Car industry warns time running out for Philippines

AUTO industry associations want the Aquino administration to expedite its review of the Comprehensive Motor Vehicle Development Program (CMVDP) so the country can catch up with its Southeast Asian neighbors. Department of Trade and Industry (DTI) Undersecretary Cristino Panlilio, who is also Board of Investments (BOI) managing head, said last week said that the government will review Executive Order 877-A to align it with the employment generation thrust of the Aquino administration.

The DTI and BOI are in charge of implementing the CMVDP, which was approved to align the Philippines’ old auto program with the mandates of a number of free-trade agreements that the country has since entered into.

“An initiative to make EO 877-A more responsive to the needs of the new administration for increased employment is seen by us as a positive development because there is the underlying promise of more production, which would make us more competitive in the region and accelerate further technology transfer to the Philippines,” Benjamin Sevilla, Philippine Automotive Competitive Council Inc. (Pacci) executive director, said in an interview last week.

“We hope, however, that these positive changes can be accommodated within the existing time frame for the implementing guidelines [of the CMVDP],” Sevilla said. Pacci groups five auto assemblers and the Motor Vehicle Parts Manufacturers Association of the Philippines Inc. (MVPMAP).

While it “support the Aquino administration’s objective to create more employment,” the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) however said that “the industry has yet to be called for a meeting regarding the review.”

Elizabeth Lee, Campi president, said industry players and the government were amid several meetings on the IRR [implementing rules and regulations]” of the CMVDP before the review of the program was announced.

Campi groups 20 car companies.

“We look forward to a meeting with the BOI/DTI at the soonest time possible,” Lee said.

The Philippines “needs to act fast” so that it can tap the potential opportunities that automotive manufacturing offers to the Southeast Asian region, she said.

“Asean [the Association of Southeast Asian Nations] as a group is seen as one of the key emerging markets, and the Philippines should keep up and be a beneficiary of the growth,” she said.

“Our neighbors [such us] Indonesia [and] Vietnam are busy enticing and encouraging automakers to invest in their respective countries to build capacity to supply the growing demand. The Philippines should not be left behind,” she said.

The Campi official said the country has much underutilized capacity in its vehicle assembly plants, which could be tapped by existing investors.

Only about 40 percent of the domestic automotive production capacity is in use.

“The immediate advantage for the Philippines is the underutilized assembly/manufacturing plants. With the utilization of this excess capacity, the immediate impact would be job creation for auto workers as well as increased demand for locally produced parts and components.

However, we must be competitive [as] the Philippines will be compared to other countries,” Lee said.

Sevilla agreed that the Philippines is lagging behind its Southeast Asian counterparts in auto manufacturing.

He cited latest data from the Asean Automotive Federation, which showed that auto production in the Philippines is growing the slowest among five countries in the region during the first six months of this year.

Production of four-wheel vehicles in Thailand until end-June this year grew to 768,994 units, almost double the production in the same six-month period last year. Production volume in Indonesia grew 65.2 percent to 336,827 units, while assembly in Malaysia was up 27.8 percent to 293,783 units.

In Vietnam, production went up 22.7 percent to 49,165 units in the first six months of the year.

In the Philippines, output during the six-month period was 35,617 units, an increase of 21.9 percent year-on-year. But the country has the lowest output among the five nations, as well as the smallest production growth.

Local vehicle sales in the first six months of this year reached 82,147 units—more than double the domestic production output.

In contrast, fast-rising Vietnam’s vehicle production volume in the six-month period is just a little less than auto sales there worth 50,278 units during the same period. –Ben Arnold O. de Vera Reporter, Manila Times