PROPOSED changes in the corporate tax system will make automotive parts supplier Continental Temic Electronics Philippines less competitive, according to a company official.
Continental Temic Electronics Vice-President General Manager Glenn Everett told reporters on Friday that he is concerned the ability of the Philippines to attract more investments will be negatively impacted by increased costs arising from the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA). The measure proposes to rationalize tax incentives for locators while reducing corporate income tax.
He noted that the Philippines has the capacity and technology to produce parts for automated vehicles, but the company faces challenges in expanding its operations in the country given the uncertainty over tax incentives.
“The company cannot wait — if Toyota wants a product, the company can’t wait for CITIRA to finish before they decide. They have to make a decision when the customer needs the product. If there’s uncertainty — it counts against us here,” Mr. Everett said.
Mr. Everett said that the company could easily shift its volume to its other production hubs in the region.
“We compete. If Toyota needs a product, the company puts quotes from all the companies that it has that could make that product. The one with the best cost, that’s where it’s located,” he said.
“If we become uncompetitive, we won’t win any new business. We’re always struggling to be a competitive location.”
This comes as parent German manufacturer Continental AG in September announced factory closures and up to 20,000 job cuts in its worldwide operations.
Mr. Everett said that certain auto parts, such as diesel engines, have shrinking demand. In contrast, demand for electric car parts and sensors for automated driving are dramatically increasing.
However, he noted that Philippine operations will not be directly affected by the restructuring.
Continental Temic Electronics Philippines has an estimated 2,500 employees in the country, and the global company has around 245,000 employees in total. — Jenina P. Ibañez
