Incentives for domestic-oriented auto assemblers would have an accelerated phased out period while incentives for exporters of completely built-up (CBU) units would be scaled up to encourage more CBU investments for the exports market, Trade and Industry undersecretary Elmer C. Hernandez said.

Hernandez, who is retiring from government service, said this would be the direction of the Board of Investments (BoI) in the crafting of the Implementing Rules and Regulations of the new Motor Vehicle Development Program (MVDP).

“There is no stopping the BoI from scaling down incentives for domestic-oriented operations,” said Hernandez, who is also chairman of the BOI.

He said he has already talked with the Japanese auto assemblers in the country and reminded them of their commitment to support the Japan Philippines Economic Partnership Agreement (JPEPA) by investing more in the country. The country’s auto industry is dominated by Japanese car giants, but none of them are exporting CBU packs.

The crafting of the CBU incentives would strengthen the existing Automotive Export Development Program (AEP), a major component of the MVDP. As an accompanying program of the old MVDP, the AEP spells out tax incentives to CBU exporters based on the volume of their exports. The AEP was crafted to promote CBU exports, but it has only attracted one participant the Ford Motor Company Philippines (FMCP), which has exported more than 65,000 units of Ford Focus, Ford Escape and Mazda3 for ASEAN markets since 2002.

“To further promote CBU exports, we will craft the IRR of the new MVDP in such a way that our domestic-oriented assemblers should be looking outside and not remain domestic-oriented."he said.

He cited studies that showed that no one big firm could survive purely by serving the domestic market.

“To encourage our domestic-oriented assemblers to export CBU packs, there should be more incentives to CBU exporters,” he said.

He said the BoI is looking at cutting short or accelerating the phase-out period in the schedule of incentives for domestic-oriented enterprises but lengthen the number of years for incentives to be availed by CBU exporters.

BoI-registered enterprises are entitled to six-year income tax holiday incentive or a maximum of eight years of ITH depending on the status of their project, whether it is classified as pioneer of non-pioneer.

BoI enterprises are also entitled to a preferential one percent duty on the importation of their capital equipment. Other incentives include additional tax exemption on their expenses for manpower training and employment of foreign nationals, among others.

Hernandez said the incentives would only be exclusive to CBU exports noting that exports of the automotive parts and components industry are performing well.

But Hernandez, who shepherds the completion of the new MVDP, would not be able to see the completion of the auto program’s IRR as he retires on Wednesday, June 30.

To avoid a leadership vacuum in the BoI because the new administration of President-elect Benigno Simeon Aquino III has yet to appoint a new BoI managing head, DTI Secretary Jesli A. Lapus is expected to appoint a BoI OIC.