For automakers, lower taxes, more perks eyed

Trade Secretary Gregory L. Domingo: Additional incentives

MANILA, Philippines—The Department of Trade and Industry is looking at possible revisions in the excise tax structure and additional incentives for higher local content in the automotive manufacturing sector, as it moves to make the Philippines the automotive hub of the region.

These incentives, which may serve as an alternative to the granting of income tax holidays, are among the proposals considered to be included in the new automotive policy being crafted by the DTI.

According to Trade Secretary Gregory L. Domingo, local automotive firms may also be allowed to meet the minimum vehicle production requirement in phases in order to qualify for the incentives.

Based on initial studies, the feasible minimum volume would be to produce 40,000 units per model a year. Local automotive firms, however, have already sounded off concerns, as this volume may be too big, considering that the domestic demand is projected to reach only 210,000 units this year.

“That figure can go down or go higher, depending on the situation. However, our ambition is for us to be a regional production hub—our ambition is not to serve the domestic market alone,” Domingo explained.

“If we’re talking about the domestic market, the car companies will not survive, which means that our ambition should be regional, or production being export-based. If that’s the case, production of 40,000 units would be small. If you’re just going to serve the domestic market alone, yes, that is big. Car companies are looking at it [domestically] … we have a different framework,” he further said. “I’m looking at having a regional center, although not immediately. But that’s the ambition. That has to be the target. I don’t want to hear from car companies that we’ll put up a production here to serve the domestic market. If that’s the case, then never mind.”

The automotive road map, which will outline the targets, direction and policies of the industry, is much anticipated by the local car firms, which are all expected to make their respective investment decisions based on the document.

Domingo is hoping to have road map issued soon, and if possible, within the year. At present, the proposed road map is awaiting approval from members of the Cabinet.