BOI tosses Norkis Automotive’s request to Malacañang

The Board of Investments (BOI) wants Malacañang to make the decision on the request of Norkis Automotive Resources Corp. (NARC) for more time to start its assembly of completely knocked-down (CKD) Chrysler vehicles.

In a memorandum, the BOI Engineering Industries Department (EID) said NARC may be allowed to open letters of credit to enable it to order the goods but it would not issue an import authorization unless it had been cleared by the Office of the President.

In a request filed with the BOI, NARC asked that its authority to import 500 semi knocked-down (SKD) units of Chrysler models be extended until March 2001 pending the approval of its request for the authority to import another 7,000 SKD units.

Under the rules of the BOI, car manufacturers have 18 months to develop the market and commence full CKD production. In the meantime, they are allowed to import SKD units with which they can establish a presence of the model in the market.

According to the BOI, the board had earlier made a ruling that it would approve no extension of the prescribed 18-month period without prior authority from the President. Companies are only allowed to import SKD units on a staggered basis within the period.

Most automotive manufacturers that availed of the privilege to import SKD units, the BOI said, were able to commence full CKD production in no more than one year except for NARC and Proton/Auto Prominence Corp.

Documents reveal that NARC has been authorized to import 500 SKD units as early as Sept. 30, 1998.

Since then, the import authority has been extended a number times. The last import authority was issued in July 2000 covering 260 units of SKD Chrysler vehicles. This authority was valid until August 2000.

The import authority covers all registered Chrysler brands – the Chrysler Jeep, Cherokee, Grand Caravan, Dakota pickup, Jeep Wrangler, Dodge Durango (both two and four-wheel drive models), Neon Base 200 cc and the Stratus 2000 cc.

To date, BOI documents show that only 271 units of the 500 units approved were imported usng this import authority, leaving a balance of 229 units that have yet to be imported.

NARC said the vehicles imported so far, were not enough for the company to conclude what model could be sustainable and merit consideration for full CKD assembly.

Because its production schedule had been delayed, NARC now wants to be allowed to import 1,000 SKD units in 2000, 2,500 SKD units in 2001 and 3,500 units in 2002. At the end of the period, the company would have imported a total of 7,000 SKD units.

According to NARC, it is Daimler-Chrysler International that needs two to three years to validate, test the market and product. The company said it has already earmarked a facility for the Chrysler models and it will not take too long to reactivate. NARC said it has entered into a long-term lease agreement with Trans Auto Manufacturing Corp. (TAMC) for the use of the latter’s existing trim chassis facility in the assembly of Chrysler and Matis CKD parts.

The assembly line to be set up, NARC said, could handle the assembly of both models through specifically designed jigs and tools unique to each brand. The company said the capital requirement for additional equipment needed when NARC goes into full CKD production are minimal and more assembly lines could be easily installed as the volume increases.