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auto companies, have filed a protest with the Department of Trade asking for a decision to grant Ford tax breaks to be withdrawn.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