Ducky Paredes

 “When EO 887 is fully implemented, this will spell doom to a lot of SMEs, the so-called backbone of a growing economy.”

by DuckyParedes

In the ‘80s, there was a transport crisis brought about by the inability of local truck assemblers to sufficient to address the requirement of the localmarket. Because of this, then President Corazon C. Aquino took back her policy curtailing the importation of used right hand drive trucks and buses through her issuance of Executive Orders No. 354 and 361. This allowed the entry of second hand trucks from Japan, mitigating the effects of the transport crisis.

Since then second-hand trucks and vehicles have been a vital partner of the business sector, especially the small and medium businessmen who rely on the affordable and reliable vehicles from Japan for their logistical needs.

In fact, 95 percent of all trucks plying major routes in Metro Manila andthe rest of the Philippines are converted second-hand trucks from Japan. There is a fully functioning dealer network of Japanese made parts in the country thatservices the needs of all truck owners.

A “midnight EO” issued by former President GMA threatens the existence of  SMEs and ultimately the Philippine economy. EO 887-A, otherwise known as theComprehensive Motor Vehicle Development Program, expanded EO 156 by banning the importation of trucks, special purpose vehicles like fire trucks and ambulances and special equipment.

Both EOs were reportedly issued upon intense lobbying of local car and truck assemblers. Now the DTI is writing the Implementing Rules and Regulations (IRR) that could effectively prohibit locators like United Auctioneers Inc. from importing the said vehicles. This means Subic Bay Freeport locators cannot import these vehicles, which are vital to our economy.

In January this year, the DTI also showered local car assemblers (whose products are those that are made in Japan) with a blanket zero percent tariff, to the consternation of other local car dealers and assemblers whose products are  made either in Korea, China or Europe.

When EO 887-is fully implemented, this will spell doom to a lot of SMEs, the so-called backbone of a growing economy. This will also be bad news to LGUs relying on second hand trucks and SPVs to deliver basic services to the people.

This move will mean death to the auction industry, which employs 120,000 Filipinos not only from among the Zambales, Bataan, Pampanga corridors but also in the Visayas-Mindanao areas through the allied industries created by  this industry – i.e., shipping,stevedoring, transportation, cargo handling, reconditioning, refurbishing, aircon installation, mechanical works, etc. Easily, the strict implementation of the new rules will put  120,000Filipinos out of work.

Second hand trucks cater to SMEs and the C and D markets. These are the farmers, fishermen, government contractors, hauling/logistics companies who cannot afford to survive working with new machines due to its prohibitive costs.

Even the Philippines’ Top 10 contractors cannot afford to purchase brand new equipment, according to Willie Castor, President of The NationalConstructors Association of the Philippines (NACCAP).

To illustrate, a brand new Isuzu ten wheeler dump truck could cost as much as P8 Million, whereas, a second-hand unit can be bought for only P800,000.00 in an auction. Imagine if second-hand units are banned – it will have a domino effect on the economy.

Businesses will be forced to buy new but expensive trucks, which cost they will pass on their customers, if they can. Prices of goods and services will then escalate and less people will be able to afford the product. In the long run, many businesses will close resulting into more unemployment.

The demise of the auction industry would also spell losses of  billions of pesos in custom taxes and duties to the government.  In fact, billions of pesos in terms of customs taxes and duties have been remitted to the National Treasury through the Bureau of Customs and the Bureau of Internal Revenue.

The House of Representatives (12th Congress), thru the joint Housecommittees headed by Rep. Jacinto Paras (Transportation & Communications)and Rep. Harry Angping (Trade & Industry), found there is nothing wrong with the importation & auction at Subic Freeport Zone since existing laws guide it.  The Committee emphasizedthe big contribution of second hand motor vehicles and heavy equipments as vital to economic growth.

“The importation of right-hand-drive and second hand motor vehicles is not costing the government huge losses in government revenues.  On the contrary, it has been shown that importation has caused the enormous increase of tax collections in Subic, has resulted in the sprouting of several other big businesses all of which generate revenues for the Philippine Government through payment of taxes & duties, and has created jobs for thousands of Filipinos,” the report clarified after conducting a series of public hearings.

As to the safety of second-hand vehicles, groups like the UAInc., assure motorists that they only deal in vehicles that are still in good condition,good enough to even comply emissions standards set by the Clean Air Act.

The group also corrected the common misconception that second-handvehicles, particularly those converted from right-hand drive to left-hand drive, are not road-worthy. It cited a September 16, 2004 article based on PNP Traffic Management Group records saying that 85 percent of accidents are caused by human error, not mechanical defects in vehicles.

Clearly, the DTI is misguided in this import ban policy. Is it notpossible to develop the motor vehicle industry without destroying thesecond-hand vehicle industry on which so many other businesses rely?

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hvp 10.24.10

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