Local automotive parts makers have urged the government to institute the necessary measures that could give them an “advantage” over imported car parts and enable them to be more competitive compared to their counterparts in the region.
Egmidio S. Jose, chair of the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), noted that they were not just after incentives, but other forms of assistance from the government that could include lower registration fees and cheaper interest rates.
Also necessary were testing facilities that would ensure the quality and safety of local parts, especially since automotive companies globally are highly stringent in their qualifications. Local auto parts makers cannot afford these facilities, which are often expensive. It will help as well if the Philippine government can match the incentives being given by other neighboring countries to local car and car parts manufacturers to at least help level the playing field for industry players.
These, according to Jose, were some of the measures that could be undertaken by the government if it was indeed keen on ensuring the growth of the sector that has since lagged, dropping to about 50 homegrown firms catering mostly to the domestic market, from a high of more than 150 parts companies in the 1990s.
Parts makers are also awaiting the issuance of the automotive manufacturing roadmap, which was meant to steer the Philippines to become a competitive manufacturing base for motor vehicles and its parts and components by 2025, and a global hub for automotive-related human resource development.
The roadmap is expected to contain time-bound and performance-based incentives not only for those manufacturers who can invest in their assembly lines to increase their production volumes for export, but also for those that will invest in new facilities for large components manufacturing.
Within this roadmap is the so-called Comprehensive Automotive Resurgence Strategy (CARS) program, which will entail an appropriation of a $600-million incentive package for the automotive industry.
“We’re also waiting for the announcement of the roadmap, we really need it,” Jose stressed. “If there is bigger local assembly or local production, then the industry of auto parts-making will also grow.”
It was earlier pointed out that a car has more than 30,000 parts and its construction is dependent on metal, chemical, plastic, textile, rubber, glass, steel, electrical and other manufacturing sub-sectors. Thus, through inter-industry and supply chain linkages, auto manufacturing can have a big multiplier effect in an economy because any expansion in the automotive industry drives growth in feeder industries.