House of CARS

“I AM grateful to the Philippine government for giving the local auto manufacturing industry a chance to flourish and further contribute to the economy.”

Those were the words of Michinobu Sugata, president of Toyota Motor Philippines Corp., taken from a news report quoting him on CARS.

Standing for “comprehensive auto resurgence strategy,” CARS took off recently as the first business “incentive” program of the Aquino (Part II) administration.

To the guys down here, two things stood out in the statement of Sugata: one, the so-called local auto manufacturing industry actually existed, and, two, this administration would give it a “chance to flourish.”

The truth of the matter is that, for the past 50 years or so, the Philippine government already gave untold, and now unquantifiable, incentives to this hypothetical “local auto manufacturing industry.”

Yes, sir, this presumed “local” industry already got all the chances in the world, and up to now we could hardly talk about it as high value-added “manufacturing.”

For the longest time now, foreign car companies here mainly imported ready-made vehicles, called CBUs in the business, as in “completely built units.”

That was why, despite all those untold government incentives in the past, the manufacture of car parts—just simple parts, mind you—never took off here.

For who would buy the locally made automotive parts—just the friendly but ill equipped car repair shop at the corner?

From what I gathered, many companies in the local parts industry—if we could call it an “industry” at all—already closed shop.

The remaining ones would only operate when they received orders from the foreign car companies, which, I tell you, were not really on a regular basis—such as the makers of car seat covers—just the cover!

Question: If we could not create an honest-to-goodness auto parts making industry here, how could we claim to have a “local auto manufacturing” industry?

Yet this administration played god, again, determining that CARS—and no other—should get first priority in its P290-billion incentive program for 2016.

But CARS would already be the fourth incentive package for such a small group that our government made us to believe as a “local manufacturing industry.”

Indeed, from the time of former President Ferdinand Marcos to the time of the cute administration of former President Gloria Macapagal Arroyo, foreign car companies were said to have missed—and miserably so— the targets that they themselves helped to set in all the past three government programs and all the untold benefits.

Each of the past six administrations had its own program supposedly to develop the local automotive sector, except perhaps the man named Band… Wrist Band.

Well, his term was, ah, a bit truncated!

In 1973, anyway, during martial rule, Marcos started the PCMP, the “progressive car manufacturing program,” complete with tax breaks and tariff cuts and all that.

Remember—the Marcos dictatorship also loved to label its program with big words, calling the car program then as part of an “industrial deepening.”

Our leader Benigno Simeon perhaps learned from him, now justifying his car program as a way to “sustain the resurgence of manufacturing.” Hmmm.

Of course everybody knew then that the Marcos-era PCMP came about only as a result of the intense lobby of foreign car companies, mainly Japanese firms.

The PCMP members at that time promised they would develop a truly local automotive industry, if only we would allow them to import everything, first.

They would import CKD (completely knocked down) units that they would assemble here, but they would slowly increase the “local content” through the years.

The supposedly slow but sure development of car parts making industry here did not happen, even after Marcos was ousted—luckily for foreign car companies.

Because then came the program of the late former President Corazon Aquino, aka Tita Cory, whose administration also caved in to the lobby of foreign car companies.

As a redo of PCMP, the program became the “car development program,” or CDP, which nevertheless erased the targets and obligations of the foreign car companies under the Marcos PCMP.

In the time of Tita Cory, our biggest problem was the lack of foreign exchange.

And so the big idea behind CDP was that foreign car companies would export locally made auto parts so that they could earn the dollars for their importation of CBUs.

They committed to the Cory administration that they would make all the major auto components here, particularly the engine and the transmission.

No trace was left of the CDP, despite its grant of blanket authority to foreign car companies to import everything they needed, while the rest of the economy scrambled for foreign exchange.

In other words, nothing actually happened out of the CDP.

In the time of former President Fidel Ramos, aka Kuya Eddie, the government expanded the CDP even more.

For instance, he increased the CDP participants from three foreign car companies to 11 (also) foreign companies, including the late unlamented Proton Saga of Malaysia.

By the way, luxury cars like Mercedes Benz also became part of the program, which hardly had any parts made locally, of course, except that its dealer here became rather active in sponsoring hole-in-one prizes in golf tournaments.

The Kuya Eddie administration, in effect, liberalized the importation of CBUs, thus doing away with the development of the local auto parts industry.

For example, the government simply imposed the same tax rates, particularly the infamous VAT, on the CKDs and the CBUs.

Guess what the foreign car companies did? Hint: forget the idea of local content!

In the time of the cute administration of Gloria, foreign car companies peddled the propaganda line that the CDP only failed because of the Asian financial crisis of 1997.

Really? As it turned out, the cute administration of Gloria only wanted to launch—tantararan!—another program called “motor vehicle development program,” or MVDP.

So intense was the lobby from foreign car companies that they succeeded in forcing the cute administration to impose a complete ban on importation of used cars.

You know—so they could monopolize the local market! Well, the cute administration also cut the tax rates on the importation of CBUs.

No wonder, up to today, almost 50 years after the first car program, we are still wondering whether or not the “local manufacturing industry” really existed.

Last year, foreign car companies sold more than 310,000 units here, and nobody knows how many of those were made, or even just assembled, locally. Nice!

Not even our beloved DTI, the Department of Trade and Industry, knows, and it was the DTI that pushed for CARS and its billions of pesos in largesse.

So how did the freaking DTI conduct the study for CARS? Well, it simply relied on the figures and “inputs” from … well, foreign car companies.