Philippine auto assemblers slam Ford tax incentives<\/p>\n
MANILA (AFP): Philippine auto assemblers have expressed alarm
\nover a government decision to grant tax incentives to a project
\nby U.S. auto giant Ford Motor Co., reports obtained yesterday
\nsaid.<\/p>\n
The assemblers, mostly affiliates of major Japanese auto
\ncompanies, have filed a protest with the Department of Trade
\nasking for a decision to grant Ford tax breaks to be withdrawn.<\/p>\n
The incentives would give a "clear and unintended advantage to
\na particular participant to the detriment of others in the same
\n(auto) program, " Vicente Mills, president of the Chamber of
\nAutomotive Manufacturers of the Philippines said in a letter to
\nTrade Secretary Cesar Bautista.<\/p>\n
A Philippine government agency said Thursday it had approved
\nlimited tax incentives to a proposed 6.18 billion peso (154
\nmillion-dollar) project by Ford.<\/p>\n
The project, to include an assembly plant for the domestic
\nmarket and parts manufacturing facilities, was granted a special
\nfive percent gross income tax rate in lieu of other national and
\nlocal taxes, the Philippine Economic Zone Authority (PEZA) said
\nin a statement.<\/p>\n
The corporate income tax rate in the Philippines is 35
\npercent.<\/p>\n
The government will waive value added taxes on imported
\nmachinery and equipment for the facilities, but Ford "will have
\nto pay the corresponding duties on machinery it will import," the
\nPEZA board said.<\/p>\n
Mills said in his letter that PEZA's action would "erode
\nconfidence and weaken the commitment of existing participants to
\nthe government-sponsored automotive program."<\/p>\n
He stressed that Ford should register its project under an
\nexisting motor vehicle development program, (MVDP) which does not
\noffer fiscal incentives for new auto assembly plants.<\/p>\n
Mills also questioned the decision to grant incentives at a
\ntime when the local industry is reeling from a slump amid the
\nAsian economic crisis.<\/p>\n
"We see no compelling reason... to granting special
\nincentives to Ford for assembly operations," the letter stressed.<\/p>\n
PEZA director Lilia de Lima said earlier, Ford is only getting
\na limited package and has not been granted an income tax holiday,
\nwhich is reserved only for export-oriented PEZA enterprises.<\/p>\n
The Ford project will be the biggest venture in the sector in
\nthe Philippines. It will also mark the U.S. giant's return to the
\ncountry after it pulled out 16 years ago at the height of an
\neconomic crunch.<\/p>\n
In 1996, Ford's rival General Motors Corp. passed the
\nPhilippines up in favor of Thailand as the site of a major plant.
\nGeneral Motors has delayed opening the plant because of the Asian
\neconomic crisis.<\/p>",
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