The 2010 MVDP: Feat. the "Filipino Car" or Philippine Brand Vehicles

[jpdm]

Still hoping.....

RP auto industry faces ‘make-or-break’ stage with revised MVDP

Part I
By BERNIE CAHILES-MAGKILAT
January 2, 2010, 1:26pm
Manila Bulletin


The BoI-approved policy framework of the proposed new MVDP seeks to craft strategies for the domestic auto industry to become globally competitive because the zero tariff in ASEAN would take effect this month while the ASEAN dialogue partners are also moving into the zero tariff regime.

To support this objective, the BoI came up with seven critical and revolutionary components under the MVDP framework hardcore assembly operations, exports program, parts and components development, review of the excise tax on vehicles, policy on importation of used vehicles, standards, and creation of an automotive “authority.”


Specific measures for each of the seven components have yet to be determined under the Implementing Rules and Regulations of the new MVDP.


FILIPINO CAR

One special feature in the new MVDP framework is the provision for the development of the so-called Philippine Winners or the [SIZE=3]“Philippine Brand Vehicles” (PBV)[/SIZE] making it the biggest beneficiary of the MVDP framework.


PBVs would be granted full tax and fiscal incentives, exemption from excise tax payments, a special exports program and with assured mass market.



In other words, the MVDP is gunning for localization of the auto industry.

The PBV would be the fifth category of the current three categories under the MVDP – passenger cars, commercial vehicles and motorcycles.


Overtime, however, the government through the BoI has undertaken revisions of the motor vehicle industry program to ensure sustainable business and to address needs of Filipinos for access to affordable vehicles.


The closest attempt at building a Filipino car was during the time of Trade and Industry Secretary Jose Concepcion Jr. and DTI Undersecretary and BoI managing head Tomas I. Alcantara.


Alcantara pushed for the implementation of the People’s Car category when the BoI amended the Japanese-controlled Progressive Car Manufacturing Program to become the MVDP by allowing new participants as long as they start in the production and marketing of People’s Car.


People’s Car participants were allowed to import their People Car entries as CBUs. They were required to market these models over a certain period of time at a price under control by the BoI before they could graduate into the assembly and distribution of higher-end models and even if they have graduated from the People’s Car program, they are still required to maintain their People’s Car models.



They were also required to invest in the assembly of cars and parts manufacturing.


Notably, however, none of the existing auto program members participated in the People’s Car program.


Indeed, the People’s Car program has opened the door to new players including the Koreans, Europeans and Americans. It also brought down prices of vehicles to as low as P320,000 per unit for a less than 1 liter engine car and widened the industry base.


But the People’s Car Program had long lost its relevance as its participants failed to sustain such operation.


Honda Cars Philippines, which entry to the Philippine market, was through the People’s Car Program said their entry model of a hatchback Honda Civic was heavily subsidized.


Honda, however, has pursued local assembly operations and is now producing and marketing higher-end models. But it has long abandoned its People’s Car model. Other People’s Car participants became pure traders.


Then there was the Asian Utility Vehicle category, whose attractiveness was eroded when it was subjected to excise tax payments.


The previous attempts at building the Filipino car had not taken into consideration the development the Philippine icon, the lowly jeepneys.

With the revival of the Filipino car program under the PBV, the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) are overjoyed because its e-jeepney project is going to qualify under this new category.


E-jeepneys are now plying in select cities and areas in the country.


The development of PBVs also means the development of the local auto parts industry.


“The PBV is the light at the end of the long, dark tunnel for the local automotive industry,” declared MVPMAP president Raffy Villareal.


[SIZE=3]“We have long advocated that given the opportunity and the resources, the Filipino engineer can build a truly Pinoy vehicle. This is also in line with our advocacy for the local car assemblers to locally assemble at least two vehicle brands,” Villareal said.[/SIZE]


Villareal said the proposed PBV must be locally-designed, developed
and assembled vehicle for the mass market, low priced, with high local value added labor and materials and compliant to standards.


The PBV is just a segment of the MVDP and would have its own market. The major players are positioning themselves for the mainstream market.


According to the study Deloitte Economics (Australia), the Philippines could be the best bet as the second regional hub for the global auto players provided the right government incentives support and commitment of players to invest and expand operations to attain a global manufacturing scale of 500,000 units by 2020.
(To be continued)

http://www.mb.com.ph/

[jpdm]

This is possible, given the right incentives...

RP eyed as second Asean auto hub

Part II
By BERNIE CAHILES-MAGKILAT
January 3, 2010, 1:22pm
Manila Bulletin


The Deloitte study entitled, “The Future of the Philippine Automotive Industry” premised its conclusion on some advantages and disadvantages prevailing in the country over its competitors.


These advantages include an already established presence of several global automotive players in the country, a strong auto components sector, capable workers, English language proficiency, a domestic market that is ready to take off, and [SIZE=3]government understanding on the importance of the auto manufacturing industry to the economic development of the country.[/SIZE]
[SIZE=3][/SIZE]
“These advantages are real and could support the development of a world scale industry,” said Jon Stanford, lead author of the Deloitte report.


Stanford said that after the economic recession that left the automotive sector badly scarred, thus global auto players need to rebuild.


While Thailand is the clear beneficiary of much of the investment in the auto industry in the ASEAN region, will the industry want to put all of its eggs into one basket?



The automotive market in the ASEAN region is expected to reach 2.5 million in 2010.


“There are clearly some risks in doing so. By allocating significant investment to develop a second production hub some of these risks could be offset,” the study said.


The study noted that global auto players need to develop a second hub in the region because if something happens in Thailand, which exports half of its 1.5 million unit annual production not just to other ASEAN countries but also to Australia and other markets, businesses would definitely suffer.


The effects of free trade together with the impact of the global financial crisis means there will be significant commercial pressures on companies to rationalise their production centres within regional and global supply chains.
The key question now is where the global auto players will place their future investment dollars.


According to the study, Indonesia is the Philippines’ closest competitor.



At present, Indonesia exports 85,000 CBU units to ASEAN. The Philippines though has only one volume CBU exporter in Ford Philippines.

Indonesia could play host to many car companies given its much faster growth and large domestic base, but it is not giving much focus on its auto industry.


But there are several challenges that the Philippine auto industry is also facing including small and slow growing domestic market, small scale vehicle assembly plants, high rate of growth of CBU imports (CBU share of the market has grown to 50 percent from 13 percent in the past five years), high level of second hand imports in last decade, weak local components supply base due to lack of scale, high logistics and energy costs, significant cost competitiveness disadvantage, reduced protection against imports from Japan (JPEPA), and approaching intra-ASEAN free trade as a result of AFTA.


Stanford noted that while the Philippine auto industry has a strong auto parts sector with internationally competitive firms, it needs a viable assembly industry operating at scale.


“We believe that the Philippines industry currently faces a cost disadvantage, on average, of at least US$1,000 per car relative to Thailand. Many of the problems identified above contribute to this cost disability, but the fundamental reason is lack of scale,” he said.



http://www.mb.com.ph/

[jpdm]

The following are the to do list made by the Deloitte Study...

The Deloitte study entitled, “The Future of the Philippine Automotive Industry” premised its conclusion on some advantages and disadvantages prevailing in the country over its competitors.

[SIZE=3]TO DO LIST[/SIZE]

Stanford said that if the Philippines were to become a second regional hub for automotive production, there has to be a concerted effort between the government and the industry.


“The government should develop a time-bounded package of incentives to provide the industry with a breathing space in which to invest and achieve efficient scale, because government cannot give incentives without reasonable commitment from the industry,” Stanford stressed.


For now, however, Stanford said, “I got no sense if the industry is seeking to do that.”


[SIZE=3]Stanford said that the study has listed specific measures for the government to implement, but said it is still confidential.[/SIZE]


Assuming that all the plans and measures are implemented, the study said the local auto production is expected to reach [SIZE=3]500,000 by 2020[/SIZE] of which [SIZE=3]40 to 50 percent is exported[/SIZE]and a [SIZE=3]local content level of 60 percent creating a global scale auto industry[/SIZE][SIZE=3]. [/SIZE]





In terms of impact to the overall domestic economy, the Deloitte study modelling results point to the Philippines’ real GDP would be 6.3 percent higher than otherwise, average real wages throughout the Philippines economy would be 10.4 percent higher, employment would be 2.5 percent higher than otherwise, investment would be 6.5 percent higher, private consumption (a proxy for economic welfare) would be 4.4 per cent higher, aggregate exports would be 12 percent higher, and the impact on the consumer price index would be zero.


[SIZE=3]On the other hand, if an industry status quo is observed, Stanford said the Philippines can kiss its local auto industry goodbye in three years with a strong adverse impact on GDP due to job and revenue losses.[/SIZE]


THE REVIEW

The Deloitte study is just one of the inputs in the crafting of the new MVDP, but the review was not without pain because while all the MVDP participants favor to revisit the old program, opposing views cropped up undeniably to protect each own interests.


The division of the industry, which presented a solid front under CAMPI, was made clear as the review of the program goes into full swing. The 18-member CAMPI is a composite of CKD assemblers with CBU business and pure CBU traders. Those with similar interests grouped together.


CAMPI led by Elizabeth H. Lee had withdrawn its P100,000 contribution to the $500,000 study the industry had commissioned to the Deloitte.


Lee’s family is both an assembler and distributor of the Nissan commercial vehicles. The group is also the exclusive distributor of Volvo, GM and Hyundai in the Philippines.


Some CAMPI members were also dismayed over the initial Deloitte proposal calling for the imposition of a quota system wherein the volume of importation of CBU is tied up to the volume of locally assembled units, the grant of $1,000 subsidy for each locally assembled unit, among other issues.



These moves are seen to favor the local automotive assemblers and stunting the growth of CBU importers, the group said.


The division was later confirmed as the main proponents for the commissioning of the Deloitte study finally came out and formally organized themselves as the [SIZE=3]Philippine Automotive Competitiveness Council Inc. (PACCI), which is composed of the country’s major car assemblers that are also members of CAMPI.[/SIZE]


PACCI members are Toyota Motor Philippines Corp., Ford Motor Group Philippines, Mitsubishi Motors Philippines Corp., Isuzu Philippines Corp., Honda Cars Philippines Inc.



Together they account for 90 percent of the country’s total auto production volume.

Some disgruntled CAMPI members have complained of haste by which the program is being crafted.


This prompted DTI Secretary Peter B. Favila to order a thorough consultation with all the industry stakeholders including the “talye” sector.
The BoI has already missed its target to come up with a new MVDP. The target has been moved to end January, a month-long delay from the December 30, 2009 deadline.


Trade and Industry Undersecretary and Board of Investments managing head Elmer C. Hernandez said the BoI, which administers the program, is still finalizing the new industry blueprint.


The previous auto programs were a failure. The domestic auto industry failed to develop even under a protected environment where other competitors prosper. Now that the ASEAN free trade zone is in effect and the upcoming zero tariff regime with other regions are ready for implementation, the entire trading landscape has changed dramatically.


Thus, it is imperative that the new MVDP will work under a free trade area where the name of the game is survival of the fittest.



This is a make or break period for the industry.


Create a weak and lousy MVDP and we can kiss this manufacturing industry goodbye sooner.



[SIZE=2]
[/SIZE]

RP eyed as second ASEAN Hu
Part II
by Bernie Cahiles-Magkilat
January 3, 2010, 1:22pm
Manila Bulletin

http://www.mb.com.ph/

[uls]

if a Philippine Brand Vehicle (PBV) didnt materialize in a high tariff environment, how can it happen in a zero tariff environment?

the CEPT-AFTA was signed 1992 by Indonesia, Brunei, Malaysia, Philippines, Singapore, Thailand

everyone had years to develop their own local industries so by the time zero tariffs take effect, everyone would be ready to compete with each other

what was the Phils. doing all those years?

now that CEPT-AFTA takes full effect, the govt wants to encourage the development of PBVs?

good luck

the free trade agreement will make imported cars cheaper

what incentive is there for investors to put money in a PBV project?

who's gonna be crazy enough to put his capital in a PBV project when everyone else around him will be importing tax-reduced CBUs?

kung hindi na nga makalaban sa foreign brand vehicles na mataas ang tax

paano pa lalaban ang isang PBV sa foreign brand vehicles na tax-reduced?

[jpdm]

if a Philippine Brand Vehicle (PBV) didnt materialize in a high tariff environment, how can it happen in a zero tariff environment?

the CEPT-AFTA was signed 1992 by Indonesia, Brunei, Malaysia, Philippines, Singapore, Thailand

everyone had years to develop their own local industries so by the time zero tariffs take effect, everyone would be ready to compete with each other

what was the Phils. doing all those years?

now that CEPT-AFTA takes full effect, the govt wants to encourage the development of PBVs?

good luck

the free trade agreement will make imported cars cheaper

what incentive is there for investors to put money in a PBV project?

who's gonna be crazy enough to put his capital in a PBV project when everyone else around him will be importing tax-reduced CBUs?

kung hindi na nga makalaban sa foreign brand vehicles na mataas ang tax

paano pa lalaban ang isang PBV sa foreign brand vehicles na tax-reduced?

Have you read these?

....the initial Deloitte proposal calling for the imposition of a quota system wherein the volume of importation of CBU is tied up to the volume of locally assembled units, the grant of $1,000 subsidy for each locally assembled unit, among other issues.

Reduced tariff will be offset by a quota system (quantitative import restrictions plus incentives.

Pure importers of CBU from CAMPI do not like the MVDP especially the provisions above plus the PBV. But, the parts makers led by MVPMAP and this..

[SIZE=2]Philippine Automotive Competitiveness Council Inc. (PACCI), which is composed of the country’s major car assemblers that are also members of CAMPI. PACCI members are Toyota [COLOR=blue ! important][COLOR=blue ! important]Motor[/COLOR][/COLOR] Philippines Corp., Ford Motor Group Philippines, Mitsubishi Motors Philippines Corp., Isuzu Philippines Corp., Honda Cars Philippines Inc.Together they [COLOR=blue ! important][COLOR=blue ! important]account[/COLOR][/COLOR] for 90 percent of the country’s total auto production volume.[/SIZE]

are endorsing the MVDP provisions and the PBV (which Mitsubishi and Toyota are very vocal about it. I posted their press releases in the Philippine car forum)and are crazy enough to push for a Philippine Brand Vehicle.

So, its very clear that the CBU traders and pure CBU importers of CAMPI are afraid of losing their market because incentives will be given to companies who will put up manufacturing palnts here and build at least two variants of PBV per manufacturer.

Anyway, we will see at the end of January as to how the MVDP will really look like.

If the government wants to maintain the jobs, technology transfer and exports created by the PACCI, the government should rule in favor of these CBU traders and importers who are only after Pinoy's consumers' money and almost nil positive impact to the economy.

I say, let the government plan, MVPMAP and PACCI objectives prevail over these insignificant CBU importers.

[ghosthunter]

A "Filipino Car" designed by a committee of Filipino "experts".

I think we have seen this before, right?

http://img193.imageshack.us/img193/9356/phuv.jpg

And how long did that project take to get the prototype vehicle rolling on four wheels?

[A121]

Rather than design a vehicle from scratch better license the old Toyota Revo chassis and engine. It looks a lot better and has better engineering than this: http://img193.imageshack.us/img193/9356/phuv.jpg

[uls]

according to jpdm, Toyota and Mitsu are interested in building Philippine Brand Vehicles (PBV)

question: will they design and build cars totally from scratch and come up with entirely unique cars?

or are they just gonna rebadge existing Toyota and Mitsu vehicles and call them PBVs?

(like Mitsubishi Lancer turned into Proton Wira)

if they're just gonna rebadge or rename their own cars, what makes the cars Philippine made?

the cars would be assembled here, with some parts coming from local autoparts manufacturers, and would have a Philippine brand name

so i guess that's a PBV

ok, i'm enlightened

[ghosthunter]

I would think getting the license for the REVO or similar (including rights to build the whole engine locally) would be be the best idea.

[jpdm]

A "Filipino Car" designed by a committee of Filipino "experts".

I think we have seen this before, right?

http://img193.imageshack.us/img193/9356/phuv.jpg

And how long did that project take to get the prototype vehicle rolling on four wheels?

I think the government would like to see existing assemblers to produce locally designed and built vehicles for the local market, like the Nissan Bida AUV before or similar with Indonesia's Toyota Kijang or Taiwan's Mitsubishi Freeca.

The BEEP of Mitsubishi and Almazora is one existing closest example of this PBV. With Almazora designing and building the body and Mitsubishi and its local affiliates (with MVPMAP) supplying most of the parts.

Of course the PBV wants to see more locally made parts used just like when Toyota Tamaraw FX were assembled here with around 60 percent local parts.

Rather than design a vehicle from scratch better license the old Toyota Revo chassis and engine. It looks a lot better and has better engineering than this: http://img193.imageshack.us/img193/9356/phuv.jpg

Most likely this will happen.

PACCI members Toyota, Mtsubishi, Isuzu, Honda and Ford, who advocates for local assembly and perhaps manufacturing of vehicles have old vehicle models that can be used for PBV.

Mitsubishi for instance, is still producing the old model, Mitsubishi Adventure/Freeca, L300 Versa van and L300 FB. Maybe they just might used the platform of these vehicles and produce a PBV version for the Philippine market.

I guess Isuzu will use its old Hilander now Crosswind model platform and make a PBV variant.

Toyota of course with their old Revo...

Ford, maybe a local variant of ranger or everest...

Honda, willd guess, the chassis and engine and PBV version of Odyssey?

according to jpdm, Toyota and Mitsu are interested in building Philippine Brand Vehicles (PBV)

question: will they design and build cars totally from scratch and come up with entirely unique cars?

or are they just gonna rebadge existing Toyota and Mitsu vehicles and call them PBVs?

(like Mitsubishi Lancer turned into Proton Wira)

if they're just gonna rebadge or rename their own cars, what makes the cars Philippine made?

the cars would be assembled here, with some parts coming from local autoparts manufacturers, and would have a Philippine brand name

so i guess that's a PBV

ok, i'm enlightened

Just read this to be enlightened.

The development of PBVs also means the development of the local auto parts industry.“The PBV is the light at the end of the long, dark tunnel for the local automotive industry,” declared MVPMAP president Raffy Villareal.

[SIZE=3]“We have long advocated that given the opportunity and the resources, the Filipino engineer can build a truly Pinoy vehicle. This is also in line with our advocacy for the local car assemblers to locally assemble at least two vehicle brands,” Villareal said.[/SIZE]


Villareal said the proposed PBV must be locally-designed, developed
and assembled vehicle for the mass market, low priced, with high local value added labor and materials and compliant to standards.

The PBV is just a segment of the MVDP and would have its own market. The major players are positioning themselves for the mainstream market.
According to the study Deloitte Economics (Australia), the Philippines could be the best bet as the second regional hub for the global auto players provided the right government incentives support and commitment of players to invest and expand operations to attain a global manufacturing scale of 500,000 units by 2020.