Real factors hurting RP auto industry

THIS IS in response to Daxim Lucas’ article “Protectionism seen hurting RP auto industry.” (Inquirer, 9/13/10)

Protectionism is not the issue for the sluggish development of the auto industry. It is the failure of the government to support the local industry through cheaper credit, more efficient infrastructure, better research and development, market development assistance, harmonized trade and domestic policies and so on.

Our labor affiliates in the automotive sector have identified three main reasons that block the industry’s faster growth and development: one, the outright and technical smuggling of new and second-hand vehicles; two, the imposition of excessive excise taxes on locally produced AUVs and other vehicles; and three, the reduction of tariffs for imports to 0-5 percent under the AFTA-CEPT.

But it is the unabated smuggling and importation of vehicles, second-hand vehicles and used engines and motor parts from Japan, the United States and Korea that are really doing the damage, that are causing the market share of the local automotive industry to decline. In 2003, the Land Transportation Office (LTO) registered a total of 195,564 “new” vehicles, but only 92,336 of this came from the local industry; meaning more than half of the total vehicles registered were imported. Most of these imports were smuggled.

We at the Alliance propose to overhaul the trade and development policy regime that has been in place in the last three decades. This policy regime has not worked and has failed the country. It is time for the current administration to make a bold break from the past by initiating radical changes in the country’s economic blueprint.

One step is to amend the Comprehensive Motor Vehicle Development Program (MVDP) or Executive Order 877-A to serve its purpose of strengthening the local automotive industry. We propose that it should be amended to include the strict prohibition on the importation of used engines, parts and components for all motor vehicles. With the current MVDP, all it takes to import used engines, parts and components is to secure an authority to import from the Department of Trade Industry. This clearly violates the Supreme Court decision, rendered in February 2006, against the importation of second-hand vehicles and parts. —
Philippine Daily Inquirer

—ALLAN DUANE A. MENDOZA,

Media Liaison, Fair Trade Alliance,
adamendoza@gmail.com