President Aquino has approved an executive order providing for the implementation of the long awaited Comprehensive Automotive Resurgence Strategy (CARS) Program.
The implementation of the industry road map is expected to revitalize the Philippine automotive sector and boost the country’s competitiveness as a manufacturing hub in the region.
The much anticipated CARS Program is expected to generate economic activity worth about P300 billion over the next six years and contribute at least 1.7 percent to gross domestic product (GDP), the Department of Trade and Industry said in a statement issued yesterday.
Under the automotive program, the government will offer as much as P27 billion worth of time-bound and performance-based fiscal incentives that will support new investments in fixed capital and new parts making capability, as well as encourage large- scale vehicle production.
Specifically, the CARS Program will provide an average of P4.5 billion worth of incentives yearly over the next six years to support only three models. These incentives are expected to attract more than P27 billion in new parts manufacturing investments; produce at least 600,000 vehicles, and generate some 200,000 direct and indirect jobs throughout the program’s life span.
“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,” Trade Secretary Gregory L. Domingo explained.
The CARS Program calls for new investments in manufacturing parts not currently available in the country, including large car body panels, bumpers, instrument panels, head lamps, shock absorbers, plastic fuel tanks, automotive fabric and others. The technology “spillover” will help develop basic support industries for manufacturing, such as casting, forging, machining, and tool and die.
“After thorough study, extensive stakeholder consultations and inter-agency coordination, the government’s CARS Program will be implemented with the signing of the EO. As parts making capability develops and production reaches economic scale, we expect consumers to benefit from lower prices of cars and spare parts,” added Trade Undersecretary Adrian S. Cristobal Jr.
Local automotive players have long been awaiting the issuance of the automotive manufacturing road map as their decision on whether to increase their investments in the country will hinge largely on the incentives and policies provided in the program.