Stronger auto industry to save PH $17B in 5 yrs

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The Philippines can save an estimated $16.8 billion or P757.8 billion in foreign exchange over a five-year period if it no longer imports completely built-up (CBU) units and instead produces vehicles locally.

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This is the goal of the auto industry roadmap which is undergoing discussion and fine-tuning between the government and industry participants.

According to the Department of Trade and Industry (DTI), the auto industry roadmap is expected to be issued in 2015, implemented in 2016, and will begin to be felt in 2017.

The DTI disclosed updates about the roadmap during the 11th Trade and Industry Development (TID) Updates held at the Board of Investments (BOI) office in Makati City on Friday.

Under the roadmap, the aim is to sell 500,000 vehicles by 2022, of which 400,000 units should be locally manufactured.

DTI Assistant Secretary Rafaelita Aldaba said the goal is to shift from imported cars to locally manufactured vehicles in order to build up the domestic automotive market and boost employment and investments, which would spill over to other manufacturing sectors.

The DTI-BOI is revving up the auto industry because of its high economic multiplier effects.

According to Aldaba, the country currently has a rated capacity of 200,000 vehicles a year and employs 68,000 people.

Without the auto industry roadmap, she said that domestic production would fall to 50,000 units by 2022 with almost all vehicles imported.

“The automotive manufacturing industry is one of the major drivers of the country’s industry sector, generating about a quarter of a trillion pesos in sales last year. Now in its implementation phase, the roadmap targets 300,000 quality jobs by 2022; and equally important is the technology that the industry will stand to gain throughout the life of the roadmap and beyond,” DTI Undersecretary and BOI managing head Adrian Cristobal Jr. said.

The Philippine Automotive Manufacturing Industry (PAMI) is one of the major drivers of Philippine industry generating approximately P248.5 billion sales in 2013.

The industry is comprised of two core sectors, the Manufacture of Parts and Accessories for Motor Vehicles and the Manufacture of Motor Vehicles, while allied industries include the Manufacture of Bodies, Wholesale and Retail Trade, Maintenance and Repair of Motor Vehicles, and Wholesale and Retail Trade of Parts and Accessories of Motor Vehicles.

PAMI is composed of a number of industry associations. The Federation of Automotive Industries in the Philippines (FAIP) serves as the umbrella organization which includes members from the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), Philippine Automotive Competitiveness Council Inc. (PACCI), Truck Manufacturers Association Inc. (TMA), Philippine Motor Association (PMA) and Motorcycle Development Program Participants Association Inc. (MDPPA). The Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) is the major association for parts manufacturing.

In 2013, the industry estimates that it has directly employed 8,000 workers in auto manufacturing. Meanwhile, the auto parts sector, with 256 companies mainly located in Manila, Laguna, and Cavite, generated approximately 68,000 jobs. In addition, 340,000 Filipinos are employed in auto-supporting industries. Despite high-skills requirements, PAMI has been employing high school and vocational school graduates.

“The comprehensive operation of the automotive industry extends to other complementary sectors, i.e. textiles, glass, plastics, electronics, rubber and iron and steel.

Hence, increasing PAMI’s productivity would likewise increase the economic activity of supporting industries, and the Philippine economy as a whole,” Cristobal explained.

A study by the University of Asia and the Pacific cited the potential of PAMI in job creation. The study projects that 170,000 additional direct employment would be generated for every P100 billion in investments. In addition, if a government stimulus package is granted, the industry would be able to gather additional P41 billion in investments that would generate 70,000 new jobs (C. Terosa, 2010).

The DTI and BOI is targeting to increase the manufacturing sector share to total gross domestic product from 23 percent to 30 percent, with employment increase from 9 percent to 15 percent in all industry roadmaps program.

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