Government eases perks rule under car export plan

MANILA, Philippines - The government will cut in half the export requirement in the Auto Export Program in an attempt to encourage more local manufacturers to sell completely built-up (CBU) units overseas.

“We are looking at cutting in half the quota in the export plan,” Board of Investments (BOI) Managing Head Cristino L. Panlilio told reporters.

Under existing rules, a company must export 10,000 units to avail itself of the incentives.

Currently, only one auto manufacturer – Ford Group Philippines – is exporting CBUs. But the company will not qualify for the incentives because it can only export up to 6,000 units. As such, Panlilio said the government decided to review the program and reduce the quota to 5,000 units.

“It is harder to export because of the conditions and the agreements (free trade agreements) that the government is entering,” Panlilio said. “We are still studying the possible solution to this problem.” He said that even with incentives it has been difficult to export vehicles.

“What is the point of coming out with the export program if no one will avail. We have to think out of the box now,” Panlilio added.

He said there is already a draft executive order that extends the Auto Export Program. “Basically it is the same but we are just bringing down the volume.”

Earlier, the Department of Trade and Industry (DTI) called on the automotive sector to present a “credible strategy” that will reverse the declining domestic production of vehicles before asking for government support like higher tariff on imported vehicles.

“They are not regionally competitive. Right now they can’t even export,” Trade Secretary Gregory L. Domingo told reporters.

Domingo stressed that the government has been very supportive of the auto industry. “Something should have happened already,” he said, adding that the best gauge of how successful the industry is is the export performance. “If they can’t export, I can’t call the industry competitive.”

Sales of automobiles have been going up but growth has been driven mainly by imported vehicles.

Domingo exhorted the industry to come up with a credible plan and then see what will happen. He said the focus should no longer be the domestic market.

Although no plan has been presented to the government, Domingo said the government is still willing to work with the industry to reverse the declining trend in local automotive manufacture. He said the government is willing to work on the power cost and the overall business environment.