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PIA Press Release

President Gloria Macapagal-Arroyo's Speech at the Electronics Industry Forum

Rizal Ballroom, Makati Shangri-La Hotel, 18 September

Congratulations for organizing this strategic forum. We all know how strategic the electronics industry is to our economy. It accounts for 2/3 of our exports, employing half a million people in well-paying jobs. In the creation of jobs, nothing beats the information technology industry: call centers, business process outsourcing, and electronics.

I understand that the Philippines supplies 50% of the world's requirements for 2.5-inch hard disk drives and 10% of the 3.5-inch hard disk drives produced by the top three global suppliers Fujitsu, Toshiba and Hitachi. And that for mobile phones, 100% of the Nokia digital signal processors and 80% of Siemens' and Ericsson's are manufactured by Texas Instruments.

Texas Instruments is expanding its factory in Baguio and, more significantly, it has started constructing a new $1 billion wafer fab facility at the Clark Feeport Zone, which they chose over other locations including China.

I like to think that the Texas Instruments investment is also a validation of the Filipino worker and the quality of the infrastructure and facilities at Clark. It is a good deal for the thousands of wokers who will be employed in that new plant. I have often said that the Philippines is the best value for investment in Asia.

There has been a sea change in the Philippines in the past few years. We have broken the back of fiscal irresponsibility and with our revenue, fiscal and investment policies we are charting a new economic course.

Aside from Texas Instruments, a number of international companies have recently invested heavily in our country in electronics and other industries. Electronics investments for the first eight months of 2007 posted more than 100 percent growth compared to the same period last year from $360 million to $763 million. As to other industries, Korea's Hanjin has built a billion dollar shipyard in Subic and is already making expansion plans. Last year, Marubeni and Tokyo Electric Power purchased power plants in the Philippines for some $3.5 billion and announced another $350 million to expand its facilities in Pagbilao. The American power company AES recently won the bid for the Calaca power plant at $930 million and has informed me of another $1 billion expansion in that plant. These are validation that our strategy is working.

The Philippines has become an increasingly competitive location for manufacturing, services and high-skill jobs along with the booming call center business.

The Texas Instruments wafer fab shows that we are moving up the industry in the value chain. We also hope to increase the industry's export earnings through wireless applications (such as mobile phones, MP3s and IPODs), personal computers, and consumer electronics (such as plasma TVs).

We offer a strategic location in a fast-growing region, our workforce is well educated, productive and English-speaking. This is a quality we are working hard to maintain through investments in human capital to ensure the competiveness of our workforce.

We are writing a new chapter in Philippine economic history through the use of tight fiscal control/ complemented by targeted investments in our people and infrastructure. Because revenue is now on track and our deficit is down in fact, Gary Teves just reported to me the good news that we posted a budget surplus for the month of August for the first time in decades, less of our revenue is being used to service debt and more towards investment in our country's infrastructure and social services, including education and healthcare.

In our national competitiveness summit last year, we resolved that by 2010, the proficiency level of Math, Science and English in our schools shall have improved by 30 percent. We are on the way there, but I hereby instruct the Department of Education to fast track English training among our grade school teachers, including principals.

We are investing P3 billion in science and engineering research and development technology, including scholarships for masters and doctoral degrees in engineering in seven universities. Upgrade know-how and learning, and Filipino talent is unbeatable.

We are focused on raising our competitiveness by improving the quality of the country's human resources, lowering transaction flows and the cost of doing business, developing efficient access to financing, and building a seamless infrastructure network. We are cutting red tape to simplify the requirements for investments. Cost-cutting measures and elimination of red tape will allow our Filipino entrepreneurs and foreign investors alike to move more rapidly to create new businesses.

May pondo na tayo para gumastos ng dagdag na sandaang bilyon piso bawat taon, or P1 trillion for our Medium Term Public Investment Program to enhance the natural competitive advantages of the natural sub-economies or "super regions" of the Philippines. We are determined to raise our infrastructure spending to GDP ratio to 4.5 percent which is the ASEAN average.

Imprastraktura ang haliging nagtitindig hindi lamang ng ating makabagong ekonomiya: mga kalsada, tulay, paliparan, and power plants.

Last week I signed an Executive Order to launch GIGA G-I-G-A the Generating Investments in Geothermal Sites project.

That Executive Order instructs the local governments to set up economic zones in the jurisdictions near seven geothermal projects sites of the PNOC, so that industries can benefit from the local governments' use of their geothermal project royalties. In these areas local governments have large bank accounts from royalties that they use to subsidize the electric bills of their constituents.

We urge electronics investors to take advantage of subsidized electric bills power in communities hosting geothermal plants. A lower electric bill is is already a powerful draw but we will make it more irresistible by throwing in other fiscal incentives which an ecozone is allowed to grant. The synergy of geothermal power and ecozones will power up progress.

The Executive Order instructs the Philippine Economic Zone Authority, whom you are all familiar with, to guide the local governments in setting up these economic zones in geothermal areas.

In the region, we will follow the roadmap for the ASEAN integration of the electronics sector, of which the Philippines is the country coordinator.

Our strengths are working to sustain our competitiveness for investment.

The state of our economy at this mid point in the year brings hope and excitement our growth is the highest in a generation. The 7.5% GDP increase in the second quarter/ and the 10% gain in capital investment are in line with what the Asian Development Bank says the country needs in order to replicate the poverty-eradicating growth of Asia's economic success stories.

Job creation is strong. Our economy has created six million new jobs in six years and helped lower the rate of poverty, Total employment was 33.3 million last July, 1.2 percent higher than in July 2006. The unemployment rate improved to 7.8 percent from 8.1 persent of the same quarter a year ago.

Consumer confidence is up and inflation is holding steady. This slowed the clamor of higher wages, which likewise secured more employment.

The foundation of our economic comeback is wide, deep and solid. Across the board, the nation's economy is pointed in the right direction, and for all the right reasons. The elements of this broad-based success are built on many things and with the help of many people-institutions-and-economic contributors. Notable among these is the electronics industry.

We are partners for better technology, regional integration and jobs for Filipinos along the entire value chain. Thank you for your contribution to our economy. (OPS) [top]

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