Automotive stakeholders doused cold water on the proposed Motor Vehicle Development Program (MVDP) saying it lacks the impetus needed to make an investor pour in his capital to assemble new vehicle models in the country.

This developed as the Board of Investments (BoI), which administers the automotive program, presented on Friday for public hearing the proposed new MVDP that will amend the existing program under Executive Order 156.

“What we see in this MVDP is a council,” said Elizabeth H. Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), referring to the proposed creation of the Automotive Industry Development Council as a policy making body of the industry attached to the BoI.

“This is all brotherhood statement,” said industry consultant Tony Jimenez.

“The secret of the success of Thailand’s automotive industry is a strong government policy support.

This MVDP lacks substance,” commented Angel Dimalanta, president of the Automotive Industry Workers Alliance.

Eddie Jose, chairman of Motor Vehicle Parts Manufacturers Association of the Philippines (MVPMAP), has suggested “to shop” around the neighboring countries for best practices and strategies that the program can consider adapting.

Noting the creation of the powerful industry council, one participant stressed that, “A minimal government intervention is what is needed by the program.”

Other participants at the public hearing criticized the government for its lack of will to implement policies that would make the industry competitive.

Indeed, the proposed new MVDP EO entitled, “Providing for a New Comprehensive Motor Vehicle Industry Development Policy and Direction,” speaks in general terms, no concrete policies except on the creation of the automotive council and an incoherent article on the importation of used motor vehicle.

On the creation of the Council, Lee said that while other ASEAN countries have their own specific auto programs, the Philippine MVDP has only the Council to speak of.

“Indonesia is low price cost, Thailand has eco-car, Malaysia has its national car. For the Philippines, we see a council and the inclusion of what is already in the current MVDP,” said Lee.

BOI Executive Director Efren V. Leano, head of the panel that presented the draft MVDP, explained that the draft MVDP was intentionally done in general terms because all the specifics, like the Philippine Brand Vehicles, would be spelled out under the Implementing Rules and Regulations of the Executive Order.

“The new MVDP EO that will come out is just an enabling law. There is another process that should put more meat into the program with the creation of the industry council. Let’s start with this proposed EO,” BoI director Rudy B. Cana added.

The draft EO pus emphasis on the creation of the Automotive Industry Development Council, which covers the entire Article 1 of the order. The Council, to be chaired by the DTI Secretary, is composed of members from 7 government agencies and three representatives from the recognized automotive industry associations.

Under the draft EO, the Council, attached to the BOI, is empowered to oversee the implementation of the MVDP, harmonize policies, rules and regulations and other concerns as they reflect the implementation of the program, and coordinate all automotive industry development efforts of all agencies and instrumentalities of the government to create a conducive environment to attract new investment and expand existing opportunities, foster development of innovative technologies in the automotive industry, develop a high value-added manufacturing activities in niche areas, increase the industry’s exports and make the Philippines a production hub for the region, and improve competitiveness of parts and component manufacturers.

The creation of the Council calls for the upgrading of the Motor Vehicles Division of the BOI to a Department to be called Motor Vehicle Industry Department under the BOI with a manpower complement of at least 20 technical and clerical personnel.

The BOI shall submit a supplemental budget to the Department of Budget and Management, which shall set aside an initial amount of P20 million. Thereafter, the Council shall have a budgetary allocation from the General Appropriations Act under the BOI budget.

Article 2 of the proposed EO covers the new MVDP, which is more or a less a reproduction of the old MVDP in terms of its program components (passenger cars, commercial vehicles and motorcycles), the program participants, investment requirements and privileges.

IMPORTATION OF USED MOTOR VEHICLE

Article 3 of the EO is entirely devoted to the prohibition on the importation of used motor vehicles. But, while Section 1 of Article 3 prohibits the importation into the country of all types of used motor vehicles, it also allows enough room for their entry.

Among its exceptions to this prohibition are the importation of used trucks and buses excluding pick –up trucks with GVW (gross vehicle weight) of 2.5 and up and buses with GVW of 6 and above. Special purpose vehicles as listed in Article 2 of EO 156 are also exempted.

Section 2 of Article 3 also provides that importation of used engines and parts and components for all motor vehicles shall be prohibited.

Section 3 also provides that all used vehicles not covered by the prohibition shall be regulated, meaning strict implementation of standards and environment protection to tighten the importation of vehicles exempted from the prohibition.

Players, however, find some cumbersome provisions under Article 3 that they would rather see a clear policy or an outright ban on the importation of used motor vehicles.

INCENTIVES

There were no specific provisions on incentives except generalities calling for the restructuring of most favour nation tariff rates under Article 4; restructuring of excise tax under Article 5 and; incentives package on motor vehicle exports and its parts and components under Article 6.

BOI officials said that issues on tariffs and taxes were not explicit in the EO so as not to encounter problems with Congress and ensure smooth sailing passage of this measure.

The proposed EO, however, has called for, in general, the establishment Creation of an Industry Development Fund (IDF) for research and development, acquisition, development and upgrading of equipment and facilities, manpower capacity building and compliance with market entry requirements for exporters. The fund is going to be administered by the Council.

Provisions on standards and technical regulations and parts manufacturing and auto-supporting industries development are new features in the upcoming EO.

The BOI, which had earlier conducted industry workshops and inter-government agency consultations, has given the industry stakeholders until Friday this week to submit their position paper on the draft MVDP.

The MVDP review started in late 2008 that led to the commissioning of Deloitte Consulting to do an assessment of the local industry. The review was characterized with disagreements among industry members themselves and even led to the formation of the Philippine Automotive Competitiveness Council Inc., a faction composed of five assemblers that are also members of CAMPI.

The BOI was targeting to have a new MVDP before end of December 2009 until it was moved to January 2010.

Just recently, DTI Secretary and BOI chairman Peter B. Favila said he wants a new MVDP within this month, February, but with the way things are, coming out of a new comprehensive auto program has yet to wait.