Government to investigate Subic auctions for luxury vehicles

The Department of Finance (DOF) said yesterday the importation of second-hand luxury vehicles through the Subic Free port should be subjected to a thorough investigation before the auctions are allowed to continue even on a limited basis.

As a result of aggressive lobbying by local car assemblers, the popular Subic auctions have been allowed to continue, but only on a very limited basis. Only vehicles intended for official use are allowed to be sold as well as special purpose vehicles such as funeral hearses.

According to the DOF, however, the justification for allowing the auctions of imported vehicles and machinery was a matter of policy that should be left to policymakers.

Finance undersecretary and officer-in-charge Nieves L. Osorio admitted that the government generated additional revenues from the regular auctions but there is a need for a formal and systematic study on its impact on local car assemblers.

Osorio explained that the defunct Economic Coordinating Council, a government-private sector team mandated to address economic issues, had ordered the suspension of the auction of imported vehicles in the Subic Bay Freeport.

The decision to suspend vehicle sales was prompted by complaints of car assemblers that the Subic auctions posed unfair competition.

Most of the vehicles were imported by companies operating inside the zone, such as Subic Auctioneers International and Asia International Auctioneers that have been conducting regular auctions.

The vehicles sold at the auctions included luxury vehicles such as vans, sports utility vehicles, jet skis, big bikes and other luxury cars. Light and heavy equipment such as forklifts were also sold through the auction.

According to the DOF, the vehicles sold in Subic cost less than locally assembled ones since these were tax and duty free. Some were also cheaper because these were slightly used. Osorio admitted that this posed unfair competition and had obvious implications on generating more investments and employment.

"The alleged non-payment of the right amount of import duties and taxes should be re-examined," Osorio said. "We believe that the correct amounts of taxes and duties have to be paid every time an imported good is brought out of the zone."

According to Osorio, a thorough examination is necessary to pinpoint the loopholes of the current procedures that open opportunities for irregular practices.

Earlier, industrialist Raul T. Concepcion noted that the bulk of the estimated 1,000 vehicles sold in Subic auctions per month were SUVs and high-end passenger vans that Japanese and American assemblers consider as direct competition for their brand new models.