By Ayen Infante
03/10/2008 [ tribune.net.ph ]
Local vehicle assemblers are threatening to withdraw all new assembly projects in protest over the government’s decision to junk vehicle manufacturing projects among prioriy areas for fiscal incentives under the proposed 2008 Investment Priorities Plan (IPP).
In a letter to Board of Investments (BoI) managing head and Trade and Industry Undersecretary Elmer Hernandez, Chamber of Automotive Manufacturers of the Philippines Inc. president Elizabeth Lee stressed that it was ironic to drop vehicle assembly among projects qualified for incentives when the industry is seriously considering to expand and retain the production of units in completely-knocked-down (CKD) kits.
Lee argued that the inclusion of motor vehicle manufacturing in the IPP is crucial to the survival of the CKD manufacturing because the implementation of the various Free Trade Agreement by 2010 would make CBU imports more attractive particularly if the incentives are withdrawn.
“We are registering our objection to the proposed delisting of motor vehicle manufacturing or assembly in the 2008 IPP,” Lee added.
The exclusion of the sector would have a real negative impact on the industry, “since there are pending applications for new investments in the commercial vehicle manufacturing segment and other applications which may be filed soon but may not meet the cut-off date.”
Apart from this, there are other projects in the pipeline that are geared toward light commercial vehicle and truck manufacturing. “These plans are made on the basis of the current policy environment and an immediate removal in the IPP without a sufficient lead time and notification would not be conducive to this investments and product planninng cycle. Thus, by delisting motor vehicle manufacturing in the IPP, the country will lose these new investment opportunities including the jobs that should be created.”
“With the promising growth exhibited by the industry in the last three years, particularly in 2007 when the growth reached 18 percent and the volume exceeded 100,000 units for the first time in a decade, the proposed delisting is very untimely. The industry has not yet fully recovered from the 1997 financial crisis and a withdrawal of priority status would send a strong but very wrong signal to the investors.”
Lee further explained that the timing of the proposed policy change is “not good in view of the current assessment being done by the respective head offices of vehicle manufacturers on the scenario after 2010.”
Under the draft 2008 IPP, the BoI has trimmed down to six areas the priorities for incentives from 11 sectors in the previous IPPs.
Areas that were retained were agriculture and agribusiness, infrastructure, tourism, engineered products, research and development and strategic investments.
Motors vehicle assembly was among the areas that were dropped. But motor vehicle parts and components were included under engineered products.
The motor vehicle industry holds some P90 billion in total investments employing jobs for 70,000 Filipinos and an estimated annual revenue contribution valued at P12 billion.
Campi believes that the industry continue to deserve recognition and utmost priority by the government.
