BMW not likely to set up full manufacturing operations in RP

German car maker BMW is not likely to set up full manufacturing operations in the country even with the advent of the ASEAN Free Trade Area (AFTA).

BMW Philippines Corp. president Mark Gilbert said yesterday that the advent of AFTA is not likely to result in a change in BMW’s current manufacturing operations.

BMW Philippines only assembles completely knocked-down units (CKDs) which it imports from Germany or the US.

Gilbert said "going into full manufacturing operations in the Philippines faces several constraints."

One such constraint, Gilbert said, is the Philippines’ left-hand drive standard, while other countries in the region such as Hong Kong, Singapore and Thailand have a right-had drive standard.

"At the same time, under AFTA, not all the countries in the region would be ideal for full manufacturing operations," Gilbert said, adding that "more likely it would be better for the Philippines to concentrate on components manufacturing."

For instance, Gilbert said, there are at least two companies located in the Philippines that supply BMW’s global operations with electronic control sets for car seats and air bags.

Gilbert said the Philippines instead should concentrate on providing sophisticated electronic control sets.

Lastly, Gilbert cited the need for "a steady market environment."

He also said they expect the government to address concerns about the influx of imported vehicles in the still unsigned revised Motor Vehicle Development Program (MVDP).

The revised MVDP is expected to set the new excise tax system which would impose rates of three percent, 15 percent, 30 percent, and 100 percent.

The 100-percent excise tax would be slapped on luxury vehicles like BMW.

"BMW feels that the sudden rate jump to 100 percent is too stiff and instead should be closer to between 40 percent and 50 percent," Gilbert said.

"Because of the high excise tax, BMW has not been more competitive than it would like to be," Gilbert said.