Motorcycle Industry COMPETITIVENESS ROADMAP PUTTING THE NATION ON - - PowerPoint PPT Presentation
Motorcycle Industry COMPETITIVENESS ROADMAP PUTTING THE NATION ON MOTORIZED TWO - WHEELS Outline of Presentation 2 Development of the Philippine Automotive Industry Global Motorcycle Industry Philippine Motorcycle Industry
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Motorcycle Manufacturing Linkages
Factors that Motivate Growth
Factors that Dampen Growth
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1950 1972 1987 1996 2002 Import Control Law/ Foreign Exchange Controls
1916 CBU Importation Progressive Motor Vehicle Program MVDP (MO136, MO157, MO160) New MVDP (EO156) Amended MVDP (MO346)
Progressive Motor Vehicle Manufacturing Program (1972)
MVDP (MO136 / Dec. 1, 1987) CDP (MO 57 / Feb. 9, 1988) CVDP (MO160 / Feb. 29, 1988 ) MDP
New MVDP (EO156) (Dec. 12, 2002)
Requirements based on GATT-WTO TRIMS
requirements under the TRIMS Extension
Amended MVDP (MO346 / Feb. 26, 1996) 4
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In thousand
Philippines rank 8th in world’s motorcycle production overtaking Japan and 4th in ASEAN surpassing Malaysia
2007 2008 2009 2010 2011 2012 Indonesia 4,722,521 6,264,265 5,884,021 7,395,390 8,006,293 7,079,991 Malaysia 446,415 536,567 436,430 467,941 498,076 543,088 Philippines 671,588 734,666 756,228 903,722 1,052,566 1,045,915 Thailand 1,646,873 1,907,424 1,634,113 2,024,599 2,043,039 2,606,161
2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 ASEAN 4 PRODUCTION
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Source: FAMI
ID 71%
MY 4%
PH 8% TH 17%
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Source: LTO
2007 2008 2009 2010 2011 2012 TOTAL MV 5,530,052 5,891,272 6,220,433 6,643,627 7,136,986 7,311,572 TOTAL MC 2,647,574 2,982,511 3,200,968 3,500,729 3,760,893 4,120,315 MC Share 48% 51% 51% 53% 53% 56% 48% 51% 51% 53% 53% 56%
42% 44% 46% 48% 50% 52% 54% 56% 58%
2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Axis Title
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTO New Registrations 343,138 495,400 585,482 605,038 671,588 734,666 756,228 903,663 1,014,1 1,048,2 MDPPA Sales 257,401 409,704 492,883 517,702 549,106 594,989 637,792 753,111 731,095 702,597 Industry % Growth 44.4% 18.2% 3.3% 11.0% 9.4% 2.9% 19.5% 12.2% 3.4% MDPPA % Share 75.0% 82.7% 84.2% 85.6% 81.8% 81.0% 84.3% 83.3% 72.1% 67.0% 75.0% 82.7% 84.2% 85.6% 81.8% 81.0% 84.3% 83.3% 72.1% 67.0% 50.00% 55.00% 60.00% 65.00% 70.00% 75.00% 80.00% 85.00% 90.00% 200,000 400,000 600,000 800,000 1,000,000 1,200,000 % Industry Growth (MDPPA and LTO) UNITS
9 Compliant to the conditions of the MVDP
have reached PhP 3.4B in Paid Up Capital and PhP 6.8B in PPE
mass production Over 95% of sales are assembled CKD parts and components
approximately 15%
models Direct employment of 5,000+ personnel. In addition are employment generated by several support groups (e.g., dealers, suppliers, service providers) estimated at 30,000 Contribution to revenue generation (taxes and duties) in 2012 at PhP 2.2 billion Contribution to GDP at 0.7% Consumer Protection
Deference to Intellectual Property Rights
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Motorcycle Manufacturing Linkages
Factors that Motivate Growth
Factors that Dampen Growth
Raw Material Supplier
2nd Tier 1st Tier OEM
Core activities Supporting industries
Universities/Training Institutions/Research Centers Industry Associations/ Chambers Technology/ Equipment Suppliers Professional/ Manufacturing/ Financial Services Dealers Marketing Arms Logistics/ Shipping Firms Logistics/ Shipping Firms Foreign/ Domestic Suppliers ASEAN Market Domestic Market Other Markets After market
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Tiers : MNCs, Large firms
Tier 2 : SMEs
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Consumers Dealers/ Distributors Manufacturers
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Iron & Steel Industry
Foundry Forging Metal casting Tool & Die
Rubber Sector
Injection Molding
Petrochem Industry
Injection/Molding Vacuum Forming
Electrical Industry
chemical and Allied Autoparts Producers Autmomotive Metal Parts Producers Automotive Rubber Parts Producers Autmotive Plastic Parts Producers
Others
Automotive Electrical Producers
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a fully-integrated automotive industry that will impact allied industries
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71 84 118 123 128
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2006 2007 2008 2009 2010 2011 Value of Parts Purchased 2,969,774,839. 3,355,845,629. 3,684,798,610. 4,519,629,628. 5,931,076,826. 5,945,328,345. Sales 517,705.00 553,143.00 594,989.00 637,792.00 753,111.00 731,130.00
200.00 300.00 400.00 500.00 600.00 700.00 800.00
2,000,000.00 3,000,000.00 4,000,000.00 5,000,000.00 6,000,000.00 7,000,000.00 Units in Thousands Value in ThousandS PhP
Value of Parts vs Sales
70 71 84 118 123 128
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The Philippines Indonesia Malaysia Thailand
CIT Rate 30 percent 30 percent 28 percent 30 percent Tax Holidays and Reductions Up to 8 year income tax holidays for newly registered pioneer projects meeting certain conditions. 3-6 year income tax holidays for non-pioneer projects, expansion projects, and for locating in less developed regions. 3 to 8 year income tax holiday for new pioneer enterprises in 22 specific sectors. Halving of income tax withholding on dividends to non residents for companies in economic development zones or in priority sectors. 5 year tax holiday on 70 to 100 percent statutory income (or 10 year holiday for companies of national and strategic importance). Corporate income tax holidays up to 8 years followed by a further 5 year holiday on 50 percent of corporate income tax (for priority activities and companies in certain geographical areas. Tax allowances and credits Various tax credits on domestic breeding stocks and genetic materials, as well as for incremental export revenue Doubling of depreciation rates for companies in economic development zones or investing in priority sectors Investment allowances for 60 to 100 percent of qualifying capital expenditure. Accelerated depreciation of computer, technology, and environmental protection investments. Investment allowance of 25 percent for expenditures on infrastructure.
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The Philippines Indonesia Malaysia Thailand
Import Duty and VAT Exemptions Exemptions from taxes and duties on imported supplies and spare parts. Zero duty on importation of capital equipment (EO 70 s 2012) Capital goods are duty and VAT exempt. Reduction of import duty on machinery, spare parts, and raw materials. Special duty drawback and VAT exemption for companies with export ratio
Duty-free import of raw material and spare parts for re-export. Import duty and sales tax exemption on machinery and equipment that cannot be produced locally. Sales tax and excise exemption on locally purchased machinery and equipment Various import duty reductions for projects located in certain regions. Others Additional 50 percent deduction for labor expenses for 5 years for new projects above certain ration of capital equipment to workers. Loss carry-forward extended to 10 years for companies in companies in economic development zones or in priority sectors. Double deduction of various expenses (such as R&D and training). Reduced tax rate 0f 3 percent for offshore companies in Labuan. Dividend distributions during holidays are from income tax exempt. Double deduction for utility and transportation costs in certain regions. Dividend distributions during holidays are tax exempt.
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Malaysia – 4:1 Indonesia – 4:1 Thailand – 4:1 Vietnam – 8:1 Philippines (2012) – 24:1
Motorcycle taxis – also known in Mindanao as “skylab” and “habal-habal”
Untapped domestic market presents a healthy picture for the industry. Even after saturation, Filipinos will continue to use motorcycles in various travel needs and livelihood.
Rising per Capita GDP Increasing urbanization & migration Inadequate public transport Access to Favorable credit terms Government incentives
Industry Directions of principal brand owners Population & possession ratio Favorable
demographics
Opportunity for brand marketing Assemblers
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Promotion and distribution reach
Growing 3S shops and sales network in rural areas Warranty issues for non compliant products
Installed Capacity
Assembly operation sufficient to sustain growth Expansion plans postponed due to surge in cheap imports New products with new features provide wider choices for consumers IPR infringements and lack of after-sales support
Consumer Finance
Banks and other financial institutions now offer financing schemes Growing repossession rate and delinquent accounts
Entry of New Players
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Under- developed local parts sector Road Safety Issues Technical Smuggling High production costs Unabated IPR violations Redundant government processes
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Under- developed local parts sector Road Safety Issues Technical Smuggling High production costs Unabated IPR violations Redundant government processes 20
Awareness Self-regulate Review Strengthen Quick settlement Industry Government
Rising per Capita GDP Increasing urbanizatio n & migration Inadequate public transport Access to Favorable credit terms Governmen t incentives Industry Directions
brand
Population & possession ratio Favorable demograph ics Opportunit y for brand marketing Assemblers
Drivers
Redund ant govern ment process es High product ion costs
Technical
Smuggli ng Under- develop ed local parts sector Unabat ed IPR violatio ns Road Safety Issues
Dampeners
Promotio n and distributi
Growing 3S shops and sales network in rural areas Warranty issues for non compliant products
Installed Capacity
Assembly operation sufficient to sustain growth Fly-by-night traders with no assembly
New products with new features provides consumer wider choices CBU trading vs. KD assembly
Consumer Finance
Banks now offer financing schemes Growing repossession rate and delinquent accounts
Entry of New Players
Influence of Supply-side Factors
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1.05 0.97 1.01 1.02 1.09 1.20 1.40 1.68 1.93 1.84 2.14 0.40 0.42 0.44 0.49 0.56 0.64 0.73 0.84 1.07 1.13 1.22 1.94 1.81 1.96 2.18 2.44 2.64 3.08 3.64 3.99 3.84 4.61 0.77 0.74 0.89 1.06 1.14 1.26 1.59 1.86 2.17 2.27 2.95 4.01 3.87 4.11 4.40 4.87 5.29 5.89 6.90 8.10 6.90 8.37 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Thousands
GDP per capita (current US$)
Philippines Vietnam Thailand Indonesia Malaysia
For developing countries, threshold where general preference of people gradually start to shift to 4W is at 3000USD. Based on forecast, the Philippines is not expected to hit this level until 2019.
2009 2010 2011 2012 2013 2014 2015 LTO 756,228 903,663 1,014,104 1,048,228 1,132,086 1,245,295 1,369,824 % GR 19% 12% 3% 8% 10% 10%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 Units
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Growth Rate %
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STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
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SWOT MDPPA ROADMAP STRENGTHS
WEAKNESSES
policy formulation)
importation, production, registered mc per area, accident per causes
OPPORTUNITIES
die making, precision machining O-S Strategies
responsive to current industry requirements
house and outsourced) O-W Strategies
contemplated Automotive Industry Council
suitable and easy-to-implement incentives scheme
parts manufacturing as backbone of the industry development THREAT
fake parts and components
(incorrect implementation of MC lanes, road infrastructures posing risks to MC)
importation, registration
(local vs national)
regulations S-T Strategies
representation in public fora and policy-making bodies to protect the welfare of MC sectors
NCIPR members
implement safety standards
motor vehicle transactions
seamless on-line processing from importation to registration
policies
policies on road safety both national and local shall emanate T-W Strategies
sector to address the following: 1. IPR issues 2. MC policies (safety, standards, trade and environment) 3. Streamlining of government processes (anti-red tape)
production, registered mc per area, accident per causes
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ACTION PLAN MEASURES Ensure Fair Market Play in the MC Industry
commitments
facility requirements
prior to BOI registration of models
Office and China Patent and trademark Office by BOI through the FTCS/Foreign Trade Posts
OEM i.e. technical smuggling and IP infringement
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ACTION PLAN MEASURES
Develop parts manufacturing industry
parts and components production` Compliance to ASEAN MRA
5 ECE
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ACTION PLAN MEASURES
Push for simplification of government procedures
agencies systems
Heap on RS Promotion
posing risks to MC
MC IN EDSA and Commonwealth Avenue
rules and regulations
“ P U T T I N G T H E N AT I O N O N M O T O R I Z E D T W O - W H E E L S ” M o t o r c yc l e D e v e l o p m e n t P r o g r a m P a r t i c i p a n t s A s s o c i a t i o n , I n c . w w w. m d p p a - i n c . o r g s e c . g e n @ m d p p a - i n c . o r g
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