By BERNIE CAHILES-MAGKILAT
The Board of Investments (BOI) has given car companies on or before December 20 this year to submit their inputs for consideration in the overhauling of the old Motor Vehicle Development Program (MVDP).
BOI Director Corazon Halili-Dichosa told participants during the first consultation with the industry last Wednesday to submit their position papers on or before December to be considered in the review.
The review “Providing a Comprehensive industrial policy and direction for the MVDP and its implementing guidelines” seeks to adopt a clear and stable industrial policy framework consistent with the core requirements of the laws and executive issuances promulgated for the development of the Philippine motor vehicle industry.
It also seeks to create a level-playing field both within and outside among competitors.
In addition, the review aims to encourage proactive participation among players and ensure success of the MVDP to enhance capabilities of the Philippines motor vehicle manufacturing firms and for them to be globally competitive producers of completely-built-up units and their parts and components for the local and export markets.
While the existing MVDP only covers car assemblers, the proposed new MVDP will enhance participation of parts makers in the assembly.
The new MVDP will seek to consider market development prior to local assembly and staging of assembly. It will also update program requirements.
Earlier, Halili-Dichosa said that the proposed MVDP may allow phased CKD (completely knocked-down) assembly to encourage participants to assemble more models in the country.
This is the reason that BOI is planning to allow a phased CKD assembly as a prequalification for participation in the new MVDP.
“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.
Since some program participants of the existing MVDP are no longer active, the new MVDP will clean up its roster and rid of those no longer doing assembly operations.
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.
“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.