Gov't losing P4B yearly from car smuggling

CEBU CITY – Unabated car smuggling is draining the government of more than P4 billion in revenue losses each year, according to Ford Group Philippines president Richard C. Baker.

Baker, in a press briefing on Saturday, noted that estimate came from the automotive industry. "We did a simulation that if you add all that government earns from import excise tax, VAT (value added tax) as well as income taxes and corporate taxes from the industry, the revenue loss would be in billions," he said.

He also said car smuggling was partly responsible for the slow growth of the domestic automotive market. Local auto sales reached about 160,000 units during the pre-Asian financial crisis years.

While other Asian countries have surpassed their pre-crisis sales figures, Baker said sales in the Philippines reached only 117,000 units in 2007. "If you look at the other markets, the new vehicles purchased in Thailand has reached 600,000 and in Indonesia, almost 500,000," he said.

Even Vietnam has surpassed the Philippines in terms of new vehicles purchased, reaching 13,000 units in January alone compared to the Philippines' 8,800, Baker noted.

Car smuggling in Cebu has become rampant, he said. While dealers sold 5,000 only new vehicles in Central Visayas, registrations reached 28,000, he said. "Something's wrong and a big part of that are smuggled cars. You travel around Cebu and it's right out there. You can see it in the open."

Baker warned that car smuggling had affected not only the new car industry but had also distorted the used car trade. Owners who would like to sell their cars would get a lower resale value because the market is saturated with the cheaper, smuggled models, he pointed out.

Baker identified the enforcement side as a source of the problem. By Irene Sino Cruz - Inquirer Visayas Bureau