Congress may give tax breaks to auto parts makers

MANILA, Philippines - Congress is looking at passing a bill that will not only provide incentives to auto manufacturers but also give tax breaks even to auto parts makers because the government is still unable to implement the Comprehensive Motor Vehicle Development Plan (CMVDP).

In an interview with reporters, Congressman Albert Garcia who heads the committee on trade and industry, said they are looking at expanding the bill filed by Congressman Rufus Rodriguez.

Garcia said they are considering expanding the bill and include more components in the MVDP. The executive order for CMVDP was signed by former President Arroyo before she stepped down from office. However, the Board of Investments (BOI) still has not crafted the implementing rules and regulations (IRR) due to differences in opinion.

Unlike the EO, a bill once passed into law, cannot be delayed because the law will give a deadline to the implementing agency for the creation of the IRR. The IRR for the CMVDP has been delayed for more than a year now.

Garcia said they can consider including additional tax breaks for auto manufacturers but they will have to include the ways and means committee of congress.

Garcia said they are in talks with the Board of Investments and the private sector to help make the bill more comprehensive. They would also like to consider the incentives given by our neighboring countries like Thailand.

The MVDP or EO 877-A was expected to increase investments in the automotive industry by making the country a more attractive destination for car makers. 

The implementation of the MVDP has been delayed  because the IRR for cars cannot be completed. The IRR for motorcycle and second hand vehicles were finished ahead of the problematic car component.

 The BOI said the government would like car manufacturers to export domestically produced vehicle but the manufacturers refuse because the domestic base is too small so it is not viable to export. Panlilio said the solution is to increase the export base but this requires increasing the purchasing power of the Filipinos so that more people can afford to buy cars.

In the meantime, BOI said they are waiting for a study by the University of Asia and the Pacific because it might offer new insights on the industry. The study was supposed to be completed last February.

The inclusion of the private sector component in the MVDP  is one of the major reasons why the government still has not come out with the implementing IRR for Executive Order 877-A.