MANILA – Department of Trade and Industry (DTI) Secretary Ramon Lopez bared on Thursday that his office received a letter from Nissan Philippines announcing the shutdown of its assembly plant in the country.
“The announcement of Nissan to close their assembly operations in the country is regrettable, as these developments all the more demonstrate the critical situation of the local motor vehicle industry,” Lopez said in a statement.
Nissan assembles its Almera model in the Philippines.
Some 133 workers are employed in the production facility.
“The stoppage of Almera’s assembly operations, following closely that of Honda and Isuzu, only highlights that the local auto assembly industry is critically impacted by the surge in imports and will thus benefit from the time-bound safeguard duty,” the DTI chief said.
Starting Jan. 20 this year, the DTI imposed provisional safeguard duties of PHP70,000 on imported passenger cars and PHP110,000 on imported light commercial vehicles.
The safeguard measures will take effect for 200 days.
Based on DTI’s study, the share of imported passenger cars in the Philippine market increased by 35 percent between 2014 and 2018, with local assemblers sharing only 22 to 25 percent of the market while imported passenger cars dominated more than 70 percent market share.
The market share of local assemblers for light commercial vehicles also shrank from 18 percent in 2014 to 7 percent in 2018.
“(T)he provisional safeguard measures need to be immediately put in place to protect the domestic industry from further serious injury,” Lopez said.
He added the Philippines is one of the most open markets among Southeast Asian nations in terms of automotive vehicle imports.
For instance, Thailand imposes an 80 percent most favored nation (MFN) tariff on completely built-up units (CBU) from countries outside Asean.
Meanwhile, the trade chief said the closure of the assembly plant of Nissan is expected as the firms’ executives have expressed their plans to cease production operations here due to weaker volume sales and low market share of the Almera.
Nissan Almera’s sales in the Philippines is around 4,500 units or 1 percent of the total market share.
Nissan is leasing its facility from Taiwanese firm Yulon Group.
As the manufacturing facility will remain intact, Lopez hopes the plant can be used by the next entrant that will assemble cars locally when the business climate improves after the coronavirus pandemic.
“Alongside the modernized incentives being made available under the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Bill, the DTI is undertaking a comprehensive approach to revive the auto industry — employing coherent policy measures while still maintaining fair trade and the contestability of the market for imports. This, together with the major reforms we are doing — such as the Public Service Act, the Rice Tariffication Law and the ‘Build, Build, Build’ program, and many more — will bring about a more attractive investment climate moving forward,” Lopez said. (PNA)