THE Philippine Economic Zone Authority (Peza) is again courting Foxconn Technology Group, the world’s largest electronics contract manufacturer and assembler of Apple iPhones, to locate to the Philippines as the investment promotion authority sees increasing interest from Taiwanese manufacturers.
After failing to capture Foxconn’s interest in the past to set up operations in the country, Peza will be offering its hand anew to the multi-billion dollar company when it visits the Republic of China (Taiwan) this week.
Peza Director General Lilia B. de Lima said that following the recent P1.8-billion investment of another Taiwanese electronics assembler, Kinpo Electronics, in the Philippines and the aggressive expansion path of Foxconn in other sites, the time is ripe to pitch the Philippines again as an “attractive investment destination.”
“Foxconn is a huge company, employing a million workers in China alone. It has been aggressive in expanding in China and India, so it may be a good idea to invite them again,” de Lima told reporters recently.
The electronics assembler was reported to have been exploring economic zones in the country in 2014 but had not taken concrete actions to invest since then.
The Department of Trade and Industry (DTI), under its previous chief Gregory L. Domingo, also made strides to court this major electronics manufacturer to consider the Philippines as a manufacturing site, last year.
More recent reports said Foxconn already has its sights to make India its global manufacturing hub for the African and West Asian markets. The company already assembles phones and television under its contract-manufacturing business. It is an assembler for companies such as Sony, Xiaomi, Gionee and Microsoft in its India operations.
The Philippines is still hard-pressed to present itself as a viable manufacturing destination amid a complicated environment for doing business and relatively unattractive tax-break scheme for investors. The country already lost a $3-billion investment of Samsung Electronics for a manufacturing facility to Vietnam in 2014, as the rival neighbor reportedly offered a more enticing scheme of lowered corporate income tax of 10 percent for 30 years to Samsung. It also offered income tax exemption at rates far more attractive than what the Philippines offers.
Currently, Peza offers a maximum income-tax holiday period of eight years, to be followed by a perpetual, reduced 5-percent tax on gross income earned among other fiscal perks.
This, however, has been a long-standing, contentious topic of debate in Congress as the Department of Finance believes the country is losing billions of pesos in government revenues annually due to these tax breaks.