Unknown gunmen have been "hijacking" trucks that bring electronics products to ports or airports for shipment abroad, said Ernie Santiago, executive director of the 204-member Semiconductor and Electronics Industries of the Philippines Inc. (SEIPI).

Some of the stolen products have ended up in the local 'grey market,' while others are bought by "some local distributors or they end up directly overseas," said Arthur Tan, president of Integrated Microelectronics Inc., a leading manufacturing subcontractor here.

SEIPI companies accounted for 69 percent of Philippine merchandise exports last year. Export receipts for the seven months to July are down by 4.9 percent from a year earlier to 13.2 billion dollars due to a patchy recovery in global demand.

Santiago told a press briefing that industry officials signed an agreement with police last month to deal with the hijackings, which have been occurring all over the Philippines.

Industry officials declined to give details on the police action or their losses from these robberies, citing security concerns.

"We don't want to talk about these things for our own security reasons," said Danilo Lachica, president of First Sumiden Circuits Inc., a Japanese-Filipino flexible printed circuits manufacturer.

The armed robberies were a "serious problem" for local semiconductor companies which produce a wide range of products ranging from chips to radar communication equipment, he added.

Since the industry signed an agreement with the police "there have been some improvements but we're not quite there yet," Lachica said.

Tan said the effect of the attacks on costs as well as meeting delivery requirements were in themselves "significant" but that the negative perception the problem could be even more damaging.

He cited an unnamed foreign company that has "decided not to produce a new generation of products here in the Philippines because they've been victimized two or three times."

Both Tan and Santiago said the SEIPI is working with the freight forwarding companies that carry the bulk of the IT sector products to prevent more attacks.

Some of the measures involved equipping the vehicles with global positioning system tracking equipment, as well as imposing qualification requirements on logistics companies that transport the sector's products.

Philippines industry is dominated by semiconductor manufacturing companies that together account for at least 11 percent of the 150 billion-dollar global market, Santiago said.

The Philippines also has a six billion-dollar share in the 650 billion-dollar electronic manufacturing service sub-sector.

Santiago said the industry is sticking to its five percent export growth target this year.

The sector shipped 24.26 billion dollars' worth in calendar 2002, an 11 percent increase over 2001 levels but still below the 2000 peak of 27.17 billion dollars.

Santiago said the global economic recovery should accelerate next year, when the Philippines is projecting its electronics exports to rise 20 percent to 30.56 billion dollars.

SPACE.WIRE