Assemblers sound off SOS as crisis bites

Published by rudy Date posted on February 6, 2009

Local vehicle assemblers are lining up strategies that would include seeking an amendment of the bond requirement for excise tax payment and a string of perks to buyers to maintain profitability and shield thousands of workers from losing their jobs.

The vehicle assembly industry said it is keeping a four percent sales growth target for the year.

Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) president Elizabeth Lee said despite the crippling effects of the global financial crisis on the industry, particularly to major markets like the United States, Europe and Japan, the Philippines continues to keep its strength in terms of sales and workforce.

Lee hinted at bolder moves in store among members of the industry to sustain jobs and growth through government support that would require several steps in changing existing policies on taxes and duties, fiscal and non-fiscal incentives, financing, upgrading of public transport and expansion of the assembly of CKD (completely-knocked-down) kits.

The industry also wants President Arroyo to require government agencies to give priority to the purchase of locally assembled vehicles.

Lee said the industry will discuss with the Bureau of Internal Revenue a formal proposal that would revise Section 14 (2) of RR-25-2003 that requires carmakers to post a bond equivalent of the actual total excise taxes paid during the year immediately preceding the year of operation.

Campi secretary general Homer Maranan, meanwhile, explained that posting that much amount as bond even before a year of actual operation was already burdensome to assemblers even before the crisis.

Under an existing regulation, the industry is required to pay 100 percent equivalent amount of bond while, the industry argued, sin products are only asked to pay 10 percent. Revenue collection from the industry alone, could amount to billions of pesos.

Maranan added the industry will try to negotiate or at least match the rate required on sin products. He said it would only take an administrative order to effect this proposal.

The excise tax paid by a company varies on the price of vehicle model. Rates ranges from 3 percent to as high as 7.5 percent.

The industry will also ask the help of the Bangko Sentral ng Pilipinas to determine a way to change the financing rules of banks like removing for the meantime the 20 percent down payment, and the lowering of interest rates to provide incentives to buyers.

Government agencies, on the other hand, should strictly observe Administrative Order (AO) 227 requiring government agencies and its units to give preference to locally made goods on its purchases.

Lee explained there would be a need to clarify or amend if needed AO 227 to prevent the use of product specification to disqualify from government purchases locally produced cars in favor of imports.

On the retention of CKD operation, Lee said the Board of Investments has already agreed to craft policy support to help the CKD operations of the industry that should include incentives such as excise tax preference, permanent inclusion in the Investment Priorities Plan, and work with other agencies to create market opportunities such as refleeting of public transport, improvement of infrastructure, franchise allocation and socialized auto loan program.

Moreover, Automotive Industry Workers Alliance president and Toyota worker Angel Dimalanta said that workers in the industry are assured to jobs and that there will be no massive job loss despite the economic slowdown.

He, however, admitted there are companies that have already gone into reduced working hours like the Nissan Motors Philippine Inc. which is now operating on an 18-day a month basis.

Toyota Motor Philippines Corp., meantime, operates at only 9 shifts a week instead of 10, adding that Toyota is set to regularize 95 of its casual employees this month.

Except for Mitsubishi which has 88 workers to go on early retirement, the rest of the car companies are keeping most of their workers, he added.

In Mitsubishi, those 50 years old and above in the service are offered attractive separation packages to leave the service.

But for auto parts and components makers, Philippine Metal Workers Alliance president and Mitsubishi worker Frank Mero said over 2,000 workers are now being assisted by the industry together with the Department of Labor and Employment (DOLE) for jobs placement in livelihood programs of the government. Total workforce of the industry is around 144,000.

These are workers retrenched workers from electronics plants for wiring harness like the Yazaki Torres and Pilipinas Kyoritsu. Both companies used to export 95 percent of their total production.–Ayen Infante, Daily Tribune

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