In a bid to save jobs and entice the market to shift to locally-produced vehicles, the Department of Trade and Industry’s (DTI) slapped additional duties in the form of cash bond to vehicles imports as completely built-up (CBU): P70,000 per unit for passenger cars and P110,000 per unit for light commercial vehicles.
The provisional safeguard duties will be in effect for a period of 200 days from the issuance of an order by the commissioner of the Bureau of Customs and while the case is under formal investigation by the Tariff Commission. Publication of the order is set today.
With the protection on local production, the DTI hopes to attract vehicle manufacturers to operate in the country and create more jobs.
The DTI in a statement yesterday said preliminary determination on the petition for safeguard measures filed by the Philippine Metalworkers Alliance (PMA) found that increased importation of passenger cars and light commercial vehicles is a substantial cause of serious injury to the domestic motor vehicle manufacturing industry.
The DTI added its preliminary determination also found that critical circumstances exist where delay in the imposition of a measure would cause damage to the industry which would be difficult to repair.
“The provisional safeguard measures will provide a breathing space to the domestic industry which has been facing a surge in importation of competing brands. To clarify, importation is not being banned, and consumers will still have the options to choose, but imported vehicle models covered by the rule shall have safeguard import duties,” said DTI Secretary Ramon Lopez.
Lopez said the measures will also facilitate the structural adjustment of the local industry to be more cost efficient and technologically advanced while ensuring a level playing field among automotive companies.
He added safeguards are imposed to protect local manufacturers and producers and to prevent other companies from leaving the country, citing the discontinuation of the production of Isuzu D-Max in July 2019 and the assembly plant closure of Honda Motors Philippines in the first quarter of 2020 that affected local jobs and the economy.
Under Republic Act 8800, the Safeguard Measures Act, any person, whether natural or juridical, belonging to or representing a domestic industry may file with the Secretary of Trade and Industry a verified petition requesting that action be taken to remedy the serious injury to the domestic industry caused by increased imports of a like or directly substitutable product. Petitioner PMA is a national union of automotive, iron and steel, electronics, and electrical sectors, including affiliates composed of key players in the automotive industry.
DTI’s findings show that imports of passenger cars have increased by an average of 35 percent during the period of investigation (POI) from 2014 to 2018 while the share of imports relative to production showed that imports exceeded domestic production from 295 percent in 2014 to 349 percent in 2018.
Imports of light commercial vehicles which include pick-up trucks significantly increased during the POI from 17,273 units in 2014 to 51,969 units in 2018. Imports’ share of imports relative to domestic production also significantly increased from 645 percent in 2015 to 1,364 percent in 2018.
The market share of domestic passenger cars’ sales contracted to a range of 22 percent to 25 percent while the share of imports captured more than 70 percent of the market. The share of the light commercial vehicles shrank from 18 percent in 2014 to 7 percent in 2018 while imports accounted for an increasing proportion at about 82 percent (2014) to 93 percent (2018) of the market.
The DTI also cited data from the Philippine Statistics Authority which showed employment in the manufacturing sector of motor vehicles which includes the manufacture of motor vehicles, bodies, parts and accessories decreased by 8 percent in 2018 compared to the 2017 level of 90,275 employment.
Overall, the domestic industry suffered declining market shares, sales, employment, as inventories accumulated. It also sustained increasing losses over the period which affected their cash flows and ability to invest. It also has been faced with excess and increasing production capacity in countries such as Thailand, Indonesia, and China.