MANILA -- The Department of Trade and Industry (DTI) is now looking at putting up a shared service facility that will manufacture common automotive parts, which in turn will support local assemblers of modern public utility vehicles (PUV).
During the press conference of the 2nd Philippine Auto Parts Expo (PhilAPEX) in Pasay City Thursday, Trade Secretary Ramon Lopez said that instead of giving “peso support per unit” to PUV body fabricators, the government will instead invest in a manufacturing facility that participating fabricators can jointly utilize.
This type of incentive is part of the government’s support to the PUV Modernization Program, replacing some 200,000 aging jeepneys that are practically already falling apart.
“[We need to have] some parts really standardized so that there will be economy of scale. The middle part can be just uniform for everyone… [T]hose that can be made as common parts will be produced in this facility, so that we are able to bring down the cost. That’s the basic principle,” Lopez said.
He mentioned that an imported modern PUV would cost PHP1.3 million per unit, while the locally assembled vehicle costs PHP1.6 million.
He reiterated that the government wants to bring down the price of the locally produced PUV at the level of an imported vehicle through the common facility.
“And to build the facility, this is where the government support will come in. The support will not be on an actual peso support per unit. It won’t be that way. It will be in the form of a common manufacturing facility,” the trade chief said.
It was noted that during the 1st PhilAPEX event, the DTI eyed an incentive program akin to the Comprehensive Automotive Resurgence Strategy (CARS) Program, where the government provides USD1,000 per unit production incentive for locally produced vehicles, for the supply side of the PUV Modernization Program.
Lopez said the government will be re-allocating the PHP9 billion initially earmarked for the third participating car maker in the CARS Program in building the shared facility.
“There is no interest on the third and nobody could meet the standard requirements, so that budget, in effect PHP9 billion, is the one we hope to re-earmarked for this program. So there will be no new budget coming from the government. It is just simply realigning and making use of this support,” he added.
“It is envisioned to be government initiated, so we can say [it is a] government facility. But nothing prevents us from allowing a private sector to run it for sustainability. It has to be self-generating. That principle of generating revenue for us to maintain the operations of the facility,” Lopez said. (PNA)
