THE automotive and manufacturing arm of conglomerate Ayala Corp., AC Industrials, is still harboring ambitions to manufacture automobiles in the Philippines and is confident to make this a reality within the present administration.
Arthur Tan, CEO of AC Industrial Technology Holdings Inc. (AC Industrials), the consolidated unit for Ayala’s car and industrial operations, said they are currently on the hunt for manufacturing partners willing to supply key car parts and possibly be interested in a full-scale car production.
“We’re still pursuing that. We’re looking at the entire supply chain of what will allow us to produce a car. There are gaps for which we’re looking for a partner to come into a country. Some major car components we’re capable of producing on our own. So we’re working with partners to bring over the country so we can produce key component parts, and eventually convince them to producing the car itself,” Tan told reporters on Wednesday evening, at the sidelines of the Volkswagen media night.
With the move to revive manufacturing at the Department of Trade and Industry, coupled with the overarching economic agenda of the Duterte administration to retain macroeconomic policies from the previous government, Tan is confident they can produce within the next six years.
“I’m hoping this current administration would be much more forward and long-termed thinking in partnering with companies like us who are willing to take that step. I’m still positive we can still do it. I feel that that’s going to happen,” Tan said.
While there are no specific requests or incentives that the industrial firm is requesting from the government, the executive underscored the need for a “level playing field” vis-à-vis their Japanese counterparts in the auto industry—especially for trade-liberalization efforts the government is undertaking.
“The incentive that would be attractive to me is a level playing field—such as that the free-trade agreements [FTAs] that they government has accepted with one country, they will accept with the European Union. I’m not asking for more, just asking for the same,” the CEO said.
Automobile Central Enterprise Inc., which distributes and imports Volkswagen, and now under AC Industrials, made a previous request to the government for the lowering of tariffs on the automotive lines included in the proposed European Union-Philippines FTA in an effort to put them on equal footing with Japanese and Korean counterparts.
The prevailing tariff for European cars is at a minimum of 30 percent.
“I think, the value creation on an economic basis for the country in allowing European products to have a free trade with the Philippines. This move will open up the Philippine product market overseas even more,” Tan said.
The bilateral FTA, now under negotiation, will also benefit AC Industrials’s electronics-manufacturing subsidiary, Integrated Micro-Electronics Inc., which now enjoys the zero-duty export privilege of the EU-Generalized System of Preferences Plus as it exports Europe.
Moreover, 40 percent of IMI’s business is in the automotive sector—mainly in Volkswagen cars—as it supplies several of the vehicle’s electronics components, such as cameras and sensors.
Tan believes that with a freer flow of trade between the EU and the Philippines, a particular benefit in the auto industry can be realized: wider parts localization that will then pave the way for local component suppliers to move up the value chain.
ACEI’s Volkswagen Philippines, meanwhile, is bullish on sales prospects this year, eyeing to double its sales this year, from 2016’s 1,060-unit haul.