The recent unveiling by the Duterte administration of CARS, a program for raising the local content of cars produced in this country, has brought back memories of PCMP (Progressive Car Manufacturing Program), which was put together in 1970 by the BoI (Board of Investments) to”•as its name suggests”•make the domestic motor vehicle industry progressively manufacture cars in the Philippines. BoI, created by the Investment Incentives Act of 1967, was intended to be the principal maker and implementor of this country’s investment policies.
The original membership of the BoI board of governors included Cesar Virata, who would later become Secretary of Finance and, much later, Prime Minister. Other members were Vicente T. Paterno, who would succeed Virata as chairman upon the latter’s departure, and Edgardo Tordesillas, who is also remembered for having been the man behind the development of Balesin Island on the Pacific side of Northern Luzon.
BoI was meant to, and did, function alongside DTI (Department of Trade and Industry). In the post-Marcos era,BoI was placed under DTI’s wing as the Department’s investment arm.
PCMP was the centerpiece of the manufacturing program of the government of the day. It was followed, in due course, by progressive manufacturing programs for trucks (PTMP) and motorcycles (PMMP).
The world automotive industry quickly took notice of PCMP. The corporate headquarters of the car makers of the US, Western Europe and Japan appeared to have come to believe that, after decades of merely importing CKD (completely knocked down) car packs, the Philippines was at last serious about developing an industry for manufacturing cars and car parts.
There was intense competition among the world’s leading carmakers for inclusion in PCMP, and their lobbyists in Congress, the media and the Philippine equivalent of Wall Street used all their influence to win a seat at the table for their clients. Being at that time the business editor of another major newspaper, I can still remember how intense the competition”•nay, the struggle”•was.
In its original formulation, PCMP was to be a four-participant affair. To achieve regional balance and to obviate any charge of bias, there were to be two participants from the US, one from Japan and one from Western Europe. The four car makers that appear to have been all but chosen were General Motors, Chrysler, Toyota and Volkswagen. But in the end there would be five participants. Determined to not be left out, Ford Motor Co. made a powerful eleventh-hour proposal to BoI: if included, its contribution to the program would be a stamping plant. That clinched the deal for the world’s then-second-largest car maker, and PCMP ended being a five-participant affair.
Being the offspring of incentives-granting legislation, and as a come-on, PCMP offered the world’s car makers a package of fiscal and administrative incentives. Chief among the fiscal incentives were provisions for accelerated depreciation, loss carry-over and various tax-rate reductions. On the administrative side there were provisions for preferential treatment of various kinds.
As a result of PCMP, this country obtained capacity for manufacturing engines, transmissions, electrical systems and stampings. With PCMP, the Philippines had taken a major step in the direction of manufacture of cars in this country. The Filipino people were excited and the business community was enthusiastic. The Philippines was at last shedding its import mentality.
For reasons that had to do with the progressive deterioration in the quality of national governance and, by extension, of the business climate, PCMP gradually fell apart. But while it was operational, the program served as a beacon for economic transformation in this country.
Now there is CARS. Am I excited? From the details that I have seen about the program, CARS is nothing to get excited about. It strikes me as being an attempt”•a feeble one”•to imply replicate PCMP.
Once there was PCMP. It was a very good program. Any program for establishing a car manufacturing industry at this point in the Philippine economy’s development should improve upon, and not merely attempt to replicate, PCMP.
E-mail: rayenano@yahoo.com