateway (AAG)—the country’s premiere cable system direct to the US mainland—was however up 100 percent.

The company said it used its activated capacity to re-route traffic from troubled cable systems, enabling it to serve its customers despite the disaster.

“We are deeply saddened by this tragedy, especially as PLDT has deep Japanese affiliation due to its relationship with NTT,” said Jovy Hernandez, PLDT vice president and head of Corporate Business Group and Smart Enterprise Sales and Marketing.

“To ensure business continuity and vital resiliency particularly for our BPO and call center clients who are US-centric, the performance of AAG affirms the immense value of PLDT’s $50M investment in this critical cable system to ensure business continuity especially for our enterprise customers,” Hernandez said.

Vic Tria, PLDT vice president and head of Corporate Business Solutions, said the AAG was also used to minimize disruptions to voice and data traffic, both for PLDT and mobile unit Smart Communications Inc.

“This ensured uptime for these essential services for all our customers,” Tria said.

The AAG cable project is a $550-million, 20,000-km long fiber optic cable network that connects Malaysia, Singapore, Thailand, Brunei Darussalam, Vietnam, Hong Kong, the Philippines, Guam, Hawaii and the US West Coast.

This project will also provide for future connectivity that can be extended to Australia, India, Africa and Europe. –Ben Arnold O. De Vera, Reporter and Darwin G. Amojelar, Senior Reporter, Manila Times

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