Palace OKs preferential tariff for three projects

Malacañang is set to issue an executive order granting preferential tariff to the participants of three approved ASEAN Industrial Cooperation (AICO) projects of Mitsubishi Motor Corp., Laguna Motor Corp. (Lamcor) and Republic Asahi Glass Corp. (RAGC).

Trade and Industry Secretary Manuel Roxas II told reporters that the approved AICO arrangements involved the exchange of selected automotive parts and components between the participating companies.

The AICO scheme was the precursor of the Asean Free Trade Agreement where the participating companies would be entitled to preferential tariff rates of between zero to five percent.

Under Mitsubishi’s AICO arrangement, it would import various automotive parts and components from PT Krama Yudha Tiga Berlian Motors of Indonesia. These parts and components would be used for Mitsubishi’s L-300 vans, Adventure vans and L-200 pick-ups, all estimated to be worth $3.1 million.

In exchange, Indonesia would import some $3.5-million worth of complementary parts and components from the Philippines for original equipment manufacturing of Kuda, D & G and L-300 van.

On the other hand, Laguna Autoparts would import starter motors from PT Lippo Melco Auto-parts worth $50,000. In return, Indonesia would import complementary auto parts and components for starter motors and alternators in the same amount of $50,000 from Laguna Autoparts.

The approved AICO, Roxas said, would also involve the exchange of rear windshields for motor vehicles from Thai Safety Glass of Thailand and safety glass for kitchen appliances from RAGC of the Philippines.

Under the arrangement, RAGC would be importing $487,090 worth of products while TSG would be importing $201,210-worth of products from RAGC.

However, Roxas could not confirm the reports that Thailand had rejected the AICO proposal of Ford Motor Co. Philippines Inc., involving the importation of completely built up (CBU) units.

Ford had planned to produce the Ford Lynx, Laser and Mazda 323 models in the Philippines which it would then export to Thailand. In return, Ford would produce its Ford Ranger and Mazda Fighter pick-up models in Thailand which it would then import here.

Part of Ford’s plan also includes the production of the Ford Escape sports utility vehicle and Tribute for export to Thailand in exchange for the latest Volvo sedan model.

Ford, however, is seeking preferential duties of between zero to five percent for the CBUs it will bring in. Under the rules of the Motor Vehicle Development Program (MVDP), participants are slapped a 30-percent duty on CBUs.

Thailand was reported to have rejected the plan since it would result in a trade deficit in the Philippines’ favor while allowing Ford to avoid Thailand’s existing duties on CBUs.