While the pandemic continues to take its toll on vulnerable industries, the Philippine automotive sector felt a surge of relief owing to the lifting of the provisional safeguard duties on imported vehicles.
The Chamber of the Automotive Manufacturers of the Philippines, Inc. (CAMPI) graciously welcomes the lifting of the provisional SG duties as this has “resolved uncertainty of the additional burden to importation of vehicles.”
“The cash flow issue is partly resolved as there’ll be no more provisional duty to be collected upon importation of vehicles,” CAMPI president Rommel Gutierrez said on Friday.
CAMPI clarified that while the SG is collected for every purchase of a vehicle, the purchase price was not inclusive of the additional taxes. The SG is collected through a cash bond or security deposit which is put on escrow.
Automotive dealers have started imposing the provisional safeguard duties of P70 per unit of imported passenger cars and P110 per unit of light commercial vehicles since February 2021. Car companies claimed the safeguard duties deposited in escrow will be reimbursed to buyers as soon as the provisional duties are lifted.
Based on the Tariff Commission’s report, the government agency concluded that during the period of investigation POI), completely built-up (CBU) passenger cars and CBU light commercial vehicles “were not imported into the Philippines in increased quantities, both in absolute and relative to domestic production.”
The TC said that the increase in the volume of imports of passenger cars and light commercial vehicles during the POI “cannot be considered recent, sudden, sharp and of such magnitude that can be deemed significant.”
According to the data submitted to the TC, total imports of CBU motor vehicles were on an increasing trend from 2014 until 2017 but begun to decline from 2018 to 2020. Total imports of CBU motor vehicles peaked in 2017 with 306,819 units wherein 78 percent of which was imported by domestic industry while 22 percent was imported by traders.
The high importation in 2017 was attributed to the anticipation of the market to the implementation of TRAIN law which took effect on January 1, 2018 and the stricter implementation of Euro 4 emission standards. In 2018, total imports of CBU motor vehicles went down to 233,346 units coming from a high import level in 2017. Total imports of CBU motor vehicles further declined to 108,770 units in 2020 due to the adverse economic effect of the COVID-19 pandemic.
Domestic industry imported mostly CBU motor vehicles with a total share of 75 percent to total imports. Meanwhile, traders accounted for 25 percent of the total imports during the POI.
The Department of Trade and Industry acted on the petition for safeguard measures filed by the Philippine Metalworkers Alliance after the group raised concerns on increasing importation of passenger cars and light commercial vehicles.
Under Republic Act 8800, the Safeguard Measures Act, anybody may file with the DTI a verified petition requesting that action be taken to remedy the serious injury to the domestic industry caused by increased imports of a like or directly substitutable product.
While the the government ceased the collection of provisional safeguard duties and provided a timely relied to the local automotive industry, CAMPI has no plans to revise the sales growth target based on the recent development.
“What the government can do to help the industry get better is facilitate government procedures on both the release of vehicles from port and vehicle registration process,” Gutierrez said.
“The market is slowly recovering. But with the strict quarantine protocol classification (ECQ, MECQ), recovery effort is hampered,” he added.
