DTI tells auto parts makers to offer more products

The Department of Trade and Industry told local auto parts makers to look into offering more diverse products to make the industry more competitive.

In a recent meeting, Trade Undersecretary Elmer Hernandez told members of the Motor Vehicle Parts Manufacturers Association of the Philippines Inc. (MVPMAP) that they should “widen their horizon” and make parts that are not traditionally manufactured locally.

Hernandez, who is also managing head of the Board of Investments, said local producers churn out only a tenth of the types of about 10,000 vehicle parts. The Philippines is among the top producers of transmission parts.

To start this diversification process, the Trade official said local parts makers should improve on their intelligence gathering.

“This [intelligence gathering] should not be the sole responsibility of the government, given our limited funds. The industry itself should know what the competition [is] doing,” he said.

He added that the government will assist the domestic industry by revisiting commitments under various trade agreements and coming up with strategies to move forward the domestic auto parts industry.

The official said the country can still tap flexibilities under Executive Order 262 and trade pacts such as the Japan-Philippines Economic Partnership Agreement (JPEPA) and the Asean Free Trade Area (AFTA).

“There are certain flexibilities through which we will continue to provide protection to local producers of parts,” he said.

Under AFTA, local manufacturers must still compete on a bigger parts segment for them to have a larger share of the market even if tariff rates on motor vehicle parts will be zero by next year.

“It does not mean [local auto parts makers] should give up. They should look into producing that part, too. We will become globally competitive if we know how to compete,” he said. –Ben Arnold O. de Vera, Reporter