By Bernie Cahiles-Magkilat
The Board of Investments (BOI) has favorably granted the motion for reconsideration filed by Hyundai Asia Resources Inc. (HARI), the official distributor of Hyundai motor vehicles in the Philippines, for its continued registration in the government’s Motor Vehicle Development Program (MVDP), on condition the company complies with two requirements specified by the agency.
In a decision on December 22, 2017, the BOI ordered HARI to comply two conditions. One is for the company to implement assembly processes of welding and painting for the two models involved within six months from receipt of the resolution. Second, HARI to refund the tax and duty differential between the completely built up units and knock down parts and components on all importations covered, which BOI earlier placed at P1 billion.
“Failure to comply with either compliance requirements shall result in the cancellation of the Certificates of Registration of HARI as a participant under the MVDP. For purposes of the refund, HARI shall secure a BOC certification on the full settlement thereof and submit to the Board as proof of compliance,” the resolution stated.
Trade and Industry Secretary Ramon M. Lopez, who is also chair of the BOI, and BOI Managing Head Ceferino S. Rodolfo also pointed the BOI decision in a letter to Congressman Dakila Cua to update the legislator, who heads the House committee on ways and means, which hears the HARI case.
“HARI has indicated its acceptance and willingness to comply with the said Board Resolution in a meeting attended, among others, relevant high-level officials from the DTI (including BOI) and Department of Finance (including the Bureau of Customs,” the BOI told Cua.
Further, the BOI said that HARI presented its future assembly process in order to comply with the BOI Resolution. On the matter of the refund of tax and duty differential, the BOI has been actively coordinating with the BOC to provide all information within its purview. Earlier, BOI placed the tax discrepancy at P1 billion.
It could be recalled that in June 2017, the BOI suspended HARI’s participation in the MVDP after it found out that HARI violated terms of its registration for importing CBU units for two vehicle models when the company was supposed to import them as CKD packs and failure to implement the assembly facilities. MVDP participants are allowed to import CKD (without batteries and tires) at 1 percent duty. Imported CBU units are slapped with 20 percent duty.
In addition, the BOI also informed Cua that it is initiating a comprehensive review of the MVDP and the CARS (Comprehensive Automotive Resurgence Strategy) Program. The result of this review will initially be presented to the inter-agency committee on automotive industry development.
The review addresses the need to ensure that BOI policies result in a resurgent automotive industry that supports innovation, technology transfer, environmental protection, and small and medium enterprises development.
The review also takes into consideration recent international developments in the auto industry and technology changes, as well as commitments under different free-trade agreements.