Six prospective investments in wiring harness manufacturing by Japanese companies worth P10.5 billion are expected to generate additional jobs of 18,650 and will fortify the Philippines’ stature as the world’s fourth largest exporter of this product.
Secretary Ramon Lopez of the Department of Trade and Industry (DTI) said in a statement this was the highlight of a roundtable organized by the Philippine Trade and Investment Center in Tokyo on April 20 attended by senior executives from Sumitomo Wiring Systems Ltd. and Yokowo Co. Ltd., among others.
The DTI said two of the six companies are new investors and two have confirmed expansion projects. The remaining companies are still completing their expansion and diversification plans.
Wire harness is one of the country’s biggest exports valued at $1.886 billion in 2020 of which 45 percent or $857 million went to Japan, the Philippines biggest market for wire harnesses. The other major markets are the US, South Korea, Canada and Thailand.
Lopez expressed optimism for the Philippines’ prospect as a supplier as automotive wiring harness market is expected to surpass $93 billion by 2023 and demand for greater fuel efficiency and electric vehicles continues to grow.
“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.
Lopez said the companies can take advantage of the newly-signed Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act in pursuing their investments.
Investment in wiring harness production may qualify as Tier One under CREATE which grants qualified industries incentives such as income tax holiday (ITH), special corporate income tax rates (SCIT), or enhanced deductions (ED).
Export-oriented industries that qualify 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. Further, a longer transition period is given to industries currently granted incentives, making the incentives more performance-based, focused, and timebound.
