How government can sustain the automotive boom in 2016 and beyond

SO THIS year, the Philippine automotive industry has set its sights at roughly 335,000 to 340,000 cars sold by the end of it. This is unofficial as the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) likes to sandbag and aim for a modest and realistic estimate. Some industry insiders think the local industry can hit 360,000 cars.

 

Regardless of the actual units sold in 2016, which we’ll know in 12 months, there are some issues which the government needs to resolve.

 

1. License plates

 

The government needs to finalize a license plate supplier, a reputable entity that will not violate any sourcing/bidding law and can deliver the plates immediately.

 

Screw the single plate supplier. The government should give guidelines on the license plates’ supply so that any Tom, Dick or Harry (or Juan, for that matter) may source their own plates.

 

There are a number of companies locally that can do replica Japanese/European plates. Why can’t they make regular plates for everyone? This is how it is done in many other parts of the world.

 

They argue that it will be easily to falsify plates, and that crime will increase. Well, guess what? If I swapped plates on my car, I am almost 100-percent certain that no traffic enforcer or police will notice.

 

On the other hand, having a single plate supplier opens up avenues for corruption. Remove the environment, conditions and restrictions that breeds corruption, and corruption will go away.

 

2. Singular, unified credit rating bureau or agency

 

Thankfully, the government has enacted Republic Act No. 9510, also known as the Credit Information System Act. This is meant to improve the financial stability of the Philippines as a whole, requiring banks and other financial institutions to submit your basic credit data to the Credit Information Corp., a government-owned and -controlled entity.

 

How does this benefit the car industry? In the third and the fourth quarters of 2015, a number of car manufacturers, dealers and executives from the banking sector (names withheld upon request) lamented the increasing cases of financing fraud.

 

For example, someone will buy a car on financing, and the car will suddenly get “stolen.” It is the dealers, or in many cases the insurance companies (comprehensive insurance is mandatory for all cars bought via financing), that lose out.

 

Officially, no bank will admit to this because it will force them to raise interest rates, or the Bangko Sentral ng Pilipinas to increase limitations and/or sanctions, which will deter buyers from getting vehicles on financing.

 

With financing rates at an all-time low (4 percent to 7 percent per annum), despite the weakened peso-to-US-dollar exchange rate, it has never been a better time to buy cars on financing.

 

But fraud will scare the banks and the BSP to tighten their requirements, and will kill the growth of the automotive industry.

 

Lastly, it will keep those at the edge of being motorized—individuals earning roughly $3,000 annually—to lose out and be unable to purchase a new car due to higher interest rates and stricter credit requirements.

 

3. Traffic

 

What has not been said about traffic? Every effort that the government is doing is only a short-to-medium-term solution. Indeed, even this in itself needs improvement.

 

We need more bridges to cross over Pasig River and its many arteries and tributaries in and around the metro. We need wider roads on major thoroughfares.

 

We need to improve the public train system to reduce the number of private vehicles and public utility vehicles on the road.

 

But the crucial solution will be when the government decentralizes Metro Manila, pushing growth in the neighboring cities and municipalities, and with it, reducing the number of people living and working in Metro Manila.

 

Down south, Cavite, Laguna and Batangas are perfect provinces ripe for a major economic transformation. Up north, Bulacan, Pampanga and Zambales are equally ready.

 

And if the US Army presence will increase in the country over the coming years, wherever they choose to settle will surely be an avenue for growth. We should, as a whole nation, start looking outside Metro Manila for growth and sustainability.

 

Of course, government needs to develop the infrastructure in these provinces, cities and municipalities, and to package special tax incentives for locators.

 

The MVP-led PLDT Group is rumored to be planning a Google-style campus complex outside Metro Manila. It takes a real visionary like MVP to see what’s possible. We should all follow in his vision.

 

4. Scrapping law

 

Previously, I spoke to Quezon City Councilor Bong Suntay, who also happens to be the president of the Philippine National Taxi Operators Association. Suntay agreed in principle that a scrapping law for old taxis would be a good idea to help modernize and improve the safety of PUVs, starting with taxis.

 

Five years is too strict and too short for taxi operators to get back their investments on a taxi. Ten years is a tad too long. So perhaps a compromise of seven or eight years?

 

And it’s not just taxis I am talking about. It should also apply to buses (both city and provincial), jeepneys, tricycles, trucks and utility/industrial vehicles that see regular road use, and lastly, private motor vehicles.

 

If we reduce the number of vehicles on the road, we will decongest traffic, reduce pollution significantly (especially on older vehicles which often need serious maintenance work), and lessen accidents due to old, ill-maintained vehicles that resemble death traps or rolling coffins.

 

The scrapping law should also stimulate new car sales.

 

What about old vehicles that we want to keep? Are project cars, vintage cars and classics too valuable to scrap?

 

In other countries, the government can opt to charge higher fees via the road users’ tax or other similar instruments, or create a special license plate or vehicle category for these old vehicles. These vehicles would only be allowed to use the roads on weekends and holidays, and off-peak hours on regular working days, like from 9 p.m. until 6 a.m.

 

5. Parking

 

The Philippines also has a serious parking problem (or lack of it). Many major arterial and secondary roads that pass through commercial, residential and industrial areas are littered with illegally parked vehicles.

 

These illegally parked vehicles obstruct traffic flow, sometimes reducing traffic to a grinding halt. This has to be addressed by the government at all levels, starting from the barangay all the way to the national.

 

We need organized parking spaces, and militant enforcement of towing of vehicles illegally parked on the road.

 

In other countries like Japan, you cannot legally buy a vehicle unless you have proof of parking space, which you have to present to the local motor vehicle inspection agency, which will then give you a certificate to be able to purchase a car.

 

If we can reduce the number of illegally parked vehicles, traffic will improve tremendously especially at the metro’s smaller inner roads.

 

6. Greater accountability, stricter guidelines and more comprehensive insurance coverage for PUVs

 

The government needs to tighten legislation on PUV and fleet operators’ accountability for accidents, injury to pedestrians and damage to private vehicles.

 

Many of these PUV and fleet operators will simply find loopholes in the legal system to escape prosecution, or worse, until the complainant gets tired chasing after them and loses hope on our judicial system.

 

On a side note, all PUV and fleet operators need to pass a national certification course on driving knowledge, conduct and manners, plus a comprehensive drug test to ensure that their drivers are fit to handle PUVs and HGVs (heavy-grade vehicles).