Amid worsening economic crisis, creditors shut doors on local semicon firms

The local semiconductors and electronics export sector is already troubled by very slow orders these days and it does not help that companies are also finding it difficult to access credit lately, an industry official said.

In a telephone interview, Arthur Young, Semiconductor and Electronics Industries in the Philippines Inc. (SEIPI) chairman, told The Manila Times that it seemed that financial institutions are getting stricter and very cautious of lending to semiconductor and electronics firms despite claims by country’s economic managers that the credit crunch has yet to hit local shores.

“It’s as if banking people are afraid of our industry right now. They’re not lending [to semiconductors and electronics companies]” Young said.

The SEIPI official related that one company, which he refused to name, told him that it wanted to borrow money for an upcoming expansion but found it difficult to do so.

Young said government financial institutions, such as Development Bank of the Philippines, Land Bank of the Philippines and especially Philippine Export Import Credit Agency (Phil-EXIM), should be able to extend them credit.

Young said capitalization for PhilEXIM should be augmented as he said the lender’s current capitalization is “fairly small” for it to guarantee more loans for players in the export sector.

“It would make good sense for the government to look at expanding the capital base of PhilEXIM as it should make available [more] credit for the export industry. We are calling on the government to increase the capitalization of PhilEXIM,” he said.

He said semiconductors and electronics firms should be revitalized with enough funding so that when the global economy gets better and orders return to normal levels, these companies could immediately recover.

Young also said the sector hopes that the government could provide them more flexible or additional incentives with regards to the cost of power in economic zones.

He said that at present, firms operating at ecozones are provided discounts for the high load of power they use.

However, as semiconductors and electronics companies are implementing shorter work weeks and temporary plant shut downs, they are now unable to avail of this “high load” discounts.

“Many facilities are currently operating at about 50-percent capacity production levels, hence we’re ‘low load’ and we’re not allowed to avail of the high load discounts,” Young said. –Ben Arnold O. de Vera, Reporter, Manila Times