BoI wants to re-issue auto exports program

MANILA, Philippines – Motor vehicle assemblers were caught by surprise of a plan of the Board of Investments (BoI) to reissue the Automotive Exports Program (AEP) or Executive Order 244 to continue granting a special incentives package for exporters of completely built up (CBU) packs even as the agency is still having a hard time finalizing the implementing rules and regulations (IRR) of the Motor Vehicle Development Program (MVDP).

An industry official said the order to reissue the AEP, which was supposed to have expired in 2008, was made during the last meeting of the members of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) and BoI managing Cristino L. Panlilio, who called for the reissuance of the AEP.

Caught by surprise, CAMPI members immediately opposed the move saying the AEP needed review to find out why this special incentives program for the auto industry has only attracted one auto assembler, Ford Motor Group Philippines.

“There might be a need to review the threshold on volume requirements for CBU exports to be able to avail of the same incentives granted to Ford,” an official said.

The AEP, which grants a CBU exporter tax incentives upon meeting certain volume of CBU exports, was issued on October 3, 2003 as an accompanying EO to the Executive Order 156 or the Motor Vehicle Development Program (MVDP), which issued a year before by then President Gloria Arroyo. EO 244 has an effective period of five years from January 1, 2004 to December 31, 2008.

In particular, AEP calls for the availment of preferential tariff rates by participants in their importation of CBUs on the basis of equivalent foreign exchange earnings from their exports of CBUs.

“It could be that the AEP has set a very high threshold for local assemblers to comply that’s why it has only attracted a lone participants,” the industry official further said.

Another very important issue is that the AEP did not include exports of automotive parts and components.

The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) has been urging the government to seriously consider their industry as an essential component of the MVDP.

“MVPMAP would like the AEP to be expanded this time to include auto parts and components exports,” he said.

MVPMAP said its member companies exported more than $2.1 billion in auto parts and components and they expect to export more than $2.5 billion in 2010. Combined, they paid over P7.5 billion in salaries and wages. MVPMAP members are even at the forefront in the local manufacturing, assembly, sales and servicing of the electric jeepneys or eJeepneys, considered the vehicle of the future.

While the AEP has attracted only a lone volume CBU exporter, there are a number of homegrown auto parts and components that are also in dire need of government assistance.

Industry leaders said the BoI’s sudden thought of reissuing the old EO was the latest twist of events hounding the completion of the IRR for EO 877-A or the new MVDP.

E0 877-A was issued only in June this year after almost two years of grueling industry and government discussions, but until now its IRR has yet to be finalized.

EO 877-A supposedly provided for the crafting of an IRR by August 30 this year but it is already November and there is no clear indication as to when the rules is going to be completed. -BERNIE CAHILES-MAGKILAT, Manila Bulletin