Government finalizing P9 billion incentives program for vehicle production

MANILA, Philippines — The government expects to complete a joint administrative order (JAO) for the implementation of the P9-billion incentives program for local vehicle manufacturing next month and open applications as early as April.

A briefer from the Department of Trade and Industry (DTI) sent to reporters yesterday showed that instead of an executive order, a JAO is being crafted by the agency with the Department of Finance and Department of Budget and Management for the easier implementation of the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program.

“We’re expecting to complete the JAO by mid-March and open the application period for participants by April or May this year,” the Board of Investments (BOI) said.

A program briefer from BOI executive director Corazon Halili-Dichosa showed that the government would provide P9 billion in fiscal support for the program, which will cover the production of three models of four-wheeled internal combustion engine (ICE) vehicles.

Each participating car maker can get fiscal support worth up to P3 billion under the program for tooling and equipment needed for vehicle production.

In addition, the participating car maker may be entitled to fixed investment support (FIS), which will cover up to 40 percent of capital expenditure.

Under the program, the participating car maker will have to make new investments for vehicle manufacturing; produce 100,000 units of the enrolled vehicle model; introduce the enrolled model to the market within two years; consistently meet the criteria for enrollment of car makers and comply with other conditions to be imposed at the time of registration.

The fiscal support will be provided through the tax payment certificate scheme.

For the FIS, the approved amount shall be provided in three equal tranches, with the first tranche to be credited after the production of the first 1,000 units of the enrolled model, second tranche after manufacturing the first 10,000 units and third tranche after the second 10,000 units.

Regular audits will be conducted to ensure adherence to the program and penalties will be imposed for non-compliance.

The RACE program will be implemented to sustain the gains achieved during the implementation of the Comprehensive Automotive Resurgence Strategy (CARS) program, which also provided incentives to support local vehicle manufacturing.

Firms that participated in the CARS program are Toyota Motor Philippines Corp. for the Vios and Mitsubishi Motors Philippines Corp. for the Mirage.

“Both Toyota and Mitsubishi signified their intention to enroll under RACE. (They are) just waiting for the JAO and the opening of the application period,” Dichosa said.

Special Assistant to the President for Investment and Economic Affairs Frederick Go earlier said the program is intended to promote local automotive manufacturing.

By implementing the RACE, the government wants to sustain the viability of the local automotive sector, particularly, the manufacture of ICE vehicles in transition to electric vehicles through targeted investments and support.

“The program represents a strategic initiative to further enhance the Philippine automotive industry, fostering sustainable growth, innovation and competitiveness. By providing the necessary support and incentives, the government aims to create a thriving automotive ecosystem that benefits the economy,” the BOI said.

As the program also aims to position the country as a regional manufacturing hub, the BOI said the fiscal support is expected to stimulate local and foreign investments in local automotive manufacturing, thereby reducing reliance on imports.