By BERNIE CAHILES-MAGKILAT
Trade and Industry Secretary Ramon M. Lopez has impressed upon car companies in the country that the government is bent on putting more importance on local car manufacturing as completely built up (CBU) packs dominate the market amid dwindling domestic production.
Lopez said as this as his agency has started a preliminary investigation on the influx of imported CBUs to determine if there is a need to impose a safeguard measure against imports.
Car companies have been informed last week of the DTI move.
According to Lopez, he assured car companies that it will be a balanced ruling, taking consideration all the stakeholders’ position.
“But with that, we impressed upon them that it’s high time we give importance to the local manufacturing industry. We are trying to balance also the protection to the local manufacturers, while we want also to encourage more players here and competition,” Lopez told reporters at the sidelines of the turnover ceremonies for the new Toyota Motor Philippines President Atsuhiro Okamato from Satoru Suzuki.
He noted that having competition and protecting the local manufacturers are not opposing views because there are still imports coming in.
But TMP Vice-President Rommel Gutierrez cautioned DTI of its decision to initiate preliminary investigation on CBU imports for possible implementation of safeguard measure. A positive determination means additional import duty on CBUs, which are mostly sourced from Thailand.
“DTI should do a thorough study on that. They should look at it seriously because that will have negative impact,” he warned.
To buttress its move, Lopez said the shutdowns of factories in China following the COVID-19 outbreak in that country should encourage companies to do backup strategy to be able to source parts from alternative manufacturing sites, including the Philippines.
“Hopefully, it would be a positive effect, like for auto parts. If we have the capabilities, they will source here, that’s the reality,” Lopez said.
“I think the point also and the learning to many manufacturers is not to put all eggs in one basket. I think that’s the learning that it’s really important to diversify your sourcing so that when things like this happen, you’re not too much affected.”
With that, Lopez has sent an invitation to car firms to localize more as part of business continuity planning.
Toyota, however, does not have specific commitment to the Philippines but Lopez said that the “broad strokes would be to increase localization and, of course, that would mean also additional investments because it has a commitment to increase domestic content. I think up to 50 percent for the Vios. You can expect more localization as a general direction.”
Gutierrez, however, said they have enough stocks to cushion the impact of factory shutdowns in China. So far, there is no impact yet on the local production.
He stressed that it has always been part of their strategy to strengthen local parts suppliers, which are also included in the CARS Program. As participant in the CARS Program, TMP has committed to increase local content of its enrolled model Vios to more than 50 percent.
Gutierrez also downplayed the role of imported auto parts from China on local manufacturers saying these are mostly second or third tier suppliers. “I don’t even know,” said Gutierrez referring to what auto parts TMP may be sourcing from China because they have regional sourcing in ASEAN that deals with procurement.
TMP has regional complementation program with Indonesia, Malaysia and Thailand. Transmission is being produced in the Philippines by Toyota Auto Parts for export to these countries.