Support the Local Auto Industry

[True Faith]

Business Mirror
November 7, 2008


[SIZE=3]Support for Local Auto Assembly Industry Pushed[/SIZE]
by Butch Fernandez/reporter




The government must effect drastic policy shifts if the ailing Philippine automotive-assembly industry is to be revived, according to Sen. Loren Legarda.


In a statement, Legarda expressed her concern over the growing number of vehicles the country imports each year vis-à-vis the number of locally assembled vehicles it exports.


She cited data used by a top official of Ford Group Philippines in lamenting the sorry state of the local automotive-assembly sector.


“The Philippines used to be an assembly hub of vehicles for export to other nations. But not anymore,” Legarda lamented, adding that “the number of CBU [completely built unit] imports does not lie.”


The senator pointed to data from the Bureau of Export and Trade Promotion as cited by Ford that Philippine CBU imports went up to 460,000 units while exports declined substantially to 90,000 in 2006.


She recalled that in 2005, the country’s CBU imports surged to 310,000 units from 230,000 units in 2003 and 2004. In contrast, Philippine CBU exports improved only slightly to 170,000 units in 2005 from 150,000 units the previous year.


“These numbers must translate to massive job losses in the local automotive-assembly industry,” Legarda said. “It is sad because a few decades back, the Philippines was looking forward to becoming a complete automotive-assembly hub by aspiring to build vehicles from scratch or from raw materials such as steel, instead of just assembling them from knocked-down parts coming from abroad.”


She added that a study by Frost & Sullivan on the Philippine automotive industry said that market liberalization has made CBUs more attractive to sellers and buyers compared with locally assembled and manufactured vehicles.


It pointed out that liberalization of the automotive industry will make some vehicle assemblers and component manufacturers redundant.

The government should support local assemblers of vehicles in the Philippines in order to save thousands of jobs and employment in the country...

CBUs should be taxed heavily to discourage importation and help existing assemblers to survive..

Do you think its a good proposition?

[meledson]

It will be too expensive for local manufacturers to set up their plant to manufacture all kinds/type of cars they are selling. They have to go CBU to save on cost.

The PH market is still too small.

Ang dapat i-bawal ay ang importation ng mga 2nd hand vehicles lalo na iyong i-convert pa mula sa right hand drive. IMHO.

[uls]

mas madali mag import ng buo kesa mag assemble

mas cost effective

you need to employ more people for assembling

more people = more chances of KMU infiltration = welga

Car companies here already got burned by that before

[meledson]

We can have the car manufacturers located at PEZA sites para they have the tax perks. Iyon lnag nga the bulk of the produce will be for export. If I remember correctly, 10% lang ang limit for local sales.

Sa PEZA sites, wala yata or bawal ang welga.

[niky]

I remember that... I even know a few who lost their (high-paying, high-perks) jobs, who are lamenting ever joining that stupid union.

----

The problem really, is that in the interest of spurring free trade, we've already signed into the South-East Asian pact that makes CBUs from Thailand and Indonesia (much bigger markets than us) cheaper.

CBUs from outside are already heavily taxed... ever wonder why Kia and Hyundai products are so expensive?

As for secondhands? I can't really agree with that. While it is hurting the industry, a blanket ban on secondhand imports strains the bounds of constitutionality. Instead, what the Government should focus on is collecting the proper taxes for surplus imports, and imposing a very, very stringent road-worthiness inspection on secondhand imports. if they don't meet road-worthiness requirements for the Philippines, the government confiscates them and sells them for scrap.

Taxes won't help local assemblers... they'll just help the local multinationals gain a small percentage of market share. What will help local small-scale assemblers is government support and standardization of local, indigenous designs like the Jeepney, the tricycle and the XLT. With manufacturing standards comes common chassis parts, which opens up opportunities for local factories to mass-produce parts such as bumpers, doors, roofs, etcetera... bringing assembly costs down... in fact, coordination might even make it possible for us to locally assemble a line of engines... say, a common 2.5 liter diesel for Jeepneys, XLTs and light trucks and a common 1 liter or smaller engine for whatever will replace tricycles in the city.

[actor21]

mas madali mag import ng buo kesa mag assemble

mas cost effective

you need to employ more people for assembling

more people = more chances of KMU infiltration = welga

Car companies here already got burned by that before

yan nang masakit na katotohonan dito sa bansa natin, welga dito welga doon....
pero baket halos pareho lang ang price ng CBU vs sa locally assembled?

[jpdm]

The government should amend the law government Freeports in order to strengthen the E.O. banning the sale of imported CBU outside these areas....

Th government can find alot of ways to discourage the proliferation of CBUs in the Philippines...

I say tax to death all imported CBUs with no local value added.

We can be another Thailand in auto manufacturing if we do the right
thing.

This time, I agree with Ford Motor Philippines that Ford/Mazda Philippines, Toyota, Mitsubishi, Isuzu and UMC should be supported by the government especially if their operation will focus more on the CKD assembly...

Local native assemblers also should be given incentives...

As an advocate of local auto industry development, I believe the government should encourage local assemblers here to revive the idea of joining forces and produce certain local auto components for the local industry (I remember the proposal develop a common engine or a 70 percent local component AUV i.e. Toyota Tamaraw FX is almost 65% local) ...

Sana, 2010 na para wala na ang walng dereksyong administrasyon ni PGMA...

Puro pasakit sa local and even foreign businessmen...

Heyday ng importers ang PGMA administation...

And I join Ford and Toyota with their grief that this government is nothing more but a loose cannon.

[niky]

We can tax them... but not really "tax them to death". The reason for low prices for some CBU vehicles here is because the government lowered the tax on non-luxury vehicles here, to make economy vehicles more affordable to the public.

Besides... high taxes will not really spur productivity that much... what we need is local vehicles that are affordable. Malaysia went that way, and it worked only because they had a large enough market to support a local manufacturer. Our local market can't support the manufacture of anything but commercial vehicles. And tax protectionism is a double-edged sword... Proton was okay initially... but the lack of competition and incentive meant that they had locally-made components that really weren't world class in quality... which made them uncompetitive outside of the Malaysian market.

Would you make it so that Filipino buyers could only buy Chinese-quality (or worse) vehicles? Would we support the local auto-industry this way at the expense of commercial users, businesses and entrepreneurs who are denied the availability of reliable and safe working machinery?

Instead of concentrating on "taxing" CBUs "to death"... I would restructure the tax and use the earnings from the tax to subsidize local manufacture... to pay for local development of powertrains and suspensions (the biggest hurdle in local manufacturing) to make locally assembled vehicles better and more competitive products.

Remember, we should not only support our local industry, but we should also assure that our local consumer base is well-served by that industry. It's only by pushing local industry to create a product that local (and hopefully overseas) consumers will be happy to buy that we can ensure that everyone wins.

[True Faith]

yan nang masakit na katotohonan dito sa bansa natin, welga dito welga doon....
pero baket halos pareho lang ang price ng CBU vs sa locally assembled?

The tariff rates on CBU and CKD has become almost the same. Japan is also using low cost Thailand and Indonesia to bring CBUs to the Philippines...

So the idea is to put not tariff barriers (tax incentives for instance) in favor of CKD or even full manufacturing of local vehicles in the Philippines...

AUVs were so popular before that small Pinoy assemblers joined the fray because tax on AUV is very favorable to the type of vehicle..


We have to remember, Pinoys love to buy multi-purpose vehicles..

The short-lived popularity and huge success of those flying coffins from SUVic and oher ports attest to the popularity of multi-purpose vehicles...

So for me, tax to death all CBUs and support CKD operations of local assemblers..

Nissan (UMC: Urban), Mitsubishi (Adventure, L300 Versa Van), Toyota (FX, REvo, Innova), Isuzu (Crosswind) are very popular locally asssembled vehicles..

I suggest Ford bring back it Ford Fiera to reach out to many Pinoys..

[jpdm]

The government should lead the way in helping our local auto industry.

[True Faith]

SC asked to ban used car imports via Port Irene

12/06/2008 | 03:50 AM

Email this | Email the Editor | Print | Digg this | Add to del.icio.us

MANILA, Philippines - [SIZE=3]Former Solicitor General Francisco I. Chavez has asked the Supreme Court to ban the importation of used motor vehicles via Port Irene in Sta. Ana, Cagayan.[/SIZE]

Acting as a taxpayer, the lawyer said the high court should compel the Cagayan Economic Zone Authority (CEZA) to respect an earlier high court ruling upholding Executive Order 156. The EO, issued on Dec. 12, 2002, seeks to promote competitiveness in the local motor vehicle industry by prohibiting the importation of used vehicles.

Several parties have questioned the validity of the executive order. Highlighting the police powers of the President however, the high court in 2006 upheld the ban on the importation, except in Subic. The imported cars, however, should remain within the former US naval base area, it said.

Despite the SC order, Mr. Chavez said that CEZA continued to import used motor vehicles. Some 7,650 were brought into the country via the economic zone from June 2005 to May 2008. [SIZE=3]Senator Juan Ponce Enrile once defended the continuous operations at the port, noting that the high court does not have jurisdiction over the CEZA.[/SIZE]

Once the vehicles reach the ports, these are remodeled to conform to local automotive regulation standards.

"The clincher is that because of relaxed tariff and customs rules within the [economic zone], the vehicles, as modified, and even with a high mark-up placed by the local ’rebuilder,’ are sold at grossly lower prices compared to used motor vehicles sold outside the economic zone... to the [SIZE=3]detriment of the local motoring industry," Mr. Chavez said.[/SIZE]

Further, the Bureau of Customs (BoC), "either through its deliberate inaction, or refusal or inability to enforce EO 156, has facilitated the importation of said used motor vehicles and their eventual sale outside the bounds of CEZA," he said.

The Land Transportation Office also issues certificates of registration of the imported vehicles.

Besides the injunction, Mr. Chavez also asked the high court to compel the government agencies to enforce EO 156. - BusinessWorld

This is a good move from Atty. Chavez.

Finally, a private citizen doing something concrete to help our local auto industry.

This Port Irene should stop the illegal importation of vehicles.

Sen Enrile should stop defending the illegal trading of imported vehicles their because its a blatant conflict of interest. The third highest official of the land condoning illegal activities in the country

[leonleon]

This is a good move from Atty. Chavez.

Finally, a private citizen doing something concrete to help our local auto industry.

This Port Irene should stop the illegal importation of vehicles.

Sen Enrile should stop defending the illegal trading of imported vehicles their because its a blatant conflict of interest. The third highest official of the land condoning illegal activities in the country

Si Atty. Chavez matagal nang on the right side of the law ang taong yan, more often than not.

Si Enrile naman inaamag na sa tagal sa pag-nenegosyo sa gobyerno, and you're expecting him to change now? Umasa ka pa.... miracle na malaki iyon kung sakali.

[True Faith]

Si Atty. Chavez matagal nang on the right side of the law ang taong yan, more often than not.

Si Enrile naman inaamag na sa tagal sa pag-nenegosyo sa gobyerno, and you're expecting him to change now? Umasa ka pa.... miracle na malaki iyon kung sakali.

Enrile should have been included among the cars ordered destroyed by his patron, the sinless Ate Glue:puke1:

Anyway, this smuggling of CBUs should be stopped-PERMANENTLY.

[Monseratto]

I think there is an ASEAN pact wherein taxes are fixed for CBUs produced among its members. If we tax CBUs higher from Thailand or Indonesia, their goverment might sue the Philippines. Or they may retaliate and increase taxes for CBUs coming from here... Alam ata ni Loren yan. Our country had tried unsucessfully to entice Auto Manufacturers here. Besides the Labour problem, the infrastructure in the country is rather antiquated and needs a lot of investment...

[ianmitsulancer]

I think there is an ASEAN pact wherein taxes are fixed for CBUs produced among its members. If we tax CBUs higher from Thailand or Indonesia, their goverment might sue the Philippines. Or they may retaliate and increase taxes for CBUs coming from here... Alam ata ni Loren yan. Our country had tried unsucessfully to entice Auto Manufacturers here. Besides the Labour problem, the infrastructure in the country is rather antiquated and needs a lot of investment...

that is the AFTA. asean free trade area. click on the link to find out:

http://en.wikipedia.org/wiki/ASEAN_Free_Trade_Area

[jpdm]

..The government must impose non-tariff barriers in order to kill the striving illegal importation of vehicles through the free ports...

..this is to level the playing field...legitimate importers of vehicles spend millions of pesos in taxes...

..the government should do its homework.

[True Faith]

Agree jpdm...

It will be a big risk to re-impose high tariff rates but we can resort to other means...

The BOI should be creative about this to lure more domestic manufacturers and not mere importers and assemblers..

[jpdm]

I hope the government will finally come up with a study and a policy to protect the local industry from a regime of almost zero tariff (Free Trade)

[jpdm]

I hope the government will finally come up with a study and a policy to protect the local industry...

Unfortunately, our inutile and stupid government has practically not done anything.

This according to this study:

An international study has pointed to incompetent [SIZE=4]government policies as one of the major reasons why the local auto industry has been overtaken by neighboring Southeast Asian countries, particularly Thailand. [/SIZE]
The study traces the root of the problem of the auto industry to the [SIZE=3]poorly designed and poorly implemented social contracts. [/SIZE]



The ireport made by Ferdinand O. Maquito, a visiting researcher from the Japan-based Sekiguchi Global Research Association (SGRA), states that the problem in the auto industry can be solved by[SIZE=3] creating a special body that will closely monitor the performance of the sector and the amount of support given by the government. [/SIZE]



“There is no close coordination between the government and the industry,” Maquito said.



He says automotive companies prefer to invest in Thailand because the Thai government closely works with the industry. “Our research showed that the car companies in Thailand were always approached by the government.”


In the Philippines, meanwhile, Maquito says the government is only giving incentives to encourage investors to come in.



“Usually the government [SIZE=3]gives one-shot deals[/SIZE] but there is really no clear guidance from the government,” he notes.


[SIZE=3]Maquito points out they are studying how the government can give more perks to companies that are producing more cars in the country. [/SIZE]



Aside from giving more perks, he says frequent revision of programs by the government tend to confuse both potential and existing investors.
“The government keeps changing the rules in the middle of the game,” he says. “Worse, the industry players are not consulted every time there are changes.”



Still another reason why auto companies are reluctant to enter the Philippines is the country’s sensitivity to macroeconomic shocks such as political disruptions and the perceived instability of the government.

From Philippine Star
[SIZE=2]Yearender: Local auto industry's growth slows in 2008[/SIZE]
By Ma. Elisa P. Osorio
Updated December 31, 2008 12:00 AM

[CVT]

Aside from giving more perks, he says frequent revision of programs by the government tend to confuse both potential and existing investors.
“The government keeps changing the rules in the middle of the game,” he says. “Worse, the industry players are not consulted every time there are changes.”

Agree here. The policies change like the weather in our country. Say, like every 10minutes.

Look at Jan 2, being declared a holiday at the last minute. May be a bit off tangent or exaggerated on this. However, it gives us a perspective on the way our government conceptualizes and implements policies in a microcosm....

7202:bruce_lee: