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Automotive Industry
July 23, 2007

Parts makers support Chamber stand on Exec Order
Local auto parts makers comprising the Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP) expressed support July 23 to the stand of the Chamber of Automotive Manufacturers of the Philippines Inc (CAMPI) regarding the yet unpublished Executive Order 617.

CAMPI President Elizabeth Yee has questioned the inadvertent reduction of the common effective preferential tariff (CEPT) on completely built up units (CBU) to zero under Annex 'A' of EO 617. CAMPI has asked the Department of Trade & Industry for the deferment of the publication of the said EO and for its full review. Under an earlier EO 156, motor vehicles were listed as prohibited items considering that the auto industry is one of the country's major industries.

MVPMAP supports this CAMPI position as CBUs have no value-added local parts and labor in them. It fears that if EO 617 is implemented, it will result in new CBUs and even used vehicles flooding the local market to the further detriment of the local auto parts making industry.

MVPMAP Director Ferdi Raquelsanots says that "for the last 10 years, local auto industry sales have neither grown nor even breached the 100,000-unit sales mark.

Furthermore, the volume of CBUs compared to completely knocked down (CKD) units have been steadily increasing and even surpassed the 50 per cent mark last year".

"As a result, most local auto parts makers are now operating at only 40 per cent of their plant capacities and even worse, some have closed shop.

It is estimated that some 50,000 direct workers are dependent on the local parts making industry", he continued.

Raquelsantos added that to prop up the ailing local parts industry, MVPMAP will recommend the reduction in tariffs of raw materials for locally-produced auto parts so that it can compete with its Asean neighbors who have been enjoying or continue to enjoy government support such as industry incentives, export tax credit, preferential tax rates and the like.

These are on top of low utility rates. It is in the light of these developments that MVPMAP launched last June 12, 2007 the prototype of the Philippine Utility Vehicle (PhUV).

It is an all-new AUV-based vehicle to be sold at around P350,000 (US$7,807), the same as the retail price of a used imported vehicle.

It will be assembled from CKD kits with a value added local parts and labor content of over 65 per cent. The prototype was designed by Filipino engineers and assembled out of over 300 local parts donated by MVPMAP members.

Raquelsantos says that the PhUV was developed and produced to prove that given the chance and support, the Filipino can design and build his own vehicle.

"We at MVPMAP hope that this in turn will hasten the granting of incentives not only to the PhUV assemblers but to the parts makers and buyers as well. And this early, we are encouraged by the reception, inquiries and sales orders that the PhUV has received.

"We have finalized the arrangement for a consortium of MVPMAP members to supply the assembler with the parts so we could finally produce the first batch of PhUVs in a few months time," he concluded. PNA

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