The DTI is enticing wiring harness makers to build in PH with tax incentives
Did you know that the Philippines is actually a hub for making wiring harnesses? Currently, the country is the fourth largest exporter of wiring harnesses to the world.
Just last year, the country was able to export $857 million (about PHP 41.15 billion) worth of wiring harnesses to Japan alone. As a result, the Land of The Rising Sun is also our biggest market, comprising 45.44% of all total wire harness exports.
With Japan serving as the biggest benefactor for this product, the Department of Trade and Industry (DTI) recently held discussions with six Japanese companies to expand their wiring harness operations in the country.
Under the DTI’s new Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, the gov’t agency is enticing companies with incentives such as income tax holiday (ITH), special corporate income tax rates (SCIT), as well as enhanced deductions (ED).
Any export-oriented industry qualifies under Tier I may avail of 10 years of ED/SCIT. This is in addition to four years of ITH for industries located in the National Capital Region (NCR), five years of ITH for those in metropolitan areas or areas contiguous and adjacent to NCR, and six years of ITH for all other areas.
“Wire harness is one of our biggest exports and for 2020 the Philippines exported USD 1.886B worth of wire harnesses to the world. Wire harness exports to Japan of USD 857M comprise about 45.44% of our total wire harness exports. For last year, Japan was our biggest market for wire harnesses followed by the United States of America, South Korea, Canada, and Thailand,” said DTI Secretary Lopez.
The DTI Secretary added that the automotive wiring harness market is expected to surpass $93 billion (about PHP 4.4 trillion) by 2023. During the meeting, the trade chief highlighted that the demand for greater fuel efficiency and electric vehicles will continue to fuel this growth for many years to come.
For now, the DTI said that the Japanese companies are still completing their expansion and diversification plans. Assuming wiring harness companies do expand their operations in the Philippines, it will result in the building of new factories, the creation of new jobs, and the improvement of the country’s economy further.
“The total collective value of the new and expansion investment projects from this group of Japanese locators is conservatively estimated at P10.5B. Additional jobs created by the same investments are projected to reach 18,650. Despite the pandemic, it is encouraging to note that the Philippines is able to attract new business in strategic sectors,” added Lopez.
With the country’s economic growth still struggling, having more companies manufacture in the Philippines could give it a much-needed boost. More importantly, it might give those that lost their jobs an opportunity for a fresh start.