Policy delay has Japanese carmakers reviewing Philippines expansion plans

Wed Aug 20, 2014 5:49pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Rosemarie Francisco

MANILA (Reuters) - Top Japanese automakers in the Philippines are threatening to shift production to cheaper Southeast Asian countries as the government drags its feet on a plan to rebuild its shrinking car manufacturing industry.

The potential pullout of production lines by Toyota Motor Corp and Mitsubishi Motors, which have a combined 50,000 vehicle annual capacity in the country, would mean the Philippines could lose more than 1,000 jobs and millions of dollars worth of planned and existing investments.

Time is running out, industry officials say, because there's less than two years left in the term of President Benigno Aquino, who has been backing the plan.

"I believe that if this does not get approved this quarter and signed by the president by the end of the year and even in the first quarter next year, then let's forget about it because nothing will happen anymore," said Ferdinand Raquelsantos, head of the motor vehicle parts industry group MVPMAP.

The original government plan includes tax incentives to help rebuild the country's tiny auto industry and turn it into a major manufacturing hub.

But two years of government and industry debates, revisions and disagreements over how best to grow the auto sector have carmakers saying they may move to cheaper countries like Malaysia and Indonesia.

The reforms have also been delayed because Manila wants the industry to ramp up production first to produce 40,000 units of a single car model annually before they can use the incentives. Industry insiders say only Toyota could meet that requirement with no incentives.

The carmakers had hoped to capitalize on the government roadmap to boost local production after car sales hit record highs for several months this year on robust consumer spending, and vehicle ownership remains the lowest among Southeast Asia's five biggest economies at just around 35 per 1,000 people.   Continued...

Newly assembled Toyota Vios sedans are seen at a stockyard of the Toyota Philippines manufacturing plant in Sta Rosa, Laguna, south of Manila August 11, 2014.  REUTERS/Erik De Castro