Government to give incentives to local manufacturers exporting CBUs

MANILA, Philippines - In an attempt to encourage the exports of local vehicles, the government will be giving increasing incentives to domestic manufacturers who will be selling completely built up (CBU) units overseas while providing decreasing tax breaks to those who will limit their sales locally.

In an interview, outgoing Board of Investments (BOI) managing head Elmer C. Hernandez said that the implementing rules and regulations (IRR) of the revised Motor Vehicle Development Plan (MVDP) will include a scheme that will scale down the incentives given to vehicle manufacturers who will concentrate on the domestic market while accelerating incentives to those who will export CBUs.

“We are talking to major assemblers and this is our way of encouraging exports,” Hernandez said. “This is also our way of reminding them of the commitments the Japanese car manufacturers made during the negotiations for JPEPA (Japan Philippines Economic Partnership Agreement).”

“The Japanese investors committed to invest here in our car manufacturing. We are now reminding them of their commitment,” Hernandez, who is also the Undersecretary of the Department of Trade and Industry (DTI) said.

Hernandez explained that they do not want the local manufacturers to depend on the local market for auto sales because the domestic market is small. “They won’t survive if they serve purely the domestic market.”

Hernandez said there is a need to push the exports of CBUs because the exports of auto parts have been very good. “If not for the global economic crisis the exports of the parts should have grown continuously.”

Likewise, Hernandez said they are in the process of making a bill that will eliminate excise tax for PBV similar to the perks enjoyed by the Asian Utility Vehicle (AUV). Hernandez said they will be presenting the draft bill to the new congress for approval.

In a separate interview, an industry source said a committee comprised of the public and the private sector will study the effects of changing the excise tax for motor vehicles. The source said they would have to study whether or not the excise tax should be changed or not.

The committee will be composed of the BOI, the Department of Finance (DOF) and representatives from the private sector.