Posted at ABS CBN news on 02/01/2012 9:41 AM
MANILA, Philippines – The Philippines has the potential of becoming the next automotive manufacturing hub in the Association of Southeast Asian Nations (Asean), according to the Philippine Automotive Competitiveness Council Inc. (PACCI).
And it proposed that the country’s automotive manufacturing industry be transformed from merely assembling completely knocked down (CKD) units for the local market to the outright manufacture of vehicles for the local and export markets.
Vicente Mills Jr., president of the Philippine Automotive Federation and the Asean Automotive Federation told reporters during a briefing highlighting the 3rd Philippine Automotive Manufacturing Summit on Tuesday, said the transformation was “imperative” to address the alarming decline in the share of locally manufactured vehicles in the domestic market, and allow the industry to participate meaningfully in the planned Asean common market. Mills presented the 2012-20 Motor Vehicle Development Program (MVDP), the road map for the automotive manufacturing industry.
PACCI said that vehicle demand is projected to reach 300,000 units by 2015; the country’s current capacity is 250,000 units.
Feliciano Torres, president of PACCI, said that with the current production capacity and the abundant supply of skilled manpower and experience in auto, auto parts and components manufacturing, the Philippines can and should compete in automotive manufacturing.
From 2000 to 2010, Mills said, local sales of LMVs dropped from 96 percent to 44 percent of the total sales.
When compared to total new vehicle registrations, the share of LMVs in 2010 was even lower at 34 percent or 75,000 units or roughly a third of the industry’s total production capacity of 250,000 a year.
The proposed MVDP aims to promote or build up the local market through incentives for complete vehicle, parts, and components exports; expansion of local vehicle sales and of exports of selected models for local manufacture as well as the integration by 20020 of the local automotive manufacturing sector into the regional vehicle, parts and components sourcing network of the brand principals.
This would require the establishment of production facilities of critical parts currently not available locally as a core component of future competitiveness of the industry, Mills said.
They include vehicle body stampings, injection, molding of large parts, engines, suspension and steering system and other parts that are not currently produced in the Philippines.
Torres said an important aspect of the industry roadmap development process was the renewal and strengthening of the strategic partnership between the government and the private sector.
The automotive manufacturing industry contributes $3.2 billion in export revenues for the Philippines.
Annually, duties and business taxes are estimated at P2 billion. Withholding taxes from the industry are estimated at P325 million annually.
According to PACCI, the Philippines, as a member of Asean, can take advantage of the open market once it reaches economies of scale and build export capabilities.
Locally, PACCI said a population of more than 100 million is a great potential for vehicle-sales growth. But this requires the phaseout of aging vehicles that are no longer road worthy with locally manufactured vehicles.
An increase in the local production would put the industry in a position where improved economies of scale can be achieved, Mills said. With the projected demand of 300,000 units by 2015, there is an opportunity to expand the domestic market.
This will also boost the per-capita income of $2,229 as of 2010, strengthen and sustain the growth of the automotive manufacturing industry but will the support in terms of policies, programs and a roadmap that takes advantage of the market opportunity, Mills said.