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Unilever threatens pullout over zoning ordinance

[ ] May 14, 2009


Dutch-owned Unilever Philippines yesterday said it would pull out its facilities from Manila and move to somewhere else in Asia if no amendment is made on a zoning ordinance that mandates all heavy and medium industries to move out of Manila in four years.

"That’s just a possibility if no amendment is made on a current ordinance that covers us," said Ramon Gil Macapagal, vice president for corporate development.

Macapagal said the pullout could translate to possible losses of over P2 billion annually. He said possible relocation sites are China, Indonesia, Vietnam or Thailand.

Unilever and 20 other companies, including match manufacturing firm Pimco, are to be hit by Ordinance 8119 enacted in 2006 , a parallel ordinance to 8027 which reclassified the area described therein from industrial to commercial.

"We are the invisible casualty," said Macapagal, saying that they are being overshadowed by the furor raised by another Ordinance 8027 which kicked out the three oil companies’ depot out of Pandacan.

Of the potential losses, Macapagal said P70 to P100 million is in the form of tax payments by the company and its employes to the city plus billions in taxes to the national government.

About P1 billion is estimated to be lost on its clients side, including suppliers including for raw ma

terials feeding its Paco plant.

The rest is for the annual P500 million capital invesments of Unilever to operate its plant.

But Macapagal said the bigger loss is on the soft side, as Unilever has been an active partner of Manila in social development such as Gawad Kalinga, nutrition program etc. and environment initiatives such as zero emission, zero pollution, etc.

Macapagal said the cost of relocating is too much.

"Why spend money (to relocate in the Philippines) when we can just expand an existing plant in the region?" he said.

"Times have changed. Some people might expect us to move to Batangas but it’s going to be the same. There are residential areas there as well. We are likely to move elsewhere like China, Indonesia, Vietnam or Thailand ," Macapagal said.

Unilever and the other industrial plants in Manila are supporting amendments to Ordinance 8119 via Ordinance 7177, the Manila Comprehensive Land Use Plan and Zoning, which reverts the classification to industrial and would thus allow them to retain their operations in the city.

Macapagal said the industries only have four years and the fate of Ordinance 7177 would enable them to plan out ahead.

"That will give us stability… and then we will see what we can do," Macapagal said.

But he said more than the losses, "the issue is not only employment to Manila but for the entire Philippines."

With an annual sales of over P24 billion, Unilever Philippines employs over 2,000 people nationally plus indirect employes of another 1,000.

The business has grown from strength to strength with the presence of its four operating companies: Unilever Foods, Unilever Foodsolutions, Unilever Philippines , and Unilever RFM Ice Cream. Unilever has been in the Philippines for 78 years.


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