BOI hopeful of 2-year extension of CARS program

MANILA, Philippines — The Board of Investments (BOI) is hopeful the relevant issuance to extend by around two years the compliance period for commitments under an incentives program for motor vehicle manufacturing will be released by February next year.

“We’ll try our best that by February, this would be out,” Trade Undersecretary and BOI managing head Ceferino Rodolfo told reporters.

He said the government is looking at whether an executive order would still be needed for the extension of the compliance period for the production volume requirements under the Comprehensive Automotive Resurgence Strategy (CARS) program or if a board decision from the Fiscal Incentives Review Board (FIRB) would suffice.

He said an executive order for the recommended three-year extension of the compliance period for the CARS program by the inter-agency committee (IAC) composed of the Department of Trade and Industry, Department of Finance, Department of Science and Technology and Department of Transportation was expected to be released last June.

During the vetting process for the draft EO, however, he said the recommended extension needs to be harmonized with the provisions of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which covers the government’s incentives program.

In particular, he said Rule 23 of the implementing rules and regulations of CREATE, covering temporary measures due to extraordinary circumstances, would be harmonized with the recommended extension.

Under Rule 23 of the CREATE IRR, the FIRB may approve temporary measures to support the recovery of registered business enterprises without reduction in their incentives during exceptional circumstances, including a pandemic, state of national emergency, armed conflict, and other major disasters.

The rule also states that the temporary measures would be in effect from the time of the declaration of such exceptional circumstance by the President, relevant government agency or the World Health Organization until it has ended.

While the IAC previously recommended a three-year extension following a request from CARS participants for a longer period to meet the volume requirement, Rodolfo said they are now looking to extend the compliance period by around two years to be based on the duration of the declaration of the state of calamity amid the pandemic.

President Duterte first declared a state of calamity due to the pandemic on March 16, 2020 for a period of six months. It was then extended up to Sept. 12 of this year and for another year or until Sept.12 of next year.

EO 182, issued by former president Benigno Aquino III, provides that CARS program participants will need to produce 200,000 units of their enrolled vehicle model within six years to avail of incentives from the government.

Toyota Motor Philippines Corp. (TMP), which enrolled the Vios as its entry model to the CARS program, has to meet the volume commitment by 2024, while the deadline of Mitsubishi Motors Philippines Corp. (MMPC) for the Mirage compact car is in 2023.

If the compliance period for the CARS program would be extended by two years, Rodolfo said TMP’s deadline would be moved to 2026, while MMPC would have until 2025 to meet the production commitment.