The country risks losing its domestic vehicle manufacturing industry, or whatever remains of it, if the government will not further tax imported cars, according to the Department of Trade and Industry (DTI).
“Safeguard duties save jobs,” Trade Secretary Ramon Lopez told reporters on Wednesday, justifying the need to do so even in the middle of a crisis. This was in response to car makers and importers who accused the government of further derailing the recovery of the virus-hit automotive industry.
The government imposes safeguard measures especially when importing means “injuring” the viability of the domestic industry and its workforce. The DTI could do this under the Safeguard Measures Act, a law passed during the Estrada administration in 2000.
But unlike previous safeguard measures the government issued, this latest action is not supported by local big players. For the first time in history, the DTI moved in favor of a petition filed by unionized workers.
Philippine Metalworkers Alliance, a 13,000 member-strong labor group, asked the DTI in 2019 to impose the safeguard measure.
In a decision published in a newspaper on Tuesday, the DTI moved to slap provisional safeguard duties on imported vehicles: P70,000 for a passenger car and P110,000 for a light commercial vehicle. The figures were based on the industry’s performance from 2014 to 2018.
These temporary duties would be in effect for 200 days, or about six months, once the Bureau of Customs issues an order. It might also last longer, or from four to 10 years, if the Tariff Commission validates the DTI’s findings after a 120-day formal investigation.
“From close to 100,000, there are now estimated 86,000 jobs in local vehicle manufacturing, including the makers of auto parts, metal works, plastic, wiring harness, etc. These jobs have been affected adversely by the increasing vehicle imports,” Lopez said.
He added the car companies’ concerns only meant they were selling more imported cars. The government was not banning the sale of imported units, he said.
“Consumers have the option, and the dealers can now sell more of the locally made vehicles such as Toyota Vios and Innova and Mitsubishi Mirage and L300, the prices of which are not changing and therefore will be more attractive,” he said. “If we don’t impose this safeguard, after finding injury to local industry, then we are risking the remaining jobs of the Filipino workers,” he added.
The pandemic, however, adds to the complications.
“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 Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines, Inc. (Campi). Gutierrez is also an executive in market leader Toyota Motor Philippines Corp.
Car firms expect sales to have shrunk 42 percent, or about 240,000 units, last year—a year that saw not only a pandemic finish off various businesses, but also a volcano eruption and a slew of typhoons that forced consumers to cut on their expenses. “We project further reduction in sales volume which in turn poses risk of employment downsizing, not to mention government revenue loss,” Gutierrez said.