Gov’t takes a backseat as carmakers study auto road map

The much awaited Comprehensive Automotive Resurgence Strategy (CARS), which will provide a new package of incentives for Philippine carmakers, will be presented anew to stakeholders this week prior to the issuance of an executive order that will enable the program to take effect before the end of the year.

Corazon H. Dichosa, executive director for the Board of Investments industry policy group, said the agency would hold within the week a Trade and Industry Development (TID) Update forum to present the more detailed automotive road map. It will include the revisions and inputs from the Cabinet’s economic cluster, and highlight the industry’s contribution to jobs generation and inclusive growth.

This proposed automotive manufacturing road map, she clarified, has yet to be approved by Malacañang.

The forum will again show “the whole strategy for the automotive sector,” Dichosa said. “It would be more detailed than what was presented before, to answer questions why we are having this special cars strategy. We will show the linkages and the multiplier effect of the sector and how huge its contribution could be in terms of employment generation. As for the fiscal incentives, we have to wait and see.”

The previous TID forums for the automotive manufacturing road map were done in 2013 using the documents that had been crafted by the industry players.

Trade Assistant Secretary Rafaelita M. Aldaba said last week that the CARS program would generate around 300,000 jobs, comprising both direct and indirect employment, and could be realized within the six-year period of the program’s implementation.

According to Dichosa, the number of jobs that can be generated may be even higher given the automotive industry’s links to other sectors like electronics, plastics, rubber, and even the tool and die.

Aldaba earlier pointed out that a car has over 30,000 parts, and its construction is dependent on metal, chemical, plastic, textile, rubber, glass, steel, electrical and other manufacturing subsectors.

“Through interindustry and supply chain linkages, auto manufacturing can have a large multiplier effect in an economy because any expansion in the automotive industry drives growth in feeder industries,” Aldaba said.

Under the proposed CARS program the government may invest roughly $600 million (or at least P26 billion) in the form of fiscal and nonfiscal support. The program will provide highly attractive perks to a limited number of participants and only for certain vehicle models. The incentives may include financial support meant to help close the $2,000 per unit gap in the cost of producing a vehicle here as against the much lower cost of importing a car.