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DTI: Firms fleeing trade war relocate to PHL.

THE Philippines is starting to benefit from the trade conflict between the United States and China, as a manufacturing giant relocated to the country to avoid taking damage from Washington's stiffer tariffs on Chinese goods.

Senen M. Perlada, director for the Department of Trade and Industry's Export Marketing Bureau, said electronics firm Ever Win International Corp. is closing down its shops in China. The firm is fleeing the rising cost of production, as well as the heavier duties imposed by the United States on products originating there.

In a move that benefited the Philippines, Ever Win relocated and opened a factory here.

'They are supposed to operate as soon as possible, and they are [here] right now. The challenge is to get them to produce right away,' Perlada told reporters on Wednesday.

According to the trade official, Ever Win is registered with the Philippine Economic Zone Authority (Peza), although investment figures have yet to be released by the agency.

'The reason that they gave us [why they are moving out of China] is that China is becoming more

expensive to be a manufacturing location. Essentially, if you look at the so-called US-China trade war, [it] was incidental because, really, China was getting expensive,' Perlada explained.

He added two more American firms with manufacturing plants in China are looking at the Philippines as a possible safe haven should the trade conflict further intensify.

Ever Win, based in California, is a solutions provider to mobile communications and consumer electronics firms, according to its web site. It has partnered with leading technology companies, such as Apple, Hitachi High-Tech, Fulton Innovation, Qualcomm and Texas Instruments, among others, in the delivery of its products and services.

Asked whether Ever Win has factored in the possible changes in the Philippine corporate tax and incentives regime, Perlada said the firm took this into consideration before infusing capital into the country.

'They have factored that in, [and it is still more competitive] compared to what they are actually experiencing in China. I think it was a very deliberate decision on their part to do that,' Perlada pointed out.

One concern commonly raised by investors before setting up shop in the Philippines is the life of tax perks, which could be overhauled under the proposed Tax Reform for Attracting Better and High-quality Opportunities bill, shortly known as the 'Trabaho' bill.

The Trabaho bill will gradually trim corporate income tax to 20 percent in 2029 from 30 percent. However, it will remove incentives, such as the 5 percent tax on gross income paid by economic zone firms in lieu of all local and national taxes, deemed crucial by investors for staying here.

The bill has hurdled third and final reading in the House of Representatives, but is hanging in the Senate.

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Publication:Business Mirror (Makati City, Philippines)
Geographic Code:9PHIL
Date:Feb 28, 2019
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