AUTO INDUSTRY NEWS

Auto Industry groups denounce recent gov't actions on converted vehicle ban

Auto Industry groups denounce recent gov't actions on converted vehicle ban image

Text: / Photos: | posted September 21, 2005 00:00

"Government authorities should not contradict themselves when it comes to the issue of banning converted second hand imported vehicles."

The said statement was the declaration of the country's auto industry umbrella organizations - Chamber of Automotive Manufacturers of the Philippines (CAMPI), the Philippine Automotive Association (PAA), the Automotive Industry Workers Alliance (AIWA) and the Motor Vehicles Parts Makers Association of the Philippines (MVPMAP) - in a press conference held at the Makati Shangri-La last September 14 denouncing the government's recent alleged actions versus the importation of converted right hand (and second hand) vehicles into the country.

While President Gloria Macapagal-Arroyo has repeatedly expressed her desire to curb the importation of converted right hand drive (and second hand) vehicles into the country, CAMPI president Elizabeth Lee accused other government officials of contradicting the President's stand on the issue by signing a memorandum of agreement (MOA) to allow the importation of used vehicles. "We are deeply disturbed by the recent revelations of Senator Richard Gordon that the issue of used motor vehicle importation was the subject of a political tradeoff, particularly in the Subic Freeport. In fact Senator Gordon sent us a photocopy of a memo, addressed to the President from Chief Presidential Legal Counsel Maria Merceditas Gutierrez and Senior Deputy Executive Secretary Jonathan Tenefrancia, stating that the Department of Finance (DOF), the Department of Trade and Industry (DTI), the Bureau of Customs (BOC), the Subic Bay Metropolitan Authority (SBMA) and the Land Transportation Office (LTO) have all been directed by Executive Secretary Eduardo Ermita to comply with the Regional Trial Court decision (as affirmed by the Court of Appeals), allowing the importation and entry of used motor vehicles within the Subic Special Freeport Zone, subject only to the payment of the required customs duties, until final disposition of the matter by the Supreme Court," said Ms. Lee.

The CAMPI president claimed that the memo was crafted to facilitate a surrender of Malacañang's announced policy to stop the illegal importation of used vehicles through freeports such as Subic. She stressed that rather than carrying on the effort to stop used vehicle importation, the Office of the President (via the said memo) seemed to be facilitating importers' activities. "This action is inconsistent and runs contrary to the President's lawful objective for the auto industry under Executive Order 156 (EO 156) which includes the prohibition of used vehicle importation for the purpose of increased investments, government revenue generation and increased employment for the labor sector. It is also inconsistent with the President's May 1 speech, in which she reiterated her support for the auto industry and called for the creation of a law that will strengthen the elimination of used vehicle importation," said Ms. Lee.

Ms. Lee emphasized that the rampant importation of converted right hand (and second hand) vehicles into the country not just in Subic but in other places such as Cagayan Valley and Cebu, freeports where alleged used vehicle importation is rampant will kill the local automotive industry, which employs over 77,000 skilled personnel. AIWA president Frank Mero and PAA president George Blaylock took the issue a step further, claiming that they would support street marches for the ouster of the President if the government will continue importing used vehicles despite the issue of economics and roadworthiness. "Why then must we condone the continued entry of these vehicles when our manufacturers have continuously upgraded the safety standards of these brand new vehicles in order to provide the Filipino consumer with safe and high quality vehicles? We only ask that all those concerned take a long hard look at the situation and give the legitimate manufacturers auto workers and dealers their due recognition as significant contributors to the country's economy," added Mr. Blaylock.

For the first time in their apparently never-ending battle against the importation of used second hand converted vehicles, CAMPI/MVPMAP/PAA/AIWA officials released to the press a copy of Subic vehicle import profit estimates. These estimates showed that so-called "auctioneers" of second hand imported vehicles can easily rake over six figures in profits on a single vehicle alone. For example, a 1988 Mitsubishi Pajero is retailed at P230,000. Acquiring an imported secondhand 1988 Mitsubishi Pajero within Subic is just US$200, or Php 11,200, with paid taxes amounting to a mere Php 44,492. This results in a Php 174,508 figure in net profit. "This demonstrates that with the huge profits that they can make out of this trade, and combined with political clout, a culture of corruption is purveyed in this country. It is only in the Philippines where used importation flourishes in an environment where government regulation in terms of safety and environmental regulation and customs authority enforcement is at times absent or powerless and where such regulation can be viewed as being dictated by the importers themselves," said Ms. Lee.

Ms. Lee also added that the presence of used vehicle importers in the country strike a big blow to the already dwindling local auto market. "We are the smallest vehicle market in the ASEAN region. Thailand has over 550,000 unit sales, Malaysia has over 490,000 unit sales and Indonesia has over 480,000 unit sales. In 2004 the local auto industry registered only 88,184 units, a far cry from the 162,000 units registered in 1996. Our ASEAN neighbors have flourishing auto industries because, to a large extent, the banning of used vehicle imports is strictly enforced," said Ms Lee.