The Philippines is prodding automotive assemblers to assign a model for assembly in the Philippines, dangling twin moves: by improving its current automotive program and by clipping imports through the use of safeguard duties.
“We are saying (assemblers) have look at the Philippines as a production hub. We are not here to just buy their products, to just import their products. We want them to establish operations here in the same way they have identified some countries like Thailand and Indonesia as their production hub for certain models and assign a product here,” said Ramon Lopez, secretary of the Department of Trade and Industry (DTI).
Lopez said this will be a win-win kind of arrangement especially that the Philippines is a growing market
“It’s about time they think about doing more things in the Philippines,” he added.
The safeguard duties that the Philippines plans to impose on imported complete build-up (CBU) vehicles, he said, “is definitely a move that can encourage them to look at the Philippines and establish operations.”
Though still subject to review, the safeguard duties will “somehow protect adequately local (assembly) operations or if not encourage more local manufacturing,” Lopez said.
While there are two Japanese assemblers which have invested heavily in the Comprehensive Automotive Resurgence Strategy (CARS), Lopez believes it should not be limited to two.
He hinted that a review of the government’s Motor Vehicle Development Program (MVDP) could lead to another CARS-like program where assemblers will be given support beyond incentives.
“Manufacturing has to be supported, it has to survive. We want to do more of that kind of assistance to manufacturing … because we cannot do much on tariff. Incentives (could be a support) subject to certain sectors under the IPP (Investment Priorities Plan) or through safeguard measures or by ensuring standards. These are the ways we can protect local manufacturers,” Lopez said.
He added the DTI is looking at how to improve the MVDP by modernizing it so “we can encourage other brands to come in do their manufacturing and assembly, more value-adding.”
The Philippine Motorworkers Alliance in their petition for the safeguards against CBU imports cited data gathered from the Bureau of Customs which showed an upward trend of imports from car and car parts consistently from $402.68 million in 2014 to $4.76 billion in 2019.
The PMA said unofficial data on the production of two major manufacturers in the country showed the decline in production can be seen in all three models of one of the players from 12,035 units in 2017 to only 9,349 units In 2018. The other company also registered a significant cut in production from 36,972 units between April 2017 to March 2018 to 21,022 units the following year.