6-Year-old Motor Vehicle Development Program Up for Overhaul
August 18, 2008 by Tsikot
The six-year-old Motor Vehicle Development Program (MVDP), the comprehensive development roadmap for local motor vehicle industry, is due for overhaul to make it a dynamic program and to address new issues affecting its competitiveness.
The inevitable review of the MVDP or Executive Order 156, which was signed by President Gloria Arroyo in December 2002, was also triggered by the industry players’ desire to assess their own industry.
Already, the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) has commissioned Deloitte, an international consulting firm, to undertake an industry review.
Trade and Industry Undersecretary Elmer C. Hernandez, who is also managing head of the Board of Investments (BoI), said the government’s move would depend on the outcome of the Deloitte study.
“If Deloitte comes up with a recommendation to overhaul the program and if adopted by the government then EO 156 will have to be amended,” Hernandez said.
But Hernandez also noted that for a program to become a dynamic one, there is a need for continuing evaluation.
“At this point we are implementing EO 156 but for a program to be dynamic, you have to continue improving on it,” he stressed.
Hernandez said that the MVDP was crafted in 2001 and implemented only 2002.
“There have been many developments since then. At that time, there was no bilateral free trade agreements yet,” Hernandez pointed out.
The Deloitte study is expected to be out by October this year. The BOI is being consulted for inputs on the study.
The BOI is also in constant talk with the industry to see how the study is proceeding, Hernandez said.
“It (Deloitte study) is an assessment if this industry has potential for competitiveness,” Hernandez said.
As such, the study has to look into what policies are needed if the government decides to develop the industry, he said. .
The importation of used motor vehicles, which is banned under the MVDP, is also another crucial issue the industry is facing at the moment.
While the Supreme Court has already ruled with finality in August 2006 upholding the ban on imported used motor vehicles under MVDP, some sectors are now saying the decision applies only to Subic Freeport and not to other areas in the country including Port Irene, where trading of imported used motor vehicles are happening.
Senator Juan Ponce Enrile has already asked DTI Secretary Peter B. Favila to revisit the MVDP.
During his meeting with the CAMPI members, Favila also asked them to be objective.
“I told them to look at things objectively because these are valid concerns raised by the locals,” Favila said noting that it takes P1 million to buy a brand new car and that is already beyond the capability of Filipinos.
The local players also responded by saying that would continue with the operations here and at the same time want to be competitive.
“That would be a subject of the study they commissioned,” Favila said.
The industry is listed under Engineered Products of the 2008 Investment Priorities Plan and is therefore entitled to incentives under Executive Order 226.
The industry is composed of six passenger car assemblers, five commercial vehicles, 25 motorcycles, 256 parts and components manufactures, 240 vehicle dealerships and 30,000 motorcycle retail outlets. The industry employs an estimated 230,000 people.
For the period 2003-2007, the industry has benefited the economy through net revenues of P43.084 billion (taxes less incentives) and net export revenue of $ 2.77 billion.
Industry sales peaked in 1996 with 162,095 units sold, the market shrunk to less than 100,000 units following the lingering impact of the Asian financial crisis that struck the region in 1997.
This year, the industry is targeting sales to reach 125,000 unit 117,903 units last year.
Since the implementation of the MVDP, substantial investments estimated at P50 billion and P30 billion have already been put in place in the assembly operations and parts manufacturing facilities, respectively.
By BERNIE C. MAGKILAT, Manila Bulletin
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