MANILA, Philippines – A day before he embarked on his first state visit to Japan, President Benigno Aquino III approved the country’s new automotive industry plan aimed at grooming the Philippines as a regional production hub.
In preparation for his state visit to Japan from June 2 to 5, the President signed Executive Order 182 providing for the Comprehensive Automotive Resurgence Strategy (CARS) Program, the Department of Trade and Industry (DTI) announced in a statement.
“The CARS program is about building capabilities and jobs to make our automotive manufacturing industry competitive in ASEAN (Association of Southeast Asian Nations),” Trade Secretary Gregory Domingo said.
The DTI said the incentives package under the plan is seen to “attract more than P27 billion ($604.75 million) in new parts manufacturing investments” and generate “economic activity estimated to be worth P300 billion ($6.72 billion) over the life of the program.”
The Philippines is seeking to replicate Thailand’s success in developing its auto industry, betting that a young workforce will entice car makers like Volkswagen AG to set up manufacturing plants in the country. The Philippines has been lagging behind Thailand – projected to produce over two million vehicles in 2015 – in vehicle sales and production.
In February this year, top Japanese car makers in the country mulled shifting their production to cheaper Southeast Asian countries, citing decreasing incentives for the automotive industry in the Philippines as a deterrent to investments.
The Philippine Automotive Competitiveness Council Incorporated (PACCI) pushed for the CARS Program.
PACCI members are all subsidiaries of Japanese carmakers such as Toyota Motor Philippines, Mitsubishi Motors Philippines Corporation, Isuzu Philippines Corporation, and Honda Cars Philippines, Incorporated. They are also part of the Chamber of Automotive Manufacturers of the Philippines, Incorporated (CAMPI).
Drafted by with DTI and its attached agency, the Board of Investments, the CARS Program is “expected to create 200,000 direct and indirect jobs” over 6 years.
The Philippines will provide fiscal and non-fiscal perks to automakers that set up their manufacturing plants in the country.
The government said it will provide an average of P4.5 billion ($101.01 million) worth of incentives yearly for 6 years to support the manufacturing of 3 vehicle models.
This includes “time-bound and performance-based fiscal incentives to support new investments in fixed capital expenditures in new parts-making capability and to encourage large-scale production in vehicle assembly,” the DTI statement read.
CARS is designed to build and grow the parts-making capability of the local automotive industry, DTI said.
It forecasts the incentives will “produce at least 600,000 vehicles.”
Early this year, CAMPI said it expects vehicle sales in the Philippines to reach 310,000 units this year, including sales posted by the Association of Vehicle Importers and Distributors.
Seen to be developed under CARS are manufacturing of auto parts not presently built in the country such as large body panels, bumpers, instrument panels, head lamps, shock absorbers, plastic fuel tanks, and other components.
DTI said this will lead to the development of basic support industries for manufacturing. (READ: Affordable, ‘lifestyle’ cars rev up PH auto industry) – Rappler.com