Study urges performance-based incentives for local auto industry

MANILA, Philippines – The government must provide performance based incentive package to help the local auto industry, a study commissioned by Toyota and other local car manufacturers said.

In a study made by visiting researcher from the Japan-based Sekiguchi Global Research Association (SGRA), Ferdinand O. Maquito said that the growth of the auto industry will have a big effect on the local economy.

The Philippine Automotive Competitiveness Council Inc. (PACCI) hosted a press conference wherein Maquito said that the local auto industry can be a catalyst to spur economic growth.

The study showed that the root of the problem of the auto industry is the poorly designed and poorly implemented social contracts.

Maquito said that the problem in the auto industry can be solved by creating a special body that will closely monitor the performance of the auto industry and the amount of support given by the government.

“There is no close coordination between the government and the industry,” Maquito said.

According to him, automotive companies prefer to invest in Thailand because the Thai government closely works with the industry. “Our research showed that the car companies in Thailand were always approached by the government.”

In the Philippines meanwhile, Maquito said the government is only giving incentive to encourage investors to come in.

“Usually the government gives one shot deal but there is really no clear guidance from the government,” he noted.

Maquito said they are studying how the government can give more perks to companies that are producing more cars in the country.

Aside from giving more perks, Maquito said frequent revision of programs by the government tend to confuse both potential and existing investors.

“The government keeps changing the rules in the middle of the game,” he said. Maquito said the behavior makes it difficult for businesses to keep up with the programs and regulations. –Ma. Elisa P. Osorio (The Philippine Star)