The Trade Department will set up a benchmark on the volume of vehicles that will get incentives under the recently-approved EO 182, or the Comprehensive Automotive Resurgence Strategy program.
Trade Undersecretary Adrian Cristobal Jr. said the government was initially envisioning a “one model, one company” guide in the granting of fiscal and non-fiscal incentives to deserving car manufacturers.
“We’ve seen strong interest from car manufacturers. We are looking at a production variable incentive for those companies that will participate or qualify for the program,” he said over the weekend.
He noted that the production variable would begin once the first vehicle model of a car company failed to meet the target volume in the sixth or the last effective year of the program.
“This means that additional units might be required to fill in the 200,000 units per model per car condition. And this might also mean that the program will require a second model to meet the required volume. So it is possible that a car manufacturer may produce two models,” he said.
The second model, he said, would get the variable incentive, if the perks to be given were not pro-rated.
By mid-July 2015, the technical working group on CARS and private sector stakeholders would draft the implementing rules and regulations of the program.
President Benigno Aquino III signed the new automotive policy into law after more than one year of polishing the measure.
The new policy will offer as much as P4.5 billion worth of fiscal and non-fiscal incentives to three car manufacturers that will qualify in the production of three car models in the Philippines in the next six years starting 2016, or about P27 billion in total incentives.
Each car company will be required to produce 200,000 units per model within six-year period of the program, with a directive to export a portion of locally-made vehicles.
Automotive manufacturers in the Philippines are supportive of the car manufacturing program and promised to give their full cooperation to support and develop the local industry.
They said the much-awaited CARS Program was expected to facilitate the expansion of local manufacturing capabilities, improve cost competitiveness of industry players, and set the stage for regional integration given a clearer direction from the government.
Local assemblers said the new automobile manufacturing policy would make it easier for automobile manufacturers to further expand their local operations.
By making expanding operations more cost-effective, CARS should not only help automobile makers increase local manufacturing operations but also boost supporting businesses, such as local parts makers, they said.