MANILA, Philippines - The United States is exploring ways to use its technical assistance projects in the Philippines to keep pressure on the government for a more sincere and vigorous anti-smuggling drive, according to whistle-blowing website WikiLeaks.
A diplomatic cable “07Manila 3387” tagged as “Unclassified/For Official Use Only” sent by then Charge d’Affaires Paul Jones from the US embassy in Manila to Washington said that lack of political will and weak law enforcement have allowed widespread smuggling of refined petroleum products and secondhand vehicles through the Subic Freeport, seriously hurting legitimate businesses.
The cable said car manufacturers in the country also estimate that roughly 70 percent of foreign-origin used vehicles flow through Subic.
The Port of Irene in the Cagayan Freeport Zone is another major entry point of converted right-hand drives illegally sold in the Philippine market, the cable said.
Ford Motor Philippines officials told embassy officials that the illegal sale of converted, secondhand automobiles was their priority issue.
“They expressed alarm that the secondhand vehicle ‘gray market’ has grown to about as large as the sum of local manufacturing and legally imported finished automobiles,” the cable said.
They noted the large discrepancy between new vehicle registrations with the Land Transportation Office (174,108 units in 2006) versus legal sales (99,541 units), attributing most of that difference to used-vehicle imports.
Ford officials said the Philippine vehicle manufacturing industry was operating at only 30 percent capacity.
Other industry sources noted that in 2006, vehicle production in the Philippines was less than 10 percent of Thailand’s and less than 15 percent of Indonesia and Malaysia’s production volumes.
They noted that these countries have been more effective in implementing restrictions on secondhand vehicle imports.
The cable said the government is also losing badly needed revenues, which is equivalent to between 4 to 5 percent of tax collections and at least 6 percent of gross domestic product in 2006.
“We are exploring ways to assist the American Chamber of Commerce and US companies to advocate for a determined anti-corruption campaign targeting smuggling.
“Foreign automobile manufacturers in the Philippines also complained that they were enticed to invest here with assurances of market protections, such as a general prohibition on entry of secondhand vehicles.