‘Export strategy’ for auto manufacturing needed

THE Philippine auto-manufacturing industry should formulate an “export strategy” to boost its regional competitiveness before the government can consider added incentives, Trade Secretary Gregory Domingo said on Tuesday.

Domingo was responding to queries from the media on whether the government will lend added support to the industry’s assembly operations and reverse the current situation in which more imported vehicles are being sold in the market than those manufactured locally.

A recent University of Asia and the Pacific (UA&P) study said this industry showed better economic multiplier benefits than the six priority sectors earlier identified by the Aquino administration.

“I think there has to be a credible strategy where we will reverse this decline in domestic production,” Domingo said, following an event commemorating the Department of Trade and Industry’s (DTI) Consumer Welfare Month.

“But it has to be an export strategy, especially that the domestic base is increasing in terms of sales. Then there is more justification to start focusing on the export market.”

“If you cannot export, then I cannot call your industry competitive,” the government executive added.

Domingo said the DTI is open to working with stakeholders in the auto-manufacturing sector, noting that the plan will need to be “integrated” and should include local vehicle-parts manufacturers, which have already begun shipping their products overseas.

He said the fact that the industry could barely export shows that it is not regionally competitive, and this does not give the government enough reason to include auto manufacturing on the list of priority sectors which include electronics, business-process outsourcing, tourism, mining, agribusiness and infrastructure.

UA&P noted in its study that the auto-manufacturing sector in the Philippines provided superior multiplier benefits in terms of income and employment.

UA&P economist Dr. Cid Terosa said the P100 billion the auto industry invested to date has resulted in another P367 billion of additional output in the economy, P27.2 billion additional household income and 169,000 additional jobs.

Other economists suggested nontax revenue-eroding schemes, such as curbing the strong Philippine peso, which encourages imports.

In 1996, when the country recorded its highest-ever total auto sales of more than 162,000 units, the industry was already producing more than 120,000 units annually. This, however, fell dramatically since, and this year locally assembled vehicles account for only about 70,000 units of total sales so far.

In the first quarter of the year, auto sales jumped by 35 percent compared with the same period last year. The industry is looking at achieving total sales of 175,000 units for 2010. –Miguel R. Camus & Max de Leon / Reporters, Businessmirror