DTI upbeat on new automotive program

Trade Secretary Gregory L. Domingo on Wednesday expressed high hopes that the Comprehensive Automotive Resurgence Strategy (CARS) Program will be a big success, given the positive feedback the department had been getting from both automotive industry players and economists.

Domingo is optimistic that the program would fill up at least two of the three “slots” being offered to local vehicle assemblers.

“Slots” referred to the number of models that will be allowed to participate. Under the CARS Program, only three models will be qualified to a new package of fiscal and non-fiscal incentives over a six-year period.

“A lot of the (automotive players) are seriously looking at it. There are only three slots, but we will get at least two. They’re just waiting for the issuance of the implementing rules and regulations (IRR),” Domingo said.

“They (car companies and economists) like the fact that the incentive scheme is performance based. The program is not just about giving out incentives. One feedback from a local assembler was that the timing of the issuance of the CARS Program was good because that company was already deciding on model changes and future production plans. If this program was delayed, we would have missed out on the cycle again,” Domingo said.

The Department of Trade and Industry targets to release this month the IRR for the CARS program, which dangles some P27 billion worth of incentives for participants. Through this program, the Philippines is expected to attract more than P27 billion in new parts manufacturing investments; produce at least 600,000 vehicles; generate some 200,000 new jobs; and generate a total economic activity estimated to be worth P300 billion. The resulting contribution to gross domestic product was estimated at about 1.7 percent.

Trade Undersecretary Adrian S. Cristobal Jr. said in an earlier interview that the department was not expecting any problem in meeting the target for the IRR issuance.

“The target publication of the IRR is 45 days from the publication of (Executive Order No. 182). The budget for the program will be included in the General Appropriations Act for 2016,” Cristobal had said.

He earlier said that at least P4.5 billion was expected to be appropriated for the program in next year’s budget. This represents the amount of incentives that will be provided to qualified participants in the CARS Program.

Under EO 182, the Department of Budget and Management (DBM), in coordination with the Board of Investments, will propose, through the National Expenditure Program, the inclusion of an Automotive Development Fund (ADF) in the annual General Appropriations Act (GAA), to fund the fiscal support for registered and eligible participants.

The DBM will indicate in the annual National Expenditure Program the annual estimated expenditure necessary to support the CARS Program for that year, until the amount of P27 billion is fully used.

The said fiscal support will come in the form of non-transferrable Tax Payment Certificates (TPC) that participants can use to cover their tax and duty obligations to the government, such as excise tax, income tax, import duties, and value added tax.

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