Global automotive parts innovator Continental Temic Electronic (Phils.) Inc. said the passage of the proposed Corporate Income Tax Incentive Reform Act may affect its competence as an exporter.
“The increase in taxes will make our operations here in the Philippines less competitive. CITIRA is an existential threat to our industry. We would like it to be a competitive advantage, not a competitive disadvantage,” Continental Temic vice president and country manager Glenn Everett said during the annual CEO forum led by the Semiconductors and Electronics Industry of the Philippines Inc. on Friday.
Continental Temic called on other semiconductor and electronics companies to share their views on CITIRA and how this would impact on exporting companies.
Everett said the objective was not to discredit the government but to educate legislators about the negative effects of CITIRA on foreign investments.
The company, which has operations globally with several factories in China and the ASEAN, is at a phase where it is shutting down five manufacturing plants as a part of its restructuring program.
“Worldwide Continental Corp. is restructuring to support changes in automotive industry. There are parts of the industry that are shrinking like engines [that] are going to nothing. But there are parts growing dramatically like electrification of cars,” Everett said.
Everett said the Philippines would not be affected by the restructuring program.
“Philippine operations is involved in the safety of cars, automotive that do automatic braking, right stability, wheel-speed sensors, radar sensors that are used in automated driving, among many other products,” he said.
He said the Philippines is among the countries that can easily innovate products that will fit the specification of a customer because it the company has a research and development office here.
Continental Temis has two factories in the Philippines which have their own research and design teams that serve the specific requirement of a client.
The parent company usually farms out projects through internal bidding where the plant that submits the lowest cost gets the business.
“About 20 percent of our business is ramping down and starting up every year. And every year, we have to win new business to replace those ending. We’re always competing,” Everett said.
He said this is the reason why the Philippine subsidiary could lose its competitiveness if taxes went up under CITIRA.
“We’re very much concerned about the tax environment. We want to make sure that there is a long term positive tax environment. CITIRA’s not done yet. I’m hopeful that we can work positively, collaboratively with the government to make a CITIRA conducive to business,” he said.