BOI draws flak for ‘vague’ PH car program rules

Lawmakers on Tuesday blamed the Board of Investments (BOI) for the local car industry’s stunted growth, citing its failure to set clear-cut rules to guide investors and questionable decisions on issues affecting the industry.

At the hearing of the House ways and means committee, Deputy Speaker Sharon Garin (AAMBIS-OWA Partylist) went as far as publicly airing suspicions that the BOI harbors biases against non-Japanese local assemblers and new players in the industry.

On the other hand, Reps. Lyndia Bolilia (NPC, Batangas), Rodel Batocabe (Ako Bicol Partylist), and Manuel Zubiri (NUP, Bukidnon) warned that unless government clears all gray areas in the implementation of rules and regulations of the Motor Vehicle Development Program (MVDP), the Philippines will continue to lag behind its Asean neighbors in the local automotive manufacturing.

Chaired by Quirino Rep. Dax Cua, the panel launched its investigation into BOI’s reported move to cancel Hyundai Asia Resources Inc.’s (HARI) license to participate in the MVDP due to alleged failure to comply with requirements set under Executive Order 156.

BOI officials led by Trade Undersecretary Ceferino Rodolfo said the agency’s board decided to cancel HARI’s license for allegedly lacking painting and welding activities in its assembly plant. He insisted that violations of EO 156 has disqualified HARI from the tax privileges extended under the program that encourages firms to engage in assembly and manufacture of completely knocked down vehicles.

At the hearing, Alex Cabrera, HARI senior technical adviser, said the company is operating under the BOI authority provided under EO 877A, an amendment to EO 156, which governs the manufacture of knocked down (KD) vehicles.

Saying that HARI only started operations less than six months before the BOI cancelled its license, Cabrera stressed that they have submitted all requirements like its technical license agreement (TLA) with Hyundai Motor Company of Korea that clearly lays down HARI’s assembly process, including the complete list of “knocked down” car parts and components for importation. All these were received and approved by BOI, he said.

Garin said BOI’s show of animosity towards a newcomer, but willing investor in the car manufacturing industry adversely affects the country’s investment climate.

“What you are doing is discouraging them from participating in the MVDP program. It’s quite disappointing,” she added.

Cua ordered an ocular inspection of the HARI assembly plant in Sta. Rosa, Laguna, to confirm whether or not BOI’s claims against the company are accurate.

In the meantime, BOI should clarify its rules and set clear legal procedures that will govern the MVDP, said Batocabe and Bolilia.

“BOI’s investment policy should be corrective, not punitive. BOI seems too eager to impose the extreme penalty of license cancellation, but did it consider what will happen to HARI’s employees and their families? What about the millions already invested by the company?” asked Batocabe.

Bolilia said she was also surprised that BOI lacks even the most basic definitions of what constitutes and differentiates “completely knocked-down” or “knocked-down”vehicles, including the extent of painting and welding activities required for companies to qualify as bonafide assemblers.

Zubiri, on the other hand, said vague rules and regulations in investment will only drive away investors. /asu