Gov’t looking to lower costs for automakers

POLICIES to lower the costs of parts and production are being considered by the government in a bid to entice more car assemblers into exporting, officials last week said.

Cheaper power could be included in the implementing rules of the new Motor Vehicle Development Program so that products can be priced more attractively, lure enough buyers and justify increased production, Board of Investments (BoI) Executive Director Efren V. Leano said.

An industry fund to improve the productivity of parts makers is also in the works so that they can supply less pricey components, Philippine Automotive Competitiveness Council, Inc. Executive Director Benjamin C. Sevilla added.

The proposals are among the approaches being considered for an incentive package an earlier program mainly tackled through tax perks and antismuggling efforts.

“The topic of the meetings for the next one to two weeks is what assemblers need to eventually export,” said Mr. Leano, who overlooks the drafting of the implementing rules due by end-September, in a chance interview.

Once finalized, the rules will put into effect the new incentive package laid down by Executive Order (EO) 877-A, which aims to grow an industry whose export volume — now accounted for by just one automotive firm — is dwarfed by those of other Southeast Asian economies.

“What do they need to bring down their prices so more people can buy and spur more manufacturing? We will check if it’s possible to lower existing power rates,” Mr. Leano said.

“And we need to bring down the cost of parts to have an increase in car and part sales,” he added.

Talks are now under way to firm up a mechanism for disbursing the industry fund provided by EO 877-A for research and development activities, Mr. Sevilla said.

“This is the topic of active discussion now: approaches to making the industry fund truly meaningful,” he said.

“I believe there needs to be more focus on strengthening the parts industry. The more local parts are there, the more chances they can sell it to [more markets abroad],” Mr. Sevilla added, noting that this will achieve economies of scale.

“The success of the industry to increase exports will require a holistic approach that is not only limited to fiscal incentives,” he said. — Jessica Anne D. Hermosa, Businessworld