Toyota, Mitsubishi gear up for CARS program

MANILA, Philippines - Toyota Motor Philippines (TMP) and Mitsubishi Motors Philippines Corp. (MMPC) are gearing up for their participation in the government’s Comprehensive Automotive Resurgence Strategy (CARS) package as the program, seeking to bring in fresh investments worth as much as $1.2 billion, goes full speed.

The Board of Investments (BOI) said it is opening applications for the CARS program with the release of a memorandum circular today.

The BOI said car and car parts manufacturers eligible for the program have 60 days upon publication of the memorandum circular to submit their applications.

An inter-agency committee composed of representatives from the Departments of Finance, Transportation and Communication, Science and Technology, as well as from the Technical Education and Skills Development Authority, the Industry Development Council, and the National Competitiveness Council will evaluate the applications within the prescribed one-month period.

Decisions are expected to be announced before June, the BOI said.

“The opening of applications a week earlier than the mandated schedule augurs well for the CARS program. We are especially enthusiastic for small and medium enterprises (SMEs) in the car parts manufacturing sector that stand to benefit from the program,” Department of Trade and Industry (DTI) Undersecretary and BOI managing head Ceferino Rodolfo said.

In separate interviews Wednesday night, TMP and MMPC officials reaffirmed their interest in joining the program that dangles P27-billion tax incentives to participating car makers.

“We are keen to participate and help the government further improve the local automotive industry and contribute to the Philippine economy,” Toyota Motor Corp. managing director and CEO of Asia, Middle East and North Africa regions Kyoichi Tanada said.

“We’re definitely eager to comply and register our interest right away,” TMP vice chairman Alfred Ty said, noting the company is just awaiting the BOI’s memorandum circular to formalize its intent.

For MMPC’s part, company first vice president and corporate secretary Dante Santos also expressed the group’s inclination to join with small cars like the Mirage model as its top contender for the CARS package.

“Small cars are viable for the market, viable for the pricing niche, and viable for the Filipino demand,” Santos said.

TMP, meanwhile, is likely to have the Vios model enter the program as it is the company’s bestseller to date.

“The requirements have been studied for so many years and back and forth consultations with the DTI and industry were made so we believe we have a very strong model to register for the CARS program,” Ty said.

The CARS program, which was approved by President Aquino in May last year seeks to encourage local car assembly through incentives and allow industry players become more competitive.

Under the program, prospective local car assemblers may apply for fiscal support not exceeding P27 billion by locally assembling three vehicle models, or P9 billion per model, with a commitment to produce 200,000 units for each model during its six-year model life.

The fiscal support will be given in the form of tax payment certificates to be used to defray the participating car companies’ tax and duty obligations.

“Three slots will be up for application. If there is a slot that is not taken, then we have to evaluate it to a certain period. Most likely, we’ll open that third slot for a certain model or kind. We don’t know what yet. We’re studying that option because we also don’t want to second-guess the market. We have to evaluate the models that are applied for,” Trade Secretary Adrian Cristobal Jr. said as only TMP and MMPC have so far expressed interest in taking up two of the three slots.

According to the BOI, the CARS program targets to generate 200,000 new jobs, bring in fresh investments worth $1.2 billion, stimulate local demand by increasing vehicle sales to $9.2 billion, and effectively implement industry regulations that would revitalize the Philippine automotive industry.

“The CARS program is a model of committed collaboration among the public and private sectors, civil society, and academe. We share this milestone with stakeholders who have worked tirelessly over the past three years to finally arrive at this point,” Trade Assistant Secretary Rafaelita Aldaba said.

Local car parts makers, most of which are SMEs, have expressed full support for the CARS program, saying the annual target production of 100,000 vehicles doubles the current completely knocked down (CKD) assemblies.

“For us, with this CARS program, we’re looking at about 60 to 70 percent increase in our current manpower. Right now we have about 70,000 employees in the parts making industry. 60 to 70 percent is what we target as soon as we capture the projected 200,000 units for each model,” Philippine Part Maker Association president Ferdinand Raquelsantos said.