The Department of Trade and Industry (DTI) has finally put a stop to one of the most contentious issues that has affected the Philippine auto industry in 2021: safeguard bonds.

According to the Manila Bulletin, DTI Secretary Ramon Lopez signed an order to stop the safeguard duty on CBU or fully built vehicles being imported into the country. The report says the Trade Secretary signed the order last Friday (August 6, 2021) but said order has yet to be released to the general public.

At the beginning of the year, the DTI announced they were imposing a safeguard bond on imported vehicles to act upon a complaint made by the Philippine Metalworker's Alliance (PMA); they argued that imported vehicles are causing significant injury to vehicle manufacturing in the Philippines. As such, the DTI has ordered that imported vehicles that fit the classification (by country, type, and price) be slapped with a safeguard bond to the amount of PHP 70,000 for passenger cars (e.g. sedans, SUVs) and PHP 110,000 for light commercial vehicles (e.g. pick-up trucks).

The complaint by the PMA prompted the provisional safeguard while the Tariff Commission (TC) conducted an official investigation to see if there was indeed a correlation between vehicle imports and a supposed significant injury to the domestic manufacturing industry. After going through the data and statistics of imported vehicles that directly compete against local models in the same vehicle category, the TC found that there was no basis for a safeguard to be imposed permanently.

As a result, the Tariff Commission recommended that the safeguard duties/bonds be ceased based on their formal investigation.

We have yet to receive a copy of the full department order or advisory that was signed by Sec. Lopez, but the news of the order will undoubtedly be a welcome one to vehicle retailers, distributors, and importers. The safeguard bond has proven to be a major hurdle for their recovery given the adverse effects of the pandemic. Surprisingly even local manufacturers were against it because while they do build vehicles, they also import other models as well.

Now the local automobile business will be making preparations for the refund of the SG to customers. As to how that will happen, we will all have to wait for the DTI order and for the processes that each individual automaker/importer will outline for their customers.