MANILA, Philippines - The Department of Finance said the proposed roadmap for the automotive industry should conform with the latest fiscal incentives rationalization bill to balance the efforts of the government to, entice more car manufacturers to set up shop in the country and to shore up state coffers.
The Department of Trade and Industry is hammering out a motor vehicle development program to speed up the industry’s growth and make the Philippines an alternative manufacturing hub in Southeast Asia.
Finance Undersecretary Jeremias N. Paul Jr., who is tasked with forecasting and programming revenues of the government, said “any incentive for the auto industry should be within the ambit of the fiscal incentives reform bill.â€
The blueprint, which has been in the works since 2011, proposes to transform the automotive industry from assembly of completely knocked down (CKD) units for the domestic market to outright production of vehicles for both the local and export markets.
The fiscal incentives bill, filed last week by Rep. Luigi Quisimbing of the 6th District of Cebu, has the support of the Finance department, which seeks to curb foregone revenues for the government.
The proposed measure will remove tax and duty-free privileges that were deemed redundant. It also limits the grant of incentives to registered export enterprises, strategic activities and micro and small enterprises (MSEs) for a period not exceeding 25 years.
Finance Secretary Cesar Purisima said he was sticking to his earlier position that tax incentives to any industry should not come in the form of income tax holidays (ITH). He also wants the incentives to be strictly time bound.
The DTI was supposed to release the auto industry blueprint in the second quarter this year but moved the submission to the last quarter of the year to allow it to consult with other government agencies.
Trade Secretary Gregory Domingo earlier said the government was considering giving incentives to car manufacturers based on their production and export volumes.
Local vehicle assemblers have been eagerly awaiting the release of the road map which will serve as the basis of their investment-making decisions in the country.