Gov’t to speed up new program for vehicle, parts manufacturers

THE DEPARTMENT of Trade and Industry has committed to fast-track the processes under the Comprehensive Automotive Resurgence Strategy Program, following the issuance of the implementing rules and regulations (IRR) last week.

“The IRR was published on Dec. 19. We anticipate applications soon after and we will fast track the evaluations,” Trade Undersecretary Adrian S. Cristobal Jr. said.

Local carmakers lauded the issuance of the IRR as this was deemed as a way to move forward the Philippine automotive manufacturing industry.

“The release of the CARS IRR is a welcome development. Considering that we are now seeing the details more clearly, it will now be reviewed by Mitsubishi Motors Philippines Corp. and our principals in Tokyo. We are also awaiting the details of the application template, which the DTI-Board of Investments has to release soon so we can react with accuracy,” said MMPC first vice president Dante C. Santos.

“We view the CARS as a means of assisting the domestic automotive-related industries from parts makers to assemblers-manufacturers become more competitive. The IRR is a working plan for [the CARS Program]. It surely will foster investments as it is looking at increased productivity,” Santos said in a text message.

According to Santos, MMPC is seriously looking into the program, but declined to cite the company’s potential investments until their principals in Tokyo have completed the assessment.

Based on the published IRR, participants in the program [which may be a vehicle assembler or auto parts maker] should make new investments in body shell assembly and large plastic parts assemblies; must be able to produce at least 200,000 units of the enrolled model; submit the economic impact of the investment plan for the model and on the overall competitive environment, and ensure compliance with safety, fuel efficiency and emission level standards.

Only three models will be allowed to enroll in the program, which dangles some P27 billion worth of fiscal and nonfiscal incentives.

Upon filing of application, a notice will be published by the DTI. An interagency committee will evaluate the application and submit within 30 days a recommendation to the BOI, which will then have to make a decision within 30 days.

Registered participants may be entitled to a maximum six years of two kinds of fiscal support during the enrolled model life. These were identified as the fixed investment support (FIS), which will cover the capital expenditure for tooling and equipment and training costs for the initial start-up operation, and the production volume incentives (PVI), which will be granted based on the volume of production and logistics efficiency.

The model life budget—of which 40 percent will be allocated for FIS and 60 percent for PVI—should not exceed P9 billion.

Under the CARS 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 total economic activity worth P300 billion. The resulting contribution to gross domestic product is estimated at about 1.7 percent.