BOI mulls perks for local auto assemblers

SANTA ROSA, Laguna , Philippines   â€“ The Board of Investments (BOI) is eyeing to introduce a new form of fiscal incentives for automotive firms with assembly operations here under the industry road map, an official yesterday said.

“The proposed incentives package for the automotive firms is different from the usual incentives. The government is shying away from giving income tax holidays and tax credits so we need other forms of fiscal incentives,” Rudy Cana, director for manufacturing industries division at the BOI said in a  public conference on automotive manufacturing organized by the city government of Santa Rosa.

He said it is difficult to propose fiscal measures because some are opposed to government providing support to the local automotive industry.

He declined to give details on the new form of fiscal incentives being considered but noted that the agency is committed to provide support to the local automotive industry.

This, as the automotive industry contributes to the economy through the direct employment of 68,000 individuals and the creation of 240,000 jobs in other automotive support industries.

The Philippines has lagged behind its peers in Southeast Asia  in terms of both vehicle sales and production given the small market here as well as the attractive incentives being offered by other countries in the region.

Cana said however, it is not too late for the Philippine automotive sector to recover on the back of improving economic conditions seen to drive demand for vehicles.

Under the automotive road map for the industry, he said the BOI is looking at providing incentives based on the performance of automotive firms.

Trade Secretary and BOI chairman Gregory Domingo said earlier the agency intends to provide incentives to automotive firms which meet the minimum volume of production of 40,000 units per model per year.

The minimum volume of production which will be qualified for incentives is intended to push the firms to hike their output to be able to export and become competitive.

Philippine Automotive Competitiveness Council Inc. executive director Ramon Vicente Kabigting said in the same event the group shares Domingo’s aspiration of making the local automotive industry competitive but noted that such will entail building up the domestic market first and the government providing support.

“The fact is that the automotive industry is one of the industries which deserve support,” he said, noting that apart from fiscal incentives, there are non-fiscal measures which can be used.

One way is for government agencies purchase locally made vehicles instead of imported units.

For his part, Philippine Automotive Federation Inc. president Vicente Mills, Jr. said incentives will have to be given for the country to be able to compete.

“Incentives have to come in because our competitors all subsidize local production,” he said.