Nestlé in political trouble in The Philippines
The global food giant, Nestlé, threatens the authorities to withdraw from The Philippines if the company does not receive tax privileges.
However, the political strategy turns against the food giant and now the company act contrite: “We have been in The Philippines for many decades and have a hundred-year perspective on our investments in the country”, sound the new signals to the government and public alike in The Philippines.
Nestlé said last week it would shut down its coffee processing plant in the Philippines unless it receives tax incentives from the government. The Swiss food multinational, which makes the popular Nescafe 3-in-1 coffee milk and sugar mix locally, said it has taken a hit from rising costs and tighter sugar supplies in the domestic market: To protect Philippine sugar growers, the government prohibits beverage makers from importing sugar. This put Nestlé at a disadvantage compared with rivals such as Indonesia's PT Mayora Indah, maker of Kopiko brand products, the company claims. Hence Nestlé was pushing for an exemption from the country's 12% value-added tax as compensation, writes Asian Review (www.asianreview.com).
“Regarding the proposed tax reforms currently debated among lawmakers, Nestlé hoped the company addressed the disadvantage of local manufacturers, which use local agriculture products, against those importing finished goods, especially from Southeast Asia”, according to Ernesto Mascenon, senior vice president and head of corporate affairs at Nestlé's Philippine unit. "Otherwise the option for us is we will close down our manufacturing here and just move to Indonesia, or Vietnam, Malaysia, and import," Mascenon said.
Political backlash
However, a public backlash very soon forced Nestlé to retreat from its threats. The comments, reported by the Nikkei Asian Review and local newspapers, drew national attention and sparked a flurry of comments on social media:
"No taxes for them. Then what's the point of having them in the Philippines?" asked a Facebook user.
"Kick Nestlé out," said another. "Corporate greed is destroying this world."
Looking forward to the next 100 years
Updated 13 September at 15.35 PM:
The senior management at the headquarters in Switzerland comments as follows on the matter:
"Nestlé Philippines is not planning to close any of its manufacturing facilities in the Philippines. Coffee under our NESCAFÉ brand remains to be a core pillar for us, and we are committed to support the local coffee industry and our coffee farmers to growth. We have been operating in the Philippines for 107 years now, and we look forward to doing business here in the next 100 years. Nestlé is here to stay."