Ford threatens to halt exports

MANILA, Philippines - Ford Motor Co. Philippines has reportedly threatened to stop their exports of locally-manufactured vehicles once the government pushes through with a plan to increase the required local content under the Auto Export Program (AEP), an industry insider said.

The source, who spoke on condition of anonymity, said Ford was disappointed with government’s plan to increase the required local content component under the AEP it is currently crafting.

The government is considering a hike in the required local content for exports in order to give the local auto parts industry a boost.

The insider said Ford intimated it may opt to stop exports but when asked to comment on the issue, company officials declined to directly answer the government’s planned move.

“Ford is proud to be the first and only CBU exporter in the Philippines, sending close to 80,000 CBU exports to ASEAN markets since 2002. We currently and have always complied with the requirement of 40 percent ASEAN content,” the company said in an email sent over the weekend.

Data released by Ford showed that exports from January to March 2011 reached 1,816 units, higher than the 1,704 units exported during the same time in 2010. Ford is exporting the Focus, Escape and Mazda 3 models. The Focus and Escape are being sold in Indonesia, Malaysia and Thailand while the Mazda 3 goes to Thailand.

In a previous interview, Board of Investments (BOI) managing head Cristino L. Panlilio explained that under the old AEP that already lapsed, local content was not an issue since the program focused more on driving up volume.

“We would like to encourage car parts manufacturers to produce more by making car assemblers use more local content,” he explained. “The higher the local content, the higher the tax credit.”

Panlilio said the government will cut in half the export requirement in the AEP in an attempt to encourage more local manufacturers to sell CBUs overseas. “We are looking at cutting in half the quota in the export plan,” Panlilio said. “Firms must be able to export 10,000 units in order to avail of the incentives.”

“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.”

“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,” he added.