By BERNIE CAHILES–MAGKILAT
With a declining car demand in the region, the Board of Investments (BoI) may allow exporters of completely built-up vehicles to combine the four export categories to reach the higher export hurdles of $ 75 million from $ 50 million and minimum volume of 15,000 units from 10,000 to avail of tax incentives under the Automotive Exports Program (AEP).
Trade and Industry Undersecretary Elmer C. Hernandez, who is also BoI managing head, said the proposed new export hurdle and the flexibility provision would be considered in the revision of the AEP, which was implemented under Executive 312 in 2004 but whose implementing guidelines was amended in 2005.
"With a declining demand from Asean markets, we should adopt our AEP accordingly. We are mending the AEP without losing sight of the intent to maintain the volume or value threshold," Hernandez said.
For instance, Thailand’s domestic car sales was down 65 percent in 2006 from 2005.
Thailand is considered ASEAN’s automotive hub suffered political debacle and instituted foreign exchange controls while Malaysia tightened credits and erected non-tariff barriers resulting in a 65 percent decline in domestic sales while Indonesian market was down 70 percent.
The country’s CBU exports is driven by the exports program of Ford Motor Group Philippines. The group is exporting four models including Ford Escape and Focus and the Mazda models Tribute and Mazda 3 to Indonesia, Thailand and Malaysia.
Data showed that Ford CBU exports to these countries plunged 50 percent to 6,677 in 2006 from 13,352 the previous year.
As a result, the country’s CBU exports declined by half to $ 90.602 million from $ 168.942 million in 2005.
The AEP under amended guidelines to Executive Order 312 in 2004 allows a participant to enjoy tax perks based on its accumulated exports on a yearly basis on any of the four categories: regular exports, developmental exports, niche, and high-value, low volume CBU exports to be able to achieve the required volume or equivalent value.
Under the regular CBU exports, an AEP participant is required to export CBUs at a minimum total yearly volume of 10, 000 units at minimum FOB value of US$ 5, 000 per unit or an annual CBU exports of $ 50 million.
On the other hand, the developmental CBU exports requires a participant to export a minimum total yearly volume of 5,000 units at minimum FOB value of US$ 5,000 per unit or $ 25 million.
The niche market category requires a participant to export 2,500 CBU vehicles that are not currently assembled in the country at a minimum FOB vale of $ 10,000 per unit or $ 25 million.
The high-value, low volume CBU exports — direct CBU export of high-end motor vehicles at a minimum volume of 2, 500 units at a minimum FOB value of US$ 20, 000 per unit or $ 50 million in annual exports.
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