May 28th, 2011

Philippine Government to protect Shipbuilding and Motorcycle Industries in the country

The Philippine government has directed to protect the shipbuilding and motorcycle industries from foreign competition by way of tariff shield. This process would ensure the fully development of these two domestic industries where the country has competitive advantage.

A source from the National Economic and Development Authority (NEDA) board said the directive was made during the recent Cabinet meeting that tackled the most-favoured nation (MFN) tariffs or the scheduled of tariff reduction on items imported outside of ASEAN and other countries where the Philippines has existing bilateral or regional free trade agreements.

The official source said that Malacañang would like to continue granting the tariff protection to these sectors. It was not clear though what would be the tariff rate that would be granted to these two sectors. Various items under these sectors are supposed to be reduced to zero rates already under the proposed 2011-2016 new tariff schedule.

The Philippines has a robust motorcycle sector and a bustling shipbuilding industry. In motorcycles alone, the Philippines ranked third among ASEAN countries with a growth of 19.3 percent in 2010 for total sales of 759,849 units from 636,889 units in 2009.

On shipbuilding, this industry has posted substantial growth and is listed in the Investment Priorities Plan entitling activities under this sector tax and fiscal incentives. The operation of Hanjin Heavy Industries in Subic has further improved the country’s image as a hub for shipbuilding activities. The Korean firm has a sprawling shipbuilding manufacturing facility in Subic Bay Freeport and has been exporting ships built in Subic.

There are also several shipbuilding companies operating in Cebu led by Tsuneishi Heavy Industries, (Cebu) Inc. (THICI), one of the leading medium sized shipbuilders in the world.

Earlier, Tariff Commissioner Edgardo Abon said they hope to get the new MFN tariffs approved within the Congressional break. The new tariff rates would be governed by an executive order to be issued by the Philippine government. “Most rates are the same with only nominal change” said Abon.