FairTrade asks PGMA to repeal new car program

The multisectoral Fair Trade Alliance (FairTrade) asked President Gloria Arroyo to revoke the recently signed order that paved the way for the new auto industry development program.

“As the last legacy of your Presidency, we earnestly hope that you recall EO [Executive Order] 877 and come up with an amended one which will in fact ensure sustained growth of the industry,” Wigberto Tañada, FairTrade lead convenor, said in a letter to President Arroyo dated May 26.

The EO or the Comprehensive Motor Vehicle Development Program (MVDP) was signed last month.

The former senator said the new auto development program “clearly allows” the importation of used vehicles, as provided under Article 2, Sections 2, 3c, 3d, 5 and 6 and Article 7, Section 1.

This would encourage smuggling and importation of used vehicles, Tañada said.

“Upon our deeper analysis of EO 877, we believe that this new policy will not only erode the industry’s competitiveness but will also put at greater risk existing jobs, income and investments,” he said.

FairTrade claimed that the Board of Investments (BOI)—the agency which spearheaded the drafting of the new MVDP—had said that the preceding order, EO 156, was a “failure” since it did not help grow the domestic auto sector.

Tañada said that the new MVDP will negatively affect future and even existing investment in the industry” as the new EO did not retain the requirement for investors to infuse at least $10 million for the assembly of passenger cars and $8 million for commercial vehicles, which were provided under EO 156.

“These provisions were included in EO 156 precisely to entice investment in CKD [completely knocked down] operation and therefore create more jobs and value-adding activity in the country. But with the new EO, we are afraid that investment in CKD operation will slow down and turn some of the auto companies as just importer and distributor of completely built up [CBU] automotive units,” Tañada said.

He said an amendment to EO 877 should be made via a transparent and multisectoral process. –Ben Arnold O. De Vera, Manila Times