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The Department of Commerce and Industry (DTI) has imposed an additional unit duty of P70,000 on passenger cars and P110,000 on light commercial vehicles (LCVs) to protect local assemblers from increased imports.
The DTI issued its preliminary determination on Monday to the petition filed by the Philippine Metalworkers Alliance to apply a safeguard measure to vehicle imports. Commerce Secretary Ramón M. López said the DTI found merit in the petition and, in response, is imposing safeguard tariffs on auto imports.
López argued that his agency can no longer delay the imposition of the safeguard, since prolonging the issuance could result in greater damage to the auto industry.
“The Philippines has one of the most open markets relative to our ASEAN neighbors,” Lopez said in a statement. “While we generally do not restrict the products entering the market, we must also ensure a level playing field for our local industry.”
As a provisional measure, the safeguard duty goes into effect for 200 days from the issuance of an order by the Chief of Customs and while the case is being investigated by the Tariff Commission.
“The provisional safeguard measures will provide a respite to the national industry, which has been facing an increase in the import of competing brands. To clarify, import is not prohibited and consumers will still have options to choose from, but imported vehicle models covered by the rule will have safeguard import duties, ”said López.
“That said, it will also facilitate the structural adjustment of local industry to make it more profitable and technologically advanced.”
According to the DTI report, passenger car imports increased on average by 35 percent during the investigation period from 2014 to 2018. The proportion of imported vehicles compared to domestic production jumped to 349 percent in 2018, from the 295 percent in 2014.
Light commercial vehicle imports tripled to 51,969 in 2018, from 17,273 in 2014, which means an increase in their share relative to domestic manufacturing to 1,364 percent in 2018, from 645 percent in 2015.
For those made here, the market share of locally made passenger cars fell to a range of 22 to 25 percent, while the share of imports captured more than 70 percent. Likewise, the market share of Philippine-made light commercial vehicles declined to 7 percent in 2018, while that of their imported counterparts improved to 93 percent.
Citing data from the Philippine Statistics Authority, the DTI said in its report that employment in the motor vehicle manufacturing sector fell by 8 percent in 2018, from a total of 90,275 workers in 2017.
“Safeguards are in place to protect local manufacturers and producers and to prevent other companies from leaving the country. If we recall, the interruption of Isuzu D-Max production in July 2019 and the closure of the Honda Motors Philippines assembly plant in the first quarter of 2020 affected local jobs and the Philippine economy, ”explained the chief of commerce. . “It can also attract vehicle manufacturers to operate in the country and create more jobs.”
The DTI concluded that the domestic industry suffered a drop in market share, sales, employment and inventories, and suffered losses during the investigation period, which affected its cash flows and financial liquidity.
