DOLE backs new safeguard duties on car imports

MANILA, Philippines — The loss of jobs in the automotive industry during the car sales boom justifies the imposition of additional taxes on imported passenger and light vehicles, according to Labor Secretary Silvestre Bello III.

“This is a significant measure to protect workers and improve the labor market condition in the industry battered not just by the pandemic, but also by the influx of imported vehicles,” he said.

Data from the Labor Force Survey showed that employment in the automotive sector went down from a high of 109,000 workers in 2016 to 93,000 workers in 2019 despite the high domestic demand in the vehicle market.

Although the labor-intensive automotive industry has been officially identified as one of the key employment generators in the manufacturing sector, “the convenience of importing vehicles in contrast to manufacturing [them] in the country jeopardized the potential of the industry to contribute more in the labor market,” Bello said.

Encourage industry

By imposing a safeguard duty on imported vehicles, the government hoped to “encourage industry players to focus more on investing and developing the domestic market, including our human resources,” he added.

The Department of Trade and Industry (DTI) announced this week that a cash bond would be imposed on imported passenger cars and light commercial vehicles to protect local metal manufacturers and car parts producers.

“Safeguard duties save jobs,” Trade Secretary Ramon Lopez told reporters on Wednesday, after carmakers and importers accused the government of further derailing the recovery of the virus-hit industry.

The government imposes safeguard measures especially when importing means “injuring” the viability of the domestic industry and its workforce. The DTI is authorized to do this under the Safeguard Measures Act, a law passed in 2000.

With the additional taxes, an imported passenger car would cost P70,000 more, while the price of a new light commercial vehicle would go up by P110,000. The figures were based on the industry’s performance from 2014 to 2018.

Locally made vehicles

The temporary duties would be in effect for 200 days, or about six months, with the issuance of an order by the Bureau of Customs. But they could be extended, or from four to 10 years, should the Tariff Commission validate the DTI’s findings after a 120-day formal investigation.

“From close to 100,000, there are now estimated 86,000 jobs in local vehicle manufacturing, including the makers of auto parts, metal works, plastic, wiring harness, etc. These jobs have been affected adversely by the increasing vehicle imports,” Lopez said.

“Consumers have the option, and the dealers can now sell more of the locally made vehicles such as Toyota Vios and Innova and Mitsubishi Mirage and L300, the prices of which are not changing and therefore will be more attractive,” he said. “If we don’t impose this safeguard, after finding injury to local industry, then we are risking the remaining jobs of the Filipino workers,” he added.

But for Rommel Gutierrez, president of Chamber of Automotive Manufacturers of the Philippines Inc., the move was yet another blow to the industry already reeling from the effects of the pandemic.

“This will further derail the recovery efforts of industry players and stakeholders,” he said.

“We project further reduction in sales volume, which in turn poses risk of employment downsizing, not to mention government revenue loss,” Gutierrez added. — WITH A REPORT FROM ROY STEPHEN C. CANIVEL