Local auto parts makers seek perks

DOMESTIC auto parts makers want the government to grant perks to assemblers that would source their components from the Philippines. In a position paper submitted to the Board of Investments, Antonio Gimenez, Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) executive director, said both the government and the local automotive industry should aim for up to 500,000 new vehicles that have high local content.

Gimenez said that such an output will generate up to 200,000 additional jobs not only in vehicle assembly and parts manufacturing but also in ancillary industries.

The MVPMAP official said this target can be achieved partly by providing assemblers and manufacturers a production incentive, in the form of tax credit for producing and/or using locally made parts.

He said this incentive can be funded using the proceeds from a higher excise tax.

“[The government should] restructure the excise tax to include gas guzzler[s], and balance this to motivate production of small family vans and electric vehicles,” he said.

Laws restricting the entry of second-hand vehicles and parts should be strictly implemented to discourage the importation of used vehicles and parts.

Data from the Philippine Automotive Competitiveness Council Inc. (PACCI), of which MVPMAP is a member, shows that only 49 percent of vehicles sold in the country last year were assembled locally.

In contrast, 90 percent of vehicles sold in 1996 were manufactured here.

The decline in sales of locally assembled vehicles has reduced current industry capacity utilization to only about a quarter of the combined 250,000-unit installed capacity of assemblers.

This has resulted in job losses reaching about 70,000 in the last 10 years, according to PACCI.

Gimenez said the government should provide incentives for the production of low-cost motorcycles, bus and truck bodies and small family vans, preferably a seven-seater type with engine displacement of between 1000 cc and 1200 cc.

Domestic motorcycle sales have been averaging about 500,000 units a year, he said.

“With this volume, special toolings and machineries can be developed . . . Motorcycles can be the driving force of the automotive industry,” he said.

“We can be very competitive if [bus and truck body manufacturing] is given focused attention and fiscal incentives,” he said.

Assembling affordable family vans can expand the vehicle-buying market to lower income, middle class Filipino families, the MVPMAP official also said. –BEN ARNOLD O. DE VERA REPORTER, Manila Times