MANILA, June 16 (PNA) — Japan has urged the country to look into offsetting price gaps of locally made vehicles and imported vehicles through policies.
Toru Asai, executive director for Automotive International Trade Policy of the Ministry of Economy, Trade and Industry of Japan, said in his presentation during industrial cooperation dialogue of the Philippines and Japan on Monday that the local production of vehicles have not increased even the domestic market has recovered from financial crisis because of price gaps between locally produced and imported vehicles.
According to Asai, vehicle production in the Philippines reached its peak in 1996 with 140,000 units being produced.
When financial crisis hit Asia in 1997, vehicle production in the Philippines declined to 110,000 units and further dropped to 50,000 units in 1998.
However, vehicle production has not perked up in the country for over a decade as vehicle production in 2013 reached only 80,000 units.
“After the currency crisis, the production scale has not recovered, coupled with reduction and abolition of tariff,” said Asai.
He also cited that the Philippines’ automotive sector relies on importation of vehicle components unlike Thailand and Indonesian automobile manufacturers which most vehicle parts are produced locally.
“For example, CIF (cost, insurance, and freight) price of vehicles produced in Thailand is lower than those produced in the Philippines,” he mentioned. “If imported cars (looking on CIF price) are cheaper than domestic cars, production (will) continue to decrease in spite of market growth.”
“It is necessary to take strong policies to prevent domestic vehicles from falling behind imported cars as quickly as possible,” the Japanese trade official stressed.
He said if the country will not have policies to counter the price gaps between locally produced and imported cars, vehicle production here will continue its flat growth or even decrease.
“If early policies implementation will offset price differentials between domestic cars and imported cars, increase of domestic production can be expected,” he further said.
The Japanese trade official noted that if the country can present long term policies like the automotive roadmap in which the sector will be promoted, car manufacturers can bring in its suppliers in accordance with timing of model change. (PNA)