BOI to allow phased CKD car assembly

Published November 24, 2019, 12:00 AM

by manilabulletin_admin

By Bernie Cahiles-Magkilat

The Board of Investments (BOI) has started overhauling the old Motor Vehicle Development Program (MVDP) that may allow phased CKD (completely knocked-down) assembly to encourage participants to assemble more models in the country.

BOI Director Corazon Halili-Dichosa said that motor vehicle associations such as the Chamber of Automotive Manufacturers of the Philippines, Truck Manufacturers Association, the auto parts sector and individual companies have been asked to comment on a draft prepared by the agency.

“The objective is really to enhance the program because if you look at the number of models assembled locally, they are not increasing,” said Halili-Dichosa.

The BOI will hold another meeting following their first meeting in August.
“We have to process the comments because others are opposed. So we have to find some logic,” Halili-Dichosa said. “We also considered some queries of potential investors,” she added.

This is the reason that BOI is planning to allow a phased CKD assembly basis as a prequalification for participation in the new MVDP.

Under the plan, there will be a new set of requirements where new and existing participants have to qualify for participation in the new program.

For existing MVPD participants, they will be asked to express their intention and list the potential models they plan to assemble locally.

“They have to express their intention to participate because we also have to clean the records,” Halili-Dichosa said. A company that commits to do CKD assembly will be qualified under the program.

But there will be a liberalized CKD assembly process, meaning participants can do CKD on a phased or staged process. Participants may be allowed market development stage first where they can sell some units initially within a limited period to test the market before going into full CKD assembly.

With a phased CKD operation, Halili-Dichosa said: “There may be no need to hike the investment requirement under the current MVDP.”

The current MVDP has three sub-programs: Car Development Program, Commercial Vehicle Program and Motorcycle Development Program. The program requires $10 million investments for the assembly of passenger cars, $8 million for commercial vehicles and $2 million for motorcycles.

The new MVDP will have a new set of non-fiscal incentives and could still be registered with the BOI for incentives, including the one percent tariff.
Halili-Dichosa refused to give details as to the new incentives package for MVDP, but the “phased CKD assembly” process could already serve as a major incentive for companies to join the MVDP program.