Eric Tipan / Brent Co | July 19, 2017 08:18
Demand for newer PUVs to increase business for auto/parts makers in the Philippines
As we count the months down until the full implementation of the Tax Reform for Acceleration and Inclusion Act (TRAIN) that will increase vehicle excise tax, among others, the Department of Transportation (DOTr) has come out and said that instead of hurting the auto industry, its effect will actually be the exact opposite.
“The DOTr fully supports the proposed excise tax reform package for the automotive industry. And again, we laud the effort and the noble intentions of the bill to propose the earmarking of the collections of the excise tax to support our “Build, Build,Build” Program of the DOTr, including earmarking certain portions of the collections to our public transport reform program, again to address the concerns of our two stakeholders: the car manufacturers and even the car users,” said DOTR Assistant Secretary Mark Richmund de Leon.
According to the DOTr, TRAIN will indirectly increase demand for new vehicles in the public transportation sector and auto parts for manufacturing public utility vehicles under the public utility jeepney (PUJ) modernization plan of the government, thereby benefitting the auto industry.
“For the car manufacturers, we’re telling the group that there’s a demand for public transportation vehicles. So we’re saying that we are replacing the public transport fleet: 200,000 to 300,000 jeepneys will be modernized, the buses will be upgraded to low-floor buses, similar to what they have in Singapore, in Korea, and other progressive cities. There’s a huge demand for new vehicles, which the industry -- the CAMPI, the parts manufacturers -- will also benefit from,” added de Leon.
By modernizing public utility vehicles (PUVs), the DOTr hopes that more people will leave their private vehicles at home and take public transportation to reduce overall vehicular traffic, especially in Metro Manila.
“In fact, in Alabang, the route from Alabang Town Center to Makati, we've done numerous surveys and they show that, in fact, 40 percent of the users there are previously car users. In order for people to really patronize public transportation, we just need to really reform the routes and even the public transport vehicles for it to be more attractive to this car-riding public,” said de Leon.
For their part, the Department of Finance (DOF) has guaranteed lawmakers that subcompact sedans like the Vios and Mirage will continue to be price-friendly for middle-class families.
DOF Secretary Carlos Dominguez III hopes the Upper House of Congress will move the TRAIN bill forward after it was already passed by an overwhelming majority in the House of Representatives.