Keep proposed incentives, car parts firms urge gov’t

CAR PARTS makers want the Board of Investments (BoI) to retain provisions establishing an industry development fund as the agency moves to review and possibly revise a new incentive package for the automotive industry.

Provisions in the program’s draft rules — also up for an overhaul — that grant perks depending on a model’s local content should likewise kept, the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) said.

“We’re running out of time. The Motor Vehicle Development Program has been in the works for two years already and yet we are still here,” MVPMAP President Rafael G. Villarreal said in a telephone interview yesterday.

“The industry development fund is very important … And yes, local content [too].”

The fund is among the provisions of Executive Order 877-A which was issued earlier this year by the previous administration. It will be used to pay for research and development projects for parts making and will be sourced from the budget of and donations to a public-private sector Motor Vehicles Industry Council.

Draft implementing rules for the EO, meanwhile, require certain vehicles to contain at least 40% local input to qualify for incentives.

The BoI last week said the EO was now up for review and that the drafting of the implementing rules would be halted to tweak incentives for job creation.

“They said [the revision] is to create jobs. I don’t what that means. We hope [it will be ready] according to the time frame,” Mr. Villarreal said, referring to an end-August deadline for the completion of the implementing rules.

The group reiterated in a statement yesterday that an upgraded incentive package was needed to allow the country to keep up with competing Southeast Asian investment sites.

Manufacturers must be favored, the group added, contrary to the calls by the Association of Vehicle Importers and Distributors which includes the market’s third top seller, Hyundai Asia Resources, Inc.

“There is a lot of idle capacity available. In the case of local auto parts makers, it is about 60%. The challenge now is to bring this idle plant capacity down to 40% or even lower,” the MVPMAP said.

“By providing incentives, support and the right business environment, auto and parts manufacturers will be more competitive in the international arena, more jobs will be generated and soon, more local products can be exported.”  –BY J. A. D. Hermosa, Senior Reporter, Businessworld