DTI imposes up to P110,000 in duty on imported vehicles

The Department of Trade and Industry said Monday it imposed safeguard duties in the form of cash bond amounting to P70,000 per unit of imported passenger cars and P110,000 per unit of imported light commercial vehicles to protect the local automotive industry.

It said in a statement all imported vehicles would be subjected to provisional safeguard duties after an investigation showed the entry of imported vehicles may cause injury to the local industry.

It said a delay in the imposition of the measure would cause damage to the industry and be difficult to repair.

“The Philippines has one of the most open markets relative to our ASEAN neighbors. While we generally do not restrict products coming into the market, we also need to ensure the level playing field for our local industry,” said Trade Secretary Ramon Lopez.

“Safeguards are imposed to protect local manufacturers and producers and to prevent other companies from leaving the country. If we recall, the discontinuation of the production of Isuzu D-Max in July 2019 and the assembly plant closure of Honda Motors Philippines in the first quarter of 2020 affected local jobs and the Philippine economy. It may also attract vehicle manufacturers to operate in the country and create more jobs,” Lopez said.

The DTI said it 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 No. 8800 or 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.

The provisional safeguard measures will take effect for 200 days from the issuance of the order by the Commissioner of Customs and while the case is under formal investigation by the Tariff Commission.

“The provisional safeguard measures will provide a breathing space to the domestic industry which has been facing a surge in importation of competing brands. To clarify, importation is not being banned, and consumers will still have the options to choose, but imported vehicle models covered by the rule shall have safeguard import duties,” Lopez said.

He said the measure would also help facilitate the structural adjustment of the local industry to be cost-efficient and technologically advanced.

The department said its findings showed that imports of passenger cars increased by an average of 35 percent during the period of investigation from 2014 to 2018, while the share of imports relative to production showed that imports exceeded domestic production from 295 percent in 2014 to 349 percent in 2018.

Imports of light commercial vehicles which include pick-up trucks also increased during the period from 17,273 units in 2014 to 51,969 units in 2018. Its share of imports relative to domestic production also surged from 645 percent in 2015 to 1,364 percent in 2018.

The DTI said that despite the efforts of the domestic motor vehicle industry to defend its market share and compete with foreign motor vehicle suppliers by increasing its domestic production and sales, it was not able to take full advantage of the growth of the domestic market that occurred during the period.

The market share of domestic passenger cars’ sales contracted to a range of 22 percent to 25 percent while the share of imports captured more than 70 percent of the market, it said.

The share of the light commercial vehicles shrank from 18 percent in 2014 to 7 percent in 2018 while imports accounted for an increasing proportion at about 82 percent in 2014 to 93 percent 2018 of the Philippine market. The domestic industry lost sales even as the market grew, it said.

Data from the Philippine Statistics Authority showed that employment in the manufacturing sector of motor vehicles, bodies, parts and accessories decreased by 8 percent in 2018 from 90,275 jobs in 2017.

The domestic industry suffered declining market shares, sales, employment as inventories accumulated, according to the DTI. It also sustained increasing losses over the period which affected their cash flows and ability to invest.

It faced excess and increasing production capacity in countries such as Thailand, Indonesia and China.

The DTI said the case would be forwarded to the Tariff Commission which would conduct a formal investigation including public hearings in the next several weeks after which it would submit its findings and recommendations to the DTI.