Six Japanese wiring harness firms are investing in the country with estimated investments of P10.5 billion and 18,650 jobs potential, according to Trade and Industry Secretary Ramon M. Lopez.
Lopez based his announcement on the report by Commercial Counselor and Special Trade Representative Dita Angara-Mathay, who leads the DTI Field Office in Japan, during a meeting on Tuesday, April 20, with six Japanese companies.
The online and sector-specific roundtable organized by the Philippine Trade and Investment Center in Tokyo was participated in by senior executives from Sumitomo Wiring Systems, Ltd. and Yokowo Co., Ltd., among others.
Mathay reported that of the 6 Japanese firms, two are new investors, and two others have confirmed expansion projects while the remaining two firmsare still completing their expansion and diversification plans. She hinted these firms to be locating outside of the National Capital Region saying that the rise of new factories with new high tech products and jobs will will not only enhance economic activities in regions outside of NCR but also decongest NCR.
“The total collective value of the new and expansion investment projects from this group of Japanese locators is conservatively estimated at P0.5 billion. 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,” said Lopez.
During the roundtable, Lopez discussed the benefits of the new Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act for wiring harness operations in the country.
As a prime generator of jobs, provider of support for sectors critical to industrial development, its potential to create value through innovation, and the country’s comparative competitive advantage in global manufacturing and the export market, investment in wiring harness production may qualify as Tier One under CREATE.
Export-oriented industries that qualify under Tier I may avail of ten years of special corporate income tax rates, or enhanced deductions.
This is in addition to four years of income tax holiday (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. Further, a longer transition period is given to industries currently granted incentives, making the incentives more performance-based, focused, and time-bound.
Wire harness is one of the country’s biggest exports and for 2020 the Philippines exported $1.886 billion worth of wire harnesses to the world. Wire harness exports to Japan of $857 million, comprising about 45.44 percent of the country’s total wire harness exports.
Japan topped as the biggest market for Philippine wire harness exports followed by the United States of America, South Korea, Canada, and Thailand.
The Philippines is the fourth largest exporter of wiring harnesses to the world. The automotive wiring harness market is expected to surpass $93 billion 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.
“With wiring harness applications expanding beyond the automotive industry to the telecommunications, aerospace, medical fields, and other ICT areas, support for upgrading Philippine-based wiring harness operations have become all the more imperative,” Lopez said.