Ayala-led IMI setting sights on Russian market
INTEGRATED Micro- electronics, Inc. ( IMI) is planning to expand into the Russian market, once its manufacturing facility in Serbia starts operations next year.
“It gives us the window into expanding into the union market, and at the same time, Serbia… has a free trade agreement with Russia. We now have a facility that has an access with a free trade agreement (FTA) directly within that economy line,” IMI Chief Executive Officer Arthur R. Tan said in a media briefing after the company’s annual stockholders’ meeting in Laguna last Friday.
The Ayala-led firm earlier said it is building a manufacturing plant in the Serbian city of Nis, which is scheduled to become operational by July 2018.
According to the Web site of the Development Agency of Serbia, the country can serve as a manufacturing hub for duty-free exports to a market of more than one billion, including the Russian economy. Serbia’s FTA with Russia stipulates that goods produced having at least 51% value added in the country are exported to Russia duty free.
For its new facility, the company received incentives from the Serbian government, such as an income tax holiday for the next 10 years and cash incentives of up to € 8.5 million based on achievement of employment and revenue milestones.
“This will help us improve our profitability overall because we don’t have to pay the tax rates in Serbia for 10 years,” IMI President Gilles Bernard said.
Mr. Tan added that the income tax holiday would help the firm offset additional logistics costs because of Serbia’s location.
“How we’re going to use the incentive is that we’re going to use it as a means to make ourselves more competitive in providing the parts out of Serbia in spite of some of the logistics and challenges that Serbia may have because of its location. We’re going to try to be able to counter that because of the incentives,” Mr. Tan said.
Mr. Tan noted the income tax holiday shows the Serbian government’s commitment to industrializing their economy. “It shows how committed the country and the government is in being able to develop their high tech manufacturing economy,” he added.
IMI offers electronics manufacturing services and power semiconductor assembly and test services. Its market spans the automotive, industrial, medical, solar energy, telecommunications infrastructure, storage device, and consumer electronics industries.
IMI currently has operations in the United States, Mexico, Czech Republic, Bulgaria, China, Singapore, and the Philippines.
On Thursday, IMI said it has acquired an 80% stake in Surface Technology International (STI) Enterprises Ltd. Its subsidiary Integrated Micro- Electronics UK Ltd. acquired STI to enable an expansion into aerospace and defense, while also strengthening its industrial business as well as its technology and development engineering processes.
STI provides services in electronics design and manufacturing solutions for printed circuit board assembly and full box-build manufacturing for high-reliability industries, according to the disclosure.
IMI reported a 2.5% drop in profit in 2016, despite growing its operating revenues and margins amid a “challenging” environment for electronics manufacturing.
The Ayala- led electronics manufacturing services provider said transactions costs related to acquisitions along with fluctuations in the renminbi dragged its net income to $28.1 million, from $28.79 billion of earnings attributed to the parent in 2015. —