Proton Philippines Corp. (PPC) has spinned off the assembly of its primary vehicle brands to Auto Prominence Corp. (APC), a company 100 percent owned by its local stockholders.
Documents obtained from the Board of Investments (BOI) indicated that PPC had sought approval for the transfer of its participation in the Car Development Program to APC for the manufacture of Volkswagen, AUDI and Alpha Romeo brands, as well as the assembly of the IVECO, TATA and TRASCO.
According to the BOI documents, APC also has to pay the required filling and registration fees for its participation in the CDP as well as surrender PPC's original certificate of registration for proper annotation.
The transfer effectively allows APC to assemble the Volkswagen and AUDI and PPC need only to submit the import and distribution agreement to the BOI in order to complete the transfer of Alfa Romeo, IVECO, TATA and TRASCO to APC.
Further, documents show that PPC was also able to secure approval from Malacañang allowing APC to extend the unutilized portion of its authority to import semi-knockdown (SKD) units under the government's Motor Vehicle Development Program.
However, the BOI ruled that APC has to secure a separate clearance before APC could avail of PPC's SKD import privileges which would allow it to import units at preferential tariff rates, subject to several conditions.
According to the BOI, APC would carry PPC's commitment to export 50 percent of the non-AIJV models it would assemble, such as AUDI, Alfa Romeo and Volkswagen. If it fails to comply, APC would have to pay the difference of the 40-percent duty on completely built-up (CBU) units and the three-percent duty on completely knockdown (CKD) units for all imported SKD units, including assessed interests.
The BOI said APC also has to generate foreign exchange earnings to cover the regular new foreign exchange earnings (NFEE) requirement of 50 percent for car models and 15 percent for the commercial vehicle models as provided under the MVDP guidelines.
APC will also be allowed to import upgraded models but it has to submit a certification from the foreign brand owner indicating that the old models have been phased out and no longer available and that the new upgrades will be registered under the MVDP.
"In case of substitution of entirely new models, the BOI ruled that this would have to be subject to another Malacañang approval," the documents said.