Motor vehicle groups watch further changes to incentives

AUTOMOTIVE GROUPS warily welcomed the Board of Investments’ (BoI) decision to review and possibly overhaul yet again the incentive program for the industry, but urged the state agency to move fast.

Consultations should be held soon to verify whether the changes eyed for the new Motor Vehicle Development Program (MVDP) will make way for more generous and production-based perks, industry leaders told BusinessWorld late last week.

This comes as BoI Managing Head Cristino L. Panlilio told reporters on Friday that he is considering amendments to the framework laid down by the previous administration in the last days of its term.

Executive Order 877-A, issued by Malacañang weeks before President Benigno Simeon C. Aquino III’s inauguration, was “within the box of the past” and needed to be recast to be “more responsive to the President’s calls for more employment,” Mr. Panlilio had said.

Before the EO was issued, BoI’s plan for the new program was to classify assemblers into two categories. Those that use more locally made parts and produce more models were to receive a bigger package of incentives than the rest.

But the final EO merely retained from the old program the investment amount required from companies seeking incentives and similar — albeit still general — provisions on restructuring excise taxes and import tariffs to favor locally made cars.

Instead, specific changes consisted of the establishment of a private-public sector council that would coordinate development efforts for the industry, the addition of more bureaucratic layers to further restrict the entry of imported secondhand vehicles, and the creation of a research fund for the local parts making industry.

The Philippine Automotive Competitiveness Council, Inc. (PACCI) — a group of car assemblers and parts makers — said they may be open to changes “if the intention is improve and expand the benefits to automotive manufacturers.”

“We’d like to sit down with BoI to see what they [sic] have in mind. We are enthusiastic about program changes that could allow our members to use their existing capacity and expand their work force,” PACCI Executive Director Benjamin C. Sevilla said in a telephone interview on Friday.

“But, of course, time remains of the essence. It would be ideal to see what changes they want as soon as possible,” Mr. Sevilla said.

The Chamber of Automotive Manufacturers of the Philippines, Inc. likewise sought a meeting with the state agency and similarly urged speedy action.

“We do need to act fast so the Philippines can actively participate in the developing opportunities… 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,” CAMPI President Elizabeth H. Lee said in an e-mail.

“Our neighbors [like] Indonesia and Vietnam, among others, are busy enticing and encouraging automakers to invest in their respective countries to build capacity to supply the growing demand,” she noted. “The Philippines should not be left behind.”  –J. A. D. HERMOSA, Senior Reporter, Businessworld