By Elijah Felice Rosales, June 6 2019; Business Mirror

Image Credit to New York Times

THE government must provide tax holidays and monetary support to carmakers if it intends to make the Philippines a manufacturing hub for electric vehicles, according to industry players from South Korea.

In a high-level meeting in Seoul on Tuesday, Trade Secretary Ramon M. Lopez made a pitch to South Korean businessmen to explore locating operations in the Philippines. He specified investing in the e-vehicle industry, which the government is eyeing to develop.

Opportunities in the industry, Lopez added, will arise from the tariff modification of e-vehicle products under the Asean Free Trade Agreement (Afta) and consideration of a target date for full e-vehicle utilization and registration in the country.

However, these efforts are not enough. The International Electric Vehicle Association and South Korean e-vehicle players, such as Hyundai Motor Co., POSCO E&C and Phillips Group, are asking the government to go beyond granting tax incentives in attracting investors.

Apparently, incentives are not enough to develop industries that manufacture products of the future.

The e-vehicle powerhouses recommended providing tax holidays and monetary support per unit made. It added the government should share the cost of putting up charging outlets and battery-replacement stations, the same package offered by the South Korean and some Southeast Asian governments to investors in the e-vehicle industry.

“Accordingly, these countries have local programs to strengthen the industry to encourage the shift to e-vehicle, such as free registration and free parking,” the Department of Trade and Industry said in a statement.

Cars program

Lopez floated the idea of coming up with another initiative similar to the Comprehensive Automotive Resurgence Strategy program.  The Cars program made available P27 billion in fiscal support to participants, with each enrolled model receiving no more than P9 billion.

“This would have to be a special program similar to our Cars program, so it can quickly attract investors in the industry,” Lopez said.

The trade chief said South Korean manufacturers, including e-vehicle makers, should consider locating and expanding operations in the Philippines. He said the country has wider market access compared to Southeast Asian competitors, as it has trade privileges with the United States and the European Union, as well as a free-trade agreement (FTA) with the European Free Trade Association.

“The Philippines is an ideal geographic base for South Korean manufacturing companies, specifically those focusing on automotive and auto parts, electronics and semiconductors, food processing, agricultural business and other labor intensive industries,” Lopez said.

He said Seoul is a manufacturing powerhouse, and setting up new shops here will benefit both economies. While South Korean firms take advantage of the country’s preferential access to key markets, they will also generate jobs in the Philippines, Lopez argued.

Over 30 South Korean business executives from the infrastructure, tool and die, and energy industries participated in the high-level meeting with Lopez and the Philippine camp, including Ambassador to South Korea Noe Albano Wong and Board of Investments Director Angelica M. Cayas.

The Philippines and South Korea are negotiating a bilateral FTA with the aim of improving trade and investment activities between the two parties. They started official talks on Monday.

Last year approved investments from South Korea declined 44.21 percent to P1.88 billion, from P3.37 billion in 2017, data from the Philippine Statistics Authority reported.