ASEAN KEY DESTINATIONS
Ambitious EO to support PHL car parts industry
To jumpstart and revitalize the automotive industry, improve its competitiveness and elevate the Philippines into an auto manufacturing hub in the region, President Benigno S. Aquino III has signed Executive Order 182 to implement the Comprehensive Automotive Resurgence Strategy (CARS) Program, the Department of Trade and Industry said in an emailed statement.
A result of the Automotive Industry Roadmap drafted by the private sector and the DTI-Board of Investments, the CARS Program calls for fiscal and non-fiscal incentives.
The President directed the Department of Budget and Management to allocate P27 billion for the next six years to support the program. The money will be used to provide qualified car makers and car parts manufacturers with fiscal support based on production volume and new investments they make in the Philippines.
The program is designed to build and grow the parts-making capability of the auto industry, “for without a robust parts making industry, our car-making industry will remain uncompetitive. The CARS program is about building capabilities and jobs to make our automotive manufacturing industry competitive in ASEAN,” said Trade Secretary Gregory L. Domingo.
“The thrust of this program is to provide time-bound, and output- or performance-based fiscal support to attract strategic investments in the manufacturing of motor vehicles and parts thereof,” the order read.
EO 182 specifies the criteria for carmakers and car parts makers to qualify for fiscal support under the program.
Expected to create about 200,000 direct and indirect jobs in the industry throughout the six-year life of the program, CARS calls for new investments in manufacturing parts not currently available in the Philippines, like large car body panels, bumpers, instrument panels, head lamps, shock absorbers, plastic fuel tanks, automotive fabric and others.
The technology “spill over” will help develop basic support industries for manufacturing, such as casting, forging, machining and tool & die, the department said.
“After thorough study, extensive stakeholder consultations and inter-agency coordination, the government’s CARS Program will be implemented with the signing of the EO,” Trade Undersecretary and BOI Managing Head Adrian S. Cristobal Jr. said.
CARS offers a package of time bound and performance-based fiscal incentives to support new investments in fixed capital expenditures in new parts-making capability and to encourage large scale production in vehicle assembly.
On average the government intends to provide P4.5 billion worth of incentives a year during the six- year lifespan of the program to support three models.
This is expected to attract more than P27 billion in new parts manufacturing investments, produce at least 600,000 vehicles and generate a total economic activity estimated to be worth P300 billion over the life of the program. The resulting contribution to gross domestic product (GDP) is estimated at about 1.7 percent, according to DTI.
“As parts-making capability develops and production reaches economic scale, we expect consumers to benefit from lower prices of cars and spare parts,“ Cristobal noted.
The President also established an inter-agency committee on automotive industry development to implement the program. The panel is headed by the DTI’s Board of Investments.
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