Nestle says 'here to stay' after Nikkei reports shutdown an 'option'

ABS-CBN News

Posted at Sep 06 2018 06:14 PM | Updated as of Sep 07 2018 12:59 PM

(Editor's note: This story is updated to include a statement from Nestle Philippines, which was issued after the Nikkei news agency report)

MANILA -- Nestle Philippines said shifting its coffee processing plant to other Southeast Asian nations was an option, as it awaited the outcome of tax reforms, Japanese news agency Nikkei reported, citing a company official.

The Nikkei report said the multinational food company was reeling from a government ban against the use of imported sugar in locally manufactured drinks.

Nestle, which operates a coffee processing plant in Cagayan De Oro, is asking the government to grant incentives to local manufacturers who use locally grown agricultural products. 

The call comes as lawmakers discuss the second package of tax reforms meant to "modernize" fiscal incentives and reduce corporate income taxes. 

National Economic and Development Authority (NEDA) Undersecretary  Rose Edillon said Nestle's call for incentives could be granted under the second package of tax reforms if Nestle was fulfilling the requirements for incentives, namely: job creation, technology transfer, research and development, and human resource development. 

“The idea is not to punish the performers. If they are really performing, helping local farmers, they should not be worried their incentives would not be granted.”

The second package of tax reforms is still being debated in Congress and Nestle should attend the hearings to make sure it is represented, she said.

Nestle's Cagayan De Oro coffee plant reportedly supports around 10,000 local growers, a quarter of the industry.

Earlier this year, Coca-Cola FEMSA said it made the "difficult decision" to lay off an undisclosed number of employees after considering the "evolving regulatory environment, our operational efficiency, and, consequent performance in the market."

Last month, the Mexico-based franchise bottler said it was exiting the Philippines and selling its majority stake to the Coca-Cola Company.

The Philippine Ecozones Association earlier said foreign direct investments in special economic zones across the country may suffer if the second package of tax reforms, or TRAIN 2, is enacted.

The Department of Finance however said the country needed to modernize fiscal incentives as the government gave away P301 billion pesos in revenues in 2015 alone because of tax perks granted to 2,844 firms. 

A version of TRAIN 2, called the Tax Reform for Attracting Better and High Quality Opportunities or TRABAHO bill, was passed by Congress on second reading earlier this week. 

- with a report from Warren De Guzman, ABS-CBN News