The Department of Trade and Industry order to implement safeguard measures against the imported automobile business is fast becoming the lightning rod for the Philippine auto industry; a sector that is feeling the sting of the economic effects of the COVID-19 pandemic.
Earlier today, Atty. Rommel Gutierrez, the president of the Chamber of Automobile Manufacturers of the Philippines, Inc. (CAMPI) has just issued a statement regarding the matter.
“As if the adverse impact of the pandemic is not enough, the decision to impose provisional safeguard measures against imported vehicles is yet another blow to the automotive industry. This will further derail the recovery efforts of industry players and stakeholders,” said Atty. Gutierrez.
Atty. Gutierrez speaks for the many automobile companies under the CAMPI umbrella. These include automobile importers and manufacturers in the Philippines such as Toyota, Mitsubishi, Nissan, Honda, Isuzu, to name a few. Gutierrez himself is a senior executive at Toyota Motor Philippines, one of the few companies that still have a significant manufacturing presence in the country.
“While CAMPI supports the development of local vehicle manufacturing, it has consistently [been] opposed to the imposition of safeguard duty against imported completely built-up units or CBUs. We project further reduction in sales volume, which, in turn, poses risk of employment downsizing, not to mention government revenue loss. This will also encourage revival of grey market/used vehicles. With much uncertainty, investments in dealer expansion and parts localization may be deferred.” continued the CAMPI president.
The many large companies that comprise the auto industry weathered a major storm in 2020 with a significant decline in sales numbers. Some were even forced to downsize their operations by laying off employees and face an uncertain future, especially since the virus is still floating around.
“The risk in the short term will be a disruption in regional production and supply. In the medium to long term, this will further slow down regional economic growth because of a chain reaction to other industrial sectors. Furthermore, this could potentially weaken trade and economic relations triggered by retaliation by concerned exporting countries to the Philippines.”
As to how the situation will play out, we'll have to wait and see. But we expect a lot of legal maneuvering over this matter in the coming days and weeks, and maybe even an unprecedented united effort from CAMPI and their importer counterpart: the Association of Vehicle Importers and Distributors, or AVID.