MANILA -- A public backlash forced Nestle on Friday to retreat from its threat to close a Philippine factory unless it received tax incentives for sourcing raw materials locally.
"Nestle Philippines is not planning to close any of its manufacturing facilities in the Philippines," the company said in a statement. "We have been operating in the Philippines for 107 years now, and we look forward to doing business here in the next 100 years."
Today's climbdown came after a senior Nestle executive was quoted as saying earlier this week that the group hoped proposed tax reforms would "address the disadvantage of local manufacturers, which use local agriculture products, against those importing finished [goods]."
Ernesto Mascenon, a Nestle senior vice president in the Philippines, had warned that in the absence of acceptable tax reform, Nestle's option was to "close down our manufacturing here and just move to Indonesia, or Vietnam, Malaysia, [and] import."
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 Nestle out," said another. "Corporate greed is destroying this world."
Nestle has been struggling with rising input costs in the Philippines after a government ban on the import of sugar and imposition of a tax on sweetened drinks. This, Nestle argues, has made it less competitive in the Philippines. The company wants an exemption from the value-added tax to stay competitive.
Mascenon's comments come as Congress deliberates the second round of the government's tax reform program, which is re-evaluating fiscal incentives given to companies.
The executive also said the company is rethinking plans for its Nesfruta powder juice drink after the beverage tax drove sales down 30%. "We are looking at whether we will continue with the business or not," Mascenon said.
Last month, Mexico Coca-Cola FEMSA divested its 51% stake in the Philippine bottler of Coke due to the new tax regime and local sugar supply issues.