The Department of Trade and Industry is now in the final stages of refining a draft executive order (EO) containing the kinds of fiscal and non-fiscal support needed by the Philippine automotive manufacturing industry.
“We can’t talk about the details, but we’re finalizing the policy. We’re looking for players who have the same level of ambition that the country has, which is [for the Philippines] to become a manufacturing hub in the region,” said Trade Undersecretary Adrian S. Cristobal Jr.
The proposed Philippine Automotive Manufacturing Roadmap, which is expected to significantly close the $2,000-per-unit gap between the cost of producing a car here and importing it, has taken a long time to complete as the government still has to assess the total cost economic benefits of this kind of program, Cristobal explained. This means looking at a more realistic timeframe for the implementation of the incentives while the government carefully assesses the amounts involved in the incentive scheme.
“The devil is in the details,” Cristobal said. “But we have already threshed it all out. We now await the executive order (EO).”
Also, trade officials have expressed their interest to meet industry stockholders for possible updates as part of the government’s efforts to continuously engage the private sector, he said. But this does not necessarily mean the DTI will still be open to tweaking the proposed automotive policies.
Trade Secretary Gregory L. Domingo earlier said that the new package of incentives would only target a few automotive manufacturers, particularly those who could invest in assembly lines to increase production volumes for export and in new facilities for large components manufacturing.
Domingo had said that the two basic criteria would be volume and capital investment. This means that the automotive manufacturer’s strategy must be export-driven because the domestic market is not big enough to accommodate the target increase in production volumes.
Domingo declined to cite specific numbers but he did say that the trade agency hoped to require a minimum production volume of 40,000 units per model a year. This requirement has been deemed too big for a manufacturer that only caters to local demand, which is expected to reach some 250,000 units this year.
The second critical requirement is capital investment, referring to the capital poured in facilities here to produce large body parts, plastic molded parts, instrument panels and body stamping, among others. Domingo had said they expected the minimum investment for such facilities to reach a minimum of $60 million, or about P2.6 billion, per company.