A lawmaker is proposing the grant of subsidies to automotive players to boost local manufacturing of vehicles and veer away from imports.
In his speech at the Auto Reverse Trade Fair in Pasay City on Tuesday, Rep. Rufus Rodriguez (2nd district, Cagayan de Oro) said he will advocate for the automotive industry bill that grants perks beyond what Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) (CREATE MORE) has to offer such as tax exemptions as well as export benefits.
Rodriguez said the bill cover assemblers and parts manufacturers including platform makers and body builders. It provides an inclusive and technology- neutral framework for fiscal and non- fiscal support covering all sub sectors of the automotive industry and will introduce new technologies such as mobility and carbon neutrality.
Rodriguez said the subsidy in production cost could be higher than what has been provided under the Comprehensive Automotive Resurgence Strategy (CARS) that translates to about $1,000 per unit of the Vios or the Mirage.
He said subsidies spent by government on the production cost would be offset by employment generation and taxes paid.
Rodriguez’ House Bill No. 1823 or the Philippine Motor Vehicle Manufacturing Industry Act has been approved by the committees on trade and industry and on ways and means.
Tailor-fit
“CREATE or CREATE MORE is a one- size fits- all measure that may not be able to address concerns that are peculiar to the automotive industry,” Rodriguez said.
Rodriguez also expressed support to the Electric Vehicle Incentive Strategy.
“I agree that we should start with electrification as early as now, but we must not abandon support for conventional vehicle manufacturing that drives our automotive industry,” he added.
Citing data from the Philippine Statistics Authority, Rodriguez said the value of the motor vehicle and parts manufacturing stood at P689 billion in 2023, contributing 10 percent of manufacturing output and employing 109,808.
Arrest the decline
While CARS has arrested the decline in the share of locally manufactured vehicles which stood at 23 percent last year, this is much lower than the 85 percent attained in 1996 when local production reached 138,000 units.
In the absence of local production, 90 percent of the 1 million vehicle sales targeted by 2030, costing $20 billion per year
Value chain
Despite this, the Philippines maintained a strong parts manufacturing industry, making seats, carpets, aluminum wheels, wire harnesses, small metals and plastic parts which collectively account for 35 percent of the value of a vehicle.
Naoyuki Okamoto, first vice president at Mitsubishi Motor Philippines Corp. (MMPC), in the same event, expressed hope government will look into the challenges faced by the industry and craft policies to plug the gap in the automotive parts and further strengthen the value chain.
Okamoto said MMPC’s entry to CARS, Mirage and Mirage G4, attained 40 percent local content while the L300 has about 30 percent.
“For the past several years, MMPC has continuously strived to increase model localization ratio, focusing on the major parts, such as metal and plastic parts and the bulky parts,” Okamoto said.
But he said MMPC encounters challenges in local sourcing such as cost competitiveness on parts including tooling compared to Thailand or Indonesia.
The Philippines, he said, lacks raw material manufacturers for metal, plastic among others that results, in additional logistics cost.
Another challenge is the limited capability for local fabrication of big stamping and injection parts and the lack of local parts testing capability. “Although we are facing these challenges, MMPC strives to overcome these by improving supplier performance in terms of quality, cost, delivery, development and management,” he said.
