Support the Local Auto Industry

[lamborghinione]

Not to mention the "exploding" Galant...but still, Mitsubishi has a pretty solid reputation.

Yeah, I agree. Hindi magiging Top 2 yung Mitsubishi sa local market kung wala pa rin tiwala yung mga local buyers. Mahina lang talaga market penetration ng Mitsu sa Compact segment at 0% penetration pa rin sa sub-compact segment(bakit di kaya gumawa ng mini Lancer-EX, di ko type yung Colt). Watch-out for the up-coming locally built Lancer EX.

[baludoy]

The late 90's Lancer kalampagin sobra, it was also around that time that Mitsubishi was involved in the worldwide Pajero scandal...

ay oo. the pajero tragedy i remember too well. but the kalampagin issue i wasn't aware of.

[jpdm]

The point here is Mitsubishi again will locally assemble lancer and that means additional local employment.

Despite all the issues raised here it does not change the idea that it is a positive news because another foreign brand will be assembled here instead of relying on CBUs which absolutely dont bring any local income or employment.

At the very least a couple of guys taken away from the fangs of poverty and lure of criminality.

[jpdm]

The article below state the reason why there is a need to build a vehicle industry in the country to veer the country away from over dependence upon expensive imported auto spare parts and technology. Plus of course government support is needed (reduction of taxes etc.) to make local transport business viable.

Inquirer Northern Luzon

[SIZE=3]Luzon’s biggest bus firm now sputters [/SIZE]

By Delmar Cariño
Philippine Daily Inquirer
First Posted 20:52:00 11/03/2009

Filed Under: Road Transport, history

MINI-BUSES, JEEPNEYS AND vans now lord it over the Cordillera’s dangerous roads, but old-timers still relish the memories of old Dangwa Tranco buses plying the rugged terrain to become the biggest transportation company in northern Luzon.


Born out of farmers’ investments in the 1920s, Dangwa Tranco became the people’s transport system before and after the World War II—ferrying students and vegetables to Baguio City and transporting the equipment of American-owned mining companies.


Today, only the Baguio-Cervantes (Ilocos Sur) line and a few short routes remain, leaving a mere shadow of the company that amazed even the Americans and former Presidents Elpidio Quirino and Ramon Magsaysay.


Benguet Rep. Samuel Dangwa, chair of the company’s board of directors since 1976, said the [SIZE=3]signature buses gave in to competition and high costs of maintenance for imported parts.[/SIZE]


The distress signal came in the 1980s, when high costs of operations ate up a big chunk of company income, Dangwa, a lawyer, said.


“We felt the spiraling cost of fuel, lubricants, tires and spare parts, not to mention the costs imposed by the government in terms of taxes, licenses and supervision fees,” he said.


The problem confronted the company until 2004. This forced the board of directors to enter into a lease agreement with businessman Jack Dulnuan, also a stockholder, in a bid to revive its operations.


Dulnuan would take over management of the remaining franchises for Banaue (Ifugao), Bontoc (Mt. Province), Lepanto (Mankayan, Benguet) and others on a yearly basis, Dangwa said.


But the buses’ history remains very much part of the Cordillera landscape.

[jpdm]

Despite some apprehensions from CAMPI, in my opinion, I find the new program good for the development of the local auto industry.

I hope BOI will immediately implement it.

[SIZE=3]New Motor Vehicle Program Raises More Questions Than IT Answers[/SIZE]

Manila TImes
November 16, 2009
BY BEN ARNOLD O. DE VERA REPORTER

AUTO industry players have asked the Board of Investments (BOI) to clarify certain provisions of the proposed policies laid out for the revised Motor Vehicle Development Program (MVDP). “There are many questions that must be clearly answered, such as definitions, incentives and criteria, among others,” an official of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) told The Manila Times.

On Friday, BOI and industry representatives again met to collate the private sector’s recommendations drawn from the previous week’s workshop.

Industry players want the following clarified, the source, who requested anonymity, said: how participants would be divided between the two levels of the program; how “low cost” and “mass market” would be defined, and how “high local content” would be determined in the case of so-called Philippine Brand Vehicles (PVB); the targets as to investments, volume and exports; the specific incentives to be given; and the scope of function and structure of the proposed National Authority in charge of the program.

Another industry source that attended Friday’s meeting told The Times that another “contentious” issue is the industry support fund for parts and components manufacturers.

An official of the Motor Vehicle Parts Manufacturers Association of the Philippines Inc., said in a text message: “Parts makers are basically all in support of BOI’s proposed amendment of MVDP. It really promotes local assembly and local parts manufacturing.”

Earlier, the BOI presented the following proposed policies for a re-structured MVDP:

• The new program will be two-tiered. Level 1 is composed of all current and new participants, and shall involve completely knocked-down (CKD) units with full benefits under Executive Order (EO) 156, while Level 2 would be composed of participants that have attained high localization rates, assembly two models each, and produce new parts or provide production/technical support to parts manufacturers. The BOI would determine the incentives for Level 2 participants. Also, a PBV category shall be added. PBVs would be for the mass market, are low cost, and characterized by high local content. They shall also be exempt from excise tax, and a special export program would be designed for them.

• The excise tax structure shall be reviewed to encourage local assembly operations.

• Exports of all completely built-up (CBU) units—passenger cars, trucks and buses, and motorcycles—as well as parts and components, shall be promoted for export.

• The new program shall “align the industrial development policy with environmentally sustainable transport policies and initiatives.”

• The ban on importation of used vehicles shall be continued.

• The new program shall develop and expand local parts and components manufacturing by providing more assistance and incentives, including tariff differential between local and imported parts, zero duty for raw/semi-processed materials for the local manufacture of parts and components, and the establishment of an industry fund that shall be administered by the BOI or another appropriate agency.

• A National Authority catering to the automotive industry shall be created and attached to the BOI.

A BOI official, who refused to be named, on Friday told reporters that some industry players “could not understand” why there shall be two levels of participation in the proposed program, and have instead proposed a single level.

“To qualify for the second level, manufacturers must produce [a model] that is not currently being manufactured here. Some auto players have asked, ‘what if we don’t have another new model [to manufacture locally], but we would increase our production [of what they currently have],’” the government source said.

He added that motorcycles and parts manufacturers have asked whether production would be based on value or volume, and which would get more incentives.

But he said some have acknowledged that a Level 2, which shall require at least two models to be assembled locally, would force their principals and parent companies to expand in the Philippines.

The industry source said participants want the BOI to quantify “how much is low” for “low cost,” and “how much is high” for “high local content” with regards to PVBs.

“A criteria should be set,” the source said.

The BOI official said the industry is receptive to the idea of PVBs.

On exports, the government source said the auto players want a “realistic” and “reasonable” quota. He said players told the BOI that the requirement is “difficult to reach.”

Regarding the proposed parts and components fund, the industry source said the BOI must identify where funding would come from, and who would manage it—whether the government or the private sector.

The government source said players are apprehensive about putting up another body to oversee the industry. He said the present setup—wherein the BOI directly attends to the sector’s concerns—could be maintained.

The BOI would soon conduct a public hearing on the new program.

To put the restructured auto program in place, the agency would be coming up with a draft EO, which President Gloria Arroyo could sign before yearend or early next year.

A BOI review has shown that the present MVDP failed to meet its targets. Despite the existing program, “the industry has not yet reached pre-Asian Crisis sales levels; CBU sales dominated the domestic market; investments showed no expansion for the past 10 years; and industry capacity utilization only reached between 20 percent and 30 percent,” the BOI said.

Launched in late 2002, EO 156 or the MVDP was intended to revert the domestic industry’s performance to pre-Asian crisis levels and make the sector more investor-friendly.

[SIZE=4]The local auto industry sold 162,095 units in 1996, a feat it has yet to replicate. Last year, it sold 124,449 units.
[/SIZE]
EO 156 banned the importation of used vehicles, restructured the excise tax structure, promoted production for export, restructured tariffs on parts and components, and called for regional complementation through the Asean Industrial Comple-mentation Scheme.

[GuthenUthen]

I hope too... But as they said a lot of thing needed clarification first.

I am also worried about the creation of the Authority... if this is a new government office, this will give opportunity to our beloved crocodiles to extract more money from us. . I hope not.

I wonder when will be the public hearing?

[jpdm]

The rationale of the new MVDP is very laudable, I hope the government and the private sector will support it.

Charting the Filipino vehicle roadmap



BIZLINKS By Rey Gamboa
(The Philippine Star)
Updated November 20, 2009 12:00 AM

Seven years after its introduction, the Board of Investments is on a renewed effort to invigorate the failed Motor Vehicle [COLOR=blue ! important][COLOR=blue ! important]Development[/color][/color]
Program that had intended in 2002 to build up a local vehicle manufacturing and assembly program.


A recent BOI review revealed that completely built up (CBU) vehicle sales continued to dominate the domestic market in the last decade, and that [SIZE=3]locally made content utilization reaching only between 20 percent and 30 percent. [/SIZE]There were also no new investments during the past 10 years.


Launched in late 2002, Executive Order 156 or the MVDP was intended to revert back the domestic [COLOR=blue ! important][COLOR=blue ! important]industry[/color][/color]’s performance to pre-Asian crisis levels and make the sector more investor-friendly. Back then, the [SIZE=3]local auto industry sold 162,095 units; last year, it sold only 124,449 units.[/SIZE]


EO 156 banned the importation of used vehicles, restructured the excise tax structure, promoted production for export, restructured tariffs on parts and components, and called for regional complementation through the Asean Industrial Complementation Scheme.


Welcome
Local vehicle parts manufacturers are waiting with bated breath just how government intends to flesh out this new program. Just recently, after conducting an assessment, the BOI came up with several proposed policies to restructure the MVDP.

There are two interesting proposals in the new MVDP. The first involves the provision of incentives, including tariff differentials between local and imported parts, zero duty for raw and semi-processed materials for the local manufacture of parts and components, and the establishment of an industry fund for use by completely knocked-down (CKD) manufacturers.

The second stipulates for a Philippine Brand Vehicle category to be added that would be for the mass market, [COLOR=blue ! important][COLOR=blue ! important]low [COLOR=blue ! important]cost[/color][/color][/color], and have high local content. This will also be exempt from excise tax. A special export program would likewise be designed for it.


Local content manufacturers are really looking forward to the creation of an Industry Support Fund intended to finance facilities upgrade of the participants, to boost R&D capabilities, and purchase test [COLOR=blue ! important][COLOR=blue ! important]equipment[/color][/color].


[SIZE=3]Local parts makers see the need for testing equipment to rebuild the local parts making industry. Presently, only five (or 1.25 percent) of the 400 auto product standards approved by the Bureau of Product Standards could be locally tested.[/SIZE]

Cautious

If local parts manufacturers and assemblers are looking at the move to change the MVDP as the light at the end of the tunnel, importers of completely built up (CBU) units are more cautious in expressing their views, and are particularly asking for more details.


Industry members understandably want more specific definitions to terms such as “local content,” “mass market,” even “low cost.” They also need to know exactly what incentives are being planned, and what the so-called Philippine Brand Vehicle would be.


Even the proposed parts and components fund is seen with much apprehension since this would give local parts manufacturers with the much needed funds to set up R&D and testing centers. Similarly, industry members do not want another body to oversee the industry.

RP-made

The biggest source of concern is turning out to be the resurrection of the turn-of-the-century’s Asian Utility Vehicle. Now to be called [SIZE=3]Philippine Brand Vehicles (PBV), this is intended to compete with today’s low-end Sports Utility Vehicles like the Toyota Innova.[/SIZE]


AUVs like the Filipino family-friendly Tamaraw FX had been discontinued by car manufacturers in favor of vehicles with higher content of imported parts. Again, it is easy to understand why. The country does not have a big-enough market to justify maintaining plants with the same economies of scale as those found in China or Thailand.


By the way, there are also incentives being planned for the development of [SIZE=3]alternative fuel vehicles (AFV) like electric vehicles and [COLOR=blue ! important][COLOR=blue ! important]hybrids[/color].[/color][/SIZE] This is one segment of the industry that government feels can be explored to boost local content manufacture, and there are a number of local companies that are interested in participating.


Part of the incentive package for both the PBV and AFV are reduced or zero excise tax, income tax [COLOR=blue ! important][COLOR=blue ! important]holidays[/color][/color] and duty-free importation of raw and semi-processed materials and capital equipment, benefits similar to those granted to locators in export processing zones and to BOI-registered companies. Incentives are also being eyed for participants exporting not only vehicles but auto components as well.

Pulling it off

All these proposals should bode well in promoting the country’s competitiveness in the automotive sector in the light of the forthcoming full trade liberalization imposing tariff-free importation starting next year.


Now, let’s hope that our government manages to get its act together and is able to successfully pull off its objectives. This will be the second attempt to bring cheaper vehicles with more local content to a wider base of our countrymen. Let’s hope that our bureaucrats will have learned from past mistakes.

[jpdm]

Good news1 THis will encourage the continuation and development of CKD operations in the country.

[SIZE=3]Carmakers Seek Changes in Auto Tariff -Cut Provisions of JPEPA[/SIZE]


Business Mirror
Nov.25, 2009
by Max V. de Leon



LOCAL automakers welcomed the pronouncement of the government that it is likely to keep the tariffs imposed on imported Japanese vehicles and pursue the renegotiation of the automotive provisions of the Japan-Philippines Economic Partnership Agreement (Jpepa).


Elizabeth Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi), told the BusinessMirror that the group wrote a letter to the Department of Trade and Industry (DTI) and the Board of Investments (BOI) to immediately initiate the negotiation of the auto tariffs-reduction provisions of the Jpepa.


“We asked them to seek the retention of the current tariffs until 2013,” Lee said.


Trade Senior Undersecretary Thomas Aquino earlier told the BusinessMirror that the Philippines has already sent a notification to Japan seeking a renegotiation of the Jpepa provisions on the auto tariffs elimination, which the agreement specifies, should be done this year.
The Automotive Industry Workers’ Alliance (Aiwa) is also seeking an extension of all the current tariff rates until the maximum period allowed by Jpepa or until 2013.


Aiwa said the country could witness the unrestricted entry from Japan at zero tariff of completely built-up motor vehicles and parts and components beginning next year if no renegotiation takes place.
This puts at risk the jobs of 75,000 industry workers; P100-billion investment in the auto industry that generates around P12 billion in annual government revenue from duty, excise tax and value-added tax; merchandise exports totaling $2 billion annually; and P350 million in withholding tax per year.


But Aquino assured that the government will only agree to alter the country’s auto tariffs once it has ascertained that the “increased investment” that Japan promised under the Jpepa has indeed poured into the local industry.


This increased investment, Aquino said, is what the government is now validating.


Lee said the industry has already sent to the government the data that it needs in negotiating with Japan.


In its letter to the BOI and the DTI, Campi committed to support the government in the renegotiation.


The Campi members gave their respective position, and they came into an agreement that tariff elimination under Jpepa for both motor vehicle parts and parts and components should be deferred.


The industry players are seeking protection from imported completely built vehicles as they have poured in more than P1 billion since 2005 for the production facilities, new model developments and parts manufacturing.

[jpdm]

It is imperative for the government to renegotiate JPEPA and maintain the tariff differential on CBU vs. CKD. This is to maintain the competitiveness of the remaining local auto manufacturing activities in the Philippines.

The country has just lost its earlier advantage against other ASEAn auto manufacturer even to upstart Vietnam. And I say its a shameful and embrarassing development for our country.

I hope the government will come to its senses and protect the thousands of jobs maintained by local auto makers in the Philippines.

Toyota to raise local vehicle production

By Ma. Elisa P. Osorio
(The Philippine Star)
Updated December 03, 2009 12:00 AM

MANILA, Philippines - Toyota Motor Philippines (TMP), the country’s largest automobile manufacturer, announced that they will be increasing their local vehicle production for next year by 25 percent.


In an interview, TMP vice president Rommel Gutierrez said that currently, their Laguna facility is only 75 percent utilized. Toyota manufactures Vios and Innova here.


By next year, Gutierrez said that they will have “full utilization” of the plant. This means that they will be producing 25,000 vehicles at their Santa Rosa plant. Gutierrez said that they may choose to produce 12,500 Vios and 12,500 Innova but it may change depending on the demand.


However, Angel Dimalanta, president of the Automotive Industry Workers’ Alliance (AIWA) said that Toyota management cannot assure them that local production of Inova and Vios will continue once imported vehicles become cheaper.


Under the Japan Philippines Economic Partnership Agreement (JPEPA), Dimalanta said that the 20-percent to 30-percent tariff on imported vehicles will be removed.For instance, Dimalanta noted that the imported Hi-Ace now costs P1.1 million. If it becomes 20-percent cheaper, then the price will be lower than the locally produced Inova.

Currently, the Inova produced in Indonesia is $2,000 cheaper and the Vios made in Thailand is $1,000 cheaper.


Dimalanta said that for this year a total of 22,000 Inova and Vios were produced here. For next year, he said there is a big possibility that the number of vehicles Toyota makes here will go down as the imported ones become more affordable.


Once this happens, Dimalanta said local management cannot assure them that the employees will keep their job and production here will continue because it is the decision of the mother company in Japan.


Toyota Philippines is just starting to recover from the slump in demand. For three months, the company has removed the Monday production shift. Dimalanta said they have restored the shift early this month.


“We are starting to recover because the industry is very volatile,” Dimalanta explained. Toyota has 1,400 employees and Dimalanta said more than 700 will be affected. Should the local production be halted, he said the line workers will be the first to be retrenched.


He said that if the agreement under the JPEPA is not corrected, there will be no more auto production in the country by 2012. “If importation is cheaper then why would you produce here.”

[jpdm]

The government must protect and in fact develop and improve the local auto manufacturing industry and stop making move in destroying it.

JPEPA should be renegotiated and I say CBU imports should be slap with a 200 percent tax rate to prevent these imported vehicles from destroying the local market for locally produced vehicles.

Car firms back revised MVDP

By Ma. Elisa P. Osorio
(The Philippine Star)
Updated December 03, 2009 12:00 AM

MANILA, Philippines - Local vehicle and parts makers expressed their support for the revision of the Motor Vehicle Development Program (MVDP) under EO156. The Philippine Automotive Competitiveness Council Inc. (PACCI) said.
In the first auto summit to be held today at the Intercontinental [COLOR=blue ! important][COLOR=blue ! important]Hotel[/COLOR][/COLOR], [COLOR=blue ! important][COLOR=blue ! important]industry[/COLOR][/COLOR] players will meet with representatives from the Board of Investments to discuss the MVDP.


“The proposed revised EO156 should provide mechanisms that will help sustain vehicle manufacturing in the country and continue to ensure the benefits and gains it contributes to the automotive industry,” Hiroshi Ito, PACCI president and Toyota Motor Philippines (TMP) president said.

PACCI is an industry association composed of Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), Ford, Honda, Isuzu, Mitsubishi, and Toyota.


The group, which represents about 90 percent of the domestic automotive production, said that the revision is necessary to ensure that the Philippine automotive manufacturing industry can sustain [COLOR=blue ! important][COLOR=blue ! important]operations[/COLOR][/COLOR] in the local market and compete within the ASEAN region when trade barriers start coming down in 2010.


According to the group, it is imperative to formulate a clear roadmap for the automotive industry to help achieve a viable and forward-looking domestic vehicle and parts manufacturing industry.

The group said that already, our ASEAN neighbors, notably Thailand, followed by Malaysia, Indonesia and Vietnam have managed to establish strong footholds in the automotive manufacturing region over the last five years and the Philippines needs much to do to stay “in the game.”

The group said that the draft framework of the revision highlights the important role of parts’ makers, who are eager to produce more parts at globally competitive prices and quality to enable higher local content of domestically manufactured vehicles, thus creating greater scale of local production and spur exports globally.


[SIZE=3]“The MVDP is a dynamic program and needs to be revisited to stay attuned with the [COLOR=blue ! important][COLOR=blue ! important]present[/COLOR]
environment,” Feliciano Torres, chairman of PACCI who is also chairman of MVPMAP said.[/COLOR][/SIZE]


“We envision a new program that will contain appropriate industry adjustment measures to cushion the impact of the full implementation of AFTA and the various FTAs,” he added.