Auto industry presents roadmap

MANILA, Philippines - The local auto industry is asking up to 100 percent excise tax rebate from the government to make local manufacturing more competitive.

During the Third Automotive Manufacturing Summit held yesterday at the Hotel Intercon, the Philippine Automotive Competitiveness Council Inc. (PACCI) presented a roadmap made by the University of Asia and the Pacific in response to the call of the Department of Trade and Industry (DTI) for the auto industry to present what they need in order for local manufacturing to take off and eventually increase export.

PACCI said that for local production the support they need is an excise tax rebate of up to 100 percent to encourage local sales and improve the model’s competitiveness.

The industry would like the rebate to be applicable to models that are designated for export.

For the new vehicle upgrade support, they would like an excise tax rebate of 50 percent. This could encourage the modernization of the country’s vehicle fleet. This could also provide upgrade financing support for priority vehicle types.

Meanwhile, Vicente Mills Jr., president of the Philippine Automotive Federation and the ASEAN Automotive Federation, said it is imperative that this transformation takes place to address the declining share of locally manufactured vehicles (LMV) in the domestic market and allow the industry to access and meaningfully participate in the soon to evolve ASEAN common market.

Over a 10-year period, from years 2000 to 2010, local sales of LMVs declined from 96 percent to 44 percent of total sales. When compared to total new vehicle registrations, the share of LMVs in 2010 is even lower, at 34 percent or 75,000 units - a third of the industry’s total production capacity of 250,000.

The roadmap consists of three principal stages, namely the local market buildup phase with the extension of incentives for complete vehicle, parts and components exports; the expansion of local vehicle sales and of exports of the selected models for local manufacture and lastly, by 2020, the integration of the local automotive manufacturing sector into the regional vehicle, parts and components sourcing network of the brand principals.

 “To achieve regional competitiveness of our vehicles, we must build and/or expand capabilities in manufacturing critical parts such as vehicle body stampings, injection molding of large parts, engines, suspension and steering systems and other parts that we don’t currently produce in the Philippines,” Mills said.

For his part, PACCI president Feliciano Torres said that the industry must act now to build scale and attain regional competitive to be able to take advantage of the ASEAN single market.

“We can and should aim to become an alternative ASEAN production hub. We have the strengths — a total production capacity of 250,000 units annually and an abundant supply of skilled manpower in the field of auto and auto parts and components manufacturing,” said Torres. 

Torres added that an important aspect of the industry roadmap development process is the renewal and strengthening of the strategic partnership between the government and the private sector.

“This private-public partnership approach must be established as this will insure that sector development directions, reforms and policies are appropriate and consistent with the vision of all of the industry’s stakeholders,” he said.