Editorial

Intel?s collapse

Intel Corp.?s move to shut down its Cavite assembly plant and lay off 1,800 workers has exposed the vulnerability of the country?s export sector.

For decades, the Philippines has relied heavily on exports of electronics, along with garments, as a major dollar earner. The transformation of the electronics sector into the country?s biggest export item over 20 years ago was timely. It enabled the Philippines to cash in on the information technology wave, diversify its export base from metals and agriculture and, more importantly, employ hundreds of thousands of workers.

The shift to electronics and garments in the early ?80s was one of the major structural changes adopted by the Marcos government in the Philippine economy. It formed part of a government policy to encourage labor-intensive industries, patterned after Asia?s so-called tiger economies. But like other industries, the electronics sector, too, is nearing the sunset, especially at a time when most major economies are in recession.

Up to 60,000 jobs could be lost in the country?s key electronics sector after Intel closed its plant in Cavite and Texas Instruments announced a number of layoffs in December. The outlook for the electronics sector could worsen further. ?The impact of the economic downturn on our business was more severe than we anticipated and the outlook is uncertain,? says Intel Philippines in a statement.

Adds Labor Secretary Marianito Roque: ?We have to admit that this is not business as usual in the Philippines for the electronics sector and in the garments sector as well? These will be the two particular areas that would be affected by the global financial crisis.?

The electronics sector alone accounts for about 58 percent of the Philippines? exports and employs 480,000 workers. Its collapse and the thousands of jobs that the sector will shed will create a big dent on the country?s economic growth.

The government, meanwhile, has failed to respond to the vulnerability of the export sector as it did in the past, when it overhauled the composition of the country?s overseas shipments. The Philippines? export list is limited and without services, like business process outsourcing, and remittances of migrant Filipino workers, it would have suffered a serious balance of payments problem.

Policy makers should craft a new program to diversify the country?s export base. The lessons from the bubble of the electronics industry and the potentials of other ignored Philippine processed products could serve as starters.

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The ?sure? in insurance It?s one thing to read the business pages and learn, as we did last month, that a chain of rural banks belonging to one Celso de los Angeles? Legacy Group first declared a bank holiday, then closed shop and was eventually taken over by the Philippine Deposit Insurance Corp.

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It?s one thing to read the business pages and learn, as we did last month, that a chain of rural banks belonging to one Celso de los Angeles? Legacy Group first declared a bank holiday, then closed shop and was eventually taken over by the Philippine Deposit Insurance Corp.