The multi-sectoral Fair Trade Alliance (FairTrade) has urged President Gloria Arroyo to recall the Motor Vehicle Development Program (MVDP) she earlier signed under Executive Order 877 citing several defects in the EO, particularly the abolished minimum investment requirements for passenger cars and commercial vehicles.

In a statement, FairTrade said the abolition of the minimum investment requirement could slow down the investments in the completely knocked down (CKD) sector or the automotive parts manufacturing industry.

EO 877 did not retain the investment requirements, which were provided for under the old MVDP or EO 156.

Article 1 Sec 3 of E.O. 156 requires investors to invest $ 10 million for passenger cars and $8 million for commercial vehicles.

“These provisions were included in EO 156 precisely to entice investment in CKD operation and therefore create more jobs and value-adding activity in the country. We are afraid that investment in CKD operation will slow down and turn some of the auto companies as just importer and distributor of completely built up (CBU) auto units,” the Alliance explained in a letter to President Arroyo.

FairTrade said that the main purpose of the MVDP is to strengthen the CKD automotive operation in the country but this would be eroded under the new EO.

The Automotive Industry Workers Alliance (AIWA), a member of FairTrade, also said that based on their analysis, the new policy will not only erode the industry’s competitiveness but will also put at greater risk existing jobs, income and investments.

The group reiterated its earlier statement that E.O. 877 re-allows importation of used vehicles – as indicated in Article 2 Sec 2, 3c, 3d, 5 and 6; Article 7 Sec 1 of E.O. 877.

“We are afraid that the smuggling and importation of used vehicles will again rise to the detriment of our local industry,” AIWA said.

Although Department of Trade and Industry Secretary Jesli Lapus assured the industry stakeholders that E.O. 877 will continue to disallow importation of used vehicles and increase investment in the industry, the Alliance believe that the opposite will happen as a result of this new policy.