DTI: No favors for Hyundai

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Metro Manila (CNN Philippines, February 12) — The Trade Department insists it has not given Hyundai Asia Resources Inc. (HARI) any special consideration after it found the car maker has been violating terms of a tax incentive program since 2016.

According to Trade Undersecretary Ceferino Rodolfo, Hyundai will not be allowed to enjoy its importation perks until it complies with two conditions: paying back the government about ₱1 billion in duties and taxes, and putting up assembly operations in the Philippines by the mid-year.

"What we're really after is that Hyundai complies with the terms of the MVDP (Motor Vehicle Development Program), just the same as all the other members," Rodolfo said in a press briefing on Monday.

The MVDP allows companies to import car parts or "completely knocked down (CKD)" units using a tariff of just 1 percent — a huge discount from the prevailing 20 percent rate — as long as they are assembled here.

Hyundai, however, was bringing in semi-knocked down units, which only needed to be fitted with wheels and batteries once they were in the Philippines.

The Department of Trade and Industry (DTI) estimates violations began in October 2016 and went on until the company was caught in July 2017.

During that period, the car maker brought in 600 units of its H350 van and 4,000 units of its Eon compact.

The DTI has since suspended Hyundai's MVDP membership until it pays back the ₱1 billion it estimates the company should have paid with the regular 20 percent tariff.

Hyundai is also required to put up painting and welding processes in its local plant by June 2018.

"Until they fulfill those conditions, they will not be able to enjoy the 1 percent incentive," Rodolfo said.

He added, "Yes, we give incentives to companies, but we expect something in return for the country."

DTI and Hyundai officials were sued by the group Volunteers Against Crime and Corruption (VACC) last week, pressing charges of plunder, technical smuggling and estafa.

However, Rodolfo debunked the VACC's claims the government gave Hyundai the "luxury of time" to address its violations.

He said the car maker filed a motion for reconsideration in October 2017, which stayed the DTI order, as provided by the law.

But once the DTI issued its final decision a month later, it was immediately implemented.

"That's why now, everything Hyundai imports will have to be paid. Starting from their imports last year, even their imports during the time of their motion for reconsideration, and even all the way until June when they're expected to finish their assembly," Rodolfo said.

"Everything will have to be paid," he added. "So it's not true that we are giving Hyundai favors."