BOI to include auto parts in export plan

The Board of Investments (BOI) will finalize by June this year plans for the inclusion of autoparts manufacturing under the Automotive Export Program (AEP).

Trade and Industry Secretary Juan B. Santos said he has ordered the completion of plans for an autoparts export program by June this year to dovetail with the signing of the Japan-Philippines Economic Partnership Agreement (JPEPA) in September.

The JPEPA is essentially a free trade agreement between Japan and the Philippines and would provide for a free flow of trade of goods and services between the two countries.

At present, the AEP is limited to the export of completely built up units.

The program provides incentives, in the form of tax credits, to participants.

Unfortunately, there is only one participant in the program – Ford Motor Co Philippines.

Other local assemblers, such as Toyota Motor Co., are already into autoparts manufacturing and export.

However, the current AEP has no provisions for autoparts exports.

The BOI, however, has been crafting an autoparts export program to provide the same incentives as the AEP.

Recently, the government provided an additional incentive to participation in the AEP by exempting participants in the AEP from a temporary increase in the import duty on big engine vehicles.

Under Executive Order 419, however, registered participants in the Automotive Export Program (AEP) are exempted from the so-called "gas guzzler" tax.

Ford is currently the only participant in the AEP.

Local automotive industry players are, thus, complaining that Ford is getting a "subsidy" at the expense of other automotive players who also stand to lose their market to the US automotive manufacturer of big engine vehicles.

EO 419, which was signed by President Arroyo just this April 4, imposes a 25 percent tariff on imported completely built-up units (CBUs) with an engine displacement of over 2,100 cc.

Previously, the tariff on imported big engine CBUs was only 20 percent.

The gas guzzler tax is being imposed for a period of one year starting this June supposedly as an energy conservation program.