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LOCAL auto assemblers are complaining about the Board of
Investment’s (BOI) decision to remove the motor vehicle
manufacturing industry from this year’s Investments Priorities
Plan (IPP).
In a position paper submitted to Trade
Undersecretary Elmer C. Hernandez, who is also the BOI managing
head, the Chamber of Automotive Manufacturers of the Philippines
Inc. (Campi) said the car industry is formulating plans to retain
and expand completely knocked down (CKD) production in the country
in the face of the impending liberalization of the business.
“It would be ironic if the government itself
would be the first to pull the plug [on] this important sector of
the Philippine economy,” Elizabeth Lee, Campi president, said.
The BOI has identified only six preferred
sectors for this year’s IPP, down from the 11 sectors in the 2007
list. Among the sectors that may still benefit from the full suite
of incentives are infrastructure, research and development,
constructive and direct exports, agriculture and agribusiness,
tourism, and engineered projects and strategic investments.
While motor vehicle parts and components are
included in the engineered products in line with the government’s
Motor Vehicle Development Program, the BOI has delisted car assembly
from the list, thus CKD investments can no longer avail of income
tax holidays and other perks from the government.
Hernandez earlier cited an agency study showing
that sectors removed from the preferred list no longer need
government incentives.
“The inclusion of motor vehicle manufacturing
or assembly in the IPP is essential to the survival of the CKD
manufacturing since the implementation of various Free Trade
Agreements like Asean Free Trade Agreement, Japan-Philippines
Economic Partnership Agreement, Asean-China, Asean-Korea and Asean-India
would make completely built up imports more attractive particularly
if the incentives for car manufacturing are withdrawn,” Lee said.
The local car assembly industry had so far
invested P90 billion, employed 70,000 Filipinos, and contributed P12
billion to government revenue in terms of duties and other taxes.
-- Katrina Mennen A. Valdez
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