Lopez stands firm on HARI suspension from motor program
The Department of Trade and Industry (DTI) yesterday stood firm on its decision to suspend the registration of Hyundai Asia Resources, Inc. (HARI), official importer and distributor of Hyundai motor vehicles in the country, in the Motor Vehicle Development Program (MVDP) stressing the agency’s “unwavering duty” to implement the program and its commitment against corruption.
A statement read by DTI Undersecretary Rodolfo S. Ceferino for DTI Secretary Ramon M. Lopez denied the accusation of plunder, estafa, and technical smuggling for allegedly favoring HARI unjustly resulting in a loss of R1 billion in taxes and customs duties filed by the Volunteers Against Crime and Corruption (VACC). Rodolfo is managing head of the Board of Investments (BOI) which came up with the decision against HARI. Lopez is the chairman of BOI. “We are unwavering in our duty to implement the MVDP. No preference nor favor was given to HARI or to any participant,” said Lopez calling the case filed “frivolous” and meant to harass and malign his good office.
He, likewise urged everyone to be “vigilant against corruption,” and not to be “counterproductive to the concerted efforts of the government to encourage investments and facilitate and promote trade activities in the country to generate business and employment.”
First and foremost, he said, the BOI Resolution issued by the BOI Board as a collegial body in July and final resolution in November, 2017 was deliberated and decided upon as a group with due regard to the requirements of due process and in accordance with applicable laws, rules and regulations.
During the question and answer portion, Rodolfo clarified that HARI should refund the R1 billion tax discrepancy between the 1 percent tariff imposed on knocked down (KD) packs and 30 percent tariff slapped on completely built up (CBU). The BOI discovered that for the period October 2016 to July 2017, HARI imported CBU units using the electronic certificate of authority to import (ECAI), which granted them 1 percent duty.
Rodolfo, however, said that the Bureau of Customs (BOC) will have the final say as to the entire tax discrepancy owed by HARI because they would be the authority on the actual importation of the company. The BOI’s R1 billion computation was based on the ECAIs that they issued, but how many actually were imported and even during the pendency of the MR would be BOC’s purview so the tax discrepancy could “higher or lower”, said Rodolfo.
Under the MVDP, all participants are given the 1 percent import duty privilege. They should also comply with the four basic manufacturing processes – welding, painting, trimming and final quality and testing.
But based on three ocular inspections conducted by the BOI, HARI did not comply with the first two processes – welding and painting – but were actually importing packs utilizing the ECAIs issued by the BOI for KD importation when their importation should have been slapped with 30 percent tariff or the tariff for imported completely built up packs.
BOI Executive Director Corazon Halili-Dichosa said the agency as part of their work conducted ocular inspections in the HARI facility in February, April, and August 2017 to evaluate the extent of assembly processes implemented by the company, only to find out that they were only doing the trimming and quality/testing or the last three and four processes only.
According to Halili-Dichosa, the MVDP case is the first “incomplete” processes by an MVDP participant.
As a collegial body, the BOI issued a decision in July, 2017 suspending HARI’s MVDP registration. The Leeowned company filed for a motion of reconsideration the following month, August. The BOI came up with its final decision in November upholding its original decision.
In upholding its decision, the BOI ordered HARI to refund the government R1 billion in tax discrepancy. HARI was also ordered to implement the first two welding and painting processes over the next 6 months or until June this year.
Failure to comply with these conditions would result in the cancellation of its MVDP registration. HARI cannot also import KDs at 1 percent duty between now and before they can put up the welding and painting assembly facility.
Halili-Dichosa explained there was no exact timelines of the HARI project because it was a continuing registration of Dreamco Automobile Co., Inc. which was transferred to HARI.