Ford asks government to relax rules on export credits

MANILA, Philippines - Ford Motor Philippines has asked the government to relax the rules on export credits as the American automobile firm grapples with the worldwide crisis which has plagued the industry since last year.

In an interview, Board of Investments (BOI) managing head Elmer C. Hernandez said Ford has asked the government if it can suspend the rule on minimum export requirements because it will be unable to meet the agreed number of exports for this fiscal year. Ford’s fiscal year will end in May.

According to Hernandez, the request was made several months ago when Ford realized that it will not be able to export the required 5,000 units or $75 million worth of vehicles as agreed upon in the government’s export program.

“Ford would like to earn export credits even if they don’t meet the minimum requirements,” Hernandez said.

Ford is the only member of the export program. Under this, Ford will be able to get tax credits for all the vehicles they will import in the country if they meet the minimum. If not, Ford at the end of their fiscal year, will have to return to the government all the discounts given to them.

Hernandez said they do not know how much exactly Ford was able to export this year but said it is safe to assume that it is below 5,000 units.

When asked if they will grant the request of the American auto firm, Hernandez said “BOI is looking favorably at their request.”

Hernandez said they are considering approving the request of suspending the minimum requirement until December 2009. This means that Ford will be saved from refunding the credits given by government last year.

He said the suspension is subject to extension depending on how long the crisis in the automotive industry will last. “Similar to the income tax holidays that we have given, this will be subject to extensions. We will have to deliberate again when the time comes.”

“We might adopt a policy of relaxation of export commitments and movement of tax holiday because of the crisis,” Hernandez who is also an undersecretary of the Department of Trade and Industry (DTI) said.

However, Hernandez said they will put restrictions in the suspension. “We might require them to maintain their current workforce if they would like to avail of the import credits even if they have not met the export requirements.”

This means that even if the production in their local plant will drop because of lower export requirements, Ford will not fire people working for them.

Hernandez noted that in the three years that Ford has been a part of the program, this is the first time that they will not be able to comply with the export requirement. A firm can be a part of the export program for five years.