Olongapo SubicBay BatangGapo Newscenter

Monday, March 07, 2005

Increasing of tariff on used cars not enough to curb importation

Increasing the import duty on used motor vehicles is unlikely to put a stop to the unabated influx of second-hand motor vehicles into the Philippines through the Subic Bay Free Port and special economic zone.

As such, Trade Secretary Juan Santos told reporters that the government is studying other legitimate measures that would make it more difficult for importers to bring in used motor vehicles.

At the groundbreaking of the P1.3-billion motorcycle plant of Honda Philippines Inc. in Batangas last week, President Arroyo announced that the government will raise the tariff on used cars if it fails to overturn a Court of Appeals ruling that declared unconstitutional Executive Order 156, or the comprehensive industrial policy and directions for the motor vehicle development program.

“In the meantime what we are doing is to tighten the smuggling and importation of right-hand vehicles,” Santos said.

Besides the substantial increase in the import tariff on used motor vehicles, the trade chief said the government is also looking at other measures to discourage importers from bringing in used motor vehicles into the Philippines.

He explained that he has made representations with Subic Bay Metropolitan Authority chairman Francisco Licuanan III to make sure that used motor vehicles imported through the former US military naval base are indeed reexported.

“I have talked with Licuanan to see to it that proper checking is balanced,” he added.

Other measures being considered to make it difficult for importers to bring in used motor vehicles include the strict implementation of antipollution rules and regulations.

The government is also looking at imposing an additional specific duty of P500,000 per unit of imported motor vehicle.

Industry sources said increasing the tariff on used motor vehicle imports would not be enough to stop the influx of second-hand right-hand drive vehicles, as these imports are undervalued by importers.

Under the Tariff and Customs Code, the President could increase by as much as 100 percent the import duty on products that affect the viability of domestic industries. In the case of used cars, the most favored nation duties on used motor vehicle imports currently range from 15 percent to 30 percent. Thus, increasing the duties on used motor vehicles could only reach as much as 60 percent.

Furthermore, there is no distinction between the tariffs on used motor vehicle imports and those of brand-new vehicles. Statistics showed that the production of local assemblers only reached a little over 80,000 units last year, but more than 100,000 used vehicles were imported.

Meanwhile, Elizabeth Lee, president of the Chamber of Automotive Manufacturers of the Philippines Inc., said the group supports the government in promoting the public interest by discouraging the importation of used motor vehicles.Lee said increasing the tariff on used motor vehicles together with the implementation of EO 156 will benefit the local industry and, at the same time, shore up government revenues.

“Promoting industry growth and protecting the local economy, we believe, is very much in keeping with the spirit of the Philippine Constitution,” she said.

Campi fully supports President Arroyo’s battle to stop used vehicle importation through the Subic Free Port, as well as in other ports in order to maximize government tax collection from automotive sales, she said.

This will also promote local manufacturing of vehicles, parts and components and protect the employment of over 70,000 workers in the formal domestic auto industry.
TODAY Reporter


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