Vehicle development plan seen released soon

The Board of Investments (BoI) will “soon” release the much-delayed implementing rules and regulations for Executive Order 877-A, or the Comprehensive Motor Vehicle Development Plan, as it can no longer wait for further inputs on provisions governing the automotive sector.

Trade Undersecretary and BoI managing head Cristino Panlilio said the other parts of the IRR—including the rules governing motorcycles, trucks, and used vehicles—had already been completed months ago.

The IRR, however, could not be released as the BoI was still awaiting inputs that local car assemblers had promised earlier in the year.

A group of different auto assemblers had teamed up and commissioned the University of Asia and the Pacific to assess the current auto industry situation and come up with recommendations on how auto assembly and exports could thrive in the country.

They asked for two months to complete the study, starting on Dec. 15, 2010. When the end-February deadline was reached, another extension was sought. Up to now, however, Panlilio said the results of the study had yet to be submitted to the BoI.

“We’re planning to revise (the draft guidelines), and we’ll release our own version soon, even if it’s not really that powerful, radical, or earth-shaking. We’re going to sit down and focus on fine-tuning this so we can issue the guidelines soon,” Panlilio said in a phone interview.

“We haven’t gotten any veritable solutions from the auto companies. We haven’t come up yet with a program to really stimulate exports and ramp up assembly. Right now, we’ll have to come out with the rules, as well as a new EO regarding export incentives for auto parts,” Panlilio added.

Right now, only vehicle assemblers were granted export incentives. A new EO, he said, would be issued to grant export incentives to local auto parts makers as well.

Citing the large contribution of auto parts exports to the country’s overall outbound merchandise shipments, Toyota Motor Philippines Corp. (TMP) and locators in its Toyota Special Economic Zone are seeking the formulation of a special government program that will provide incentives to parts makers.

TMP president Michinobu Sugata earlier said the program could be similar to what was currently in place for exports of completely built-up units.

“The increasing cost competition between parts suppliers in the region also threatens the position of the Philippines as an automotive parts production base. At present, the risk of losing business to strong production bases like Thailand and Indonesia is very high,” Sugata related.

Without additional support from the government, he said the country faced the possibility of losing a “significant portion” of auto export sales.