The Board of Investments (BOI) does not see any problem is the proposed executive order that will extend by three years for a total of 9 years the compliance period for CARS Program participants.
Trade and Industry Undersecretary Ceferino S. Rodolfo, who is also BOI managing head, the EO is expected to be issued by Malacanang in May or June this year. The EO will give Toyota Motor Philippines Corp. (TMPC) and Mitsubishi Motors Philippines (MMPC) three more years to comply with the required 200,000 unit production for each of their enrolled car model.
Rodolfo does not see any problem with the extension of the compliance period because all the relevant government agencies are members in the inter-agency committee (IAC) that is crafting the EO. The extension will not also mean additional budget for the CARS Program participants since the original budget of P9 billion in tax perks are notional budget only and part of the automatic appropriations under the General Appropriations Act.
“We are confident on the recommendations of the IAC for the extension of compliance period for the CARS program participants and the EO would be issued before end of June this year,” said Rodolfo.
Rodolfo also said that the extension only covers the period of compliance, but the volume requirement remains intact and the notional budget caps still retained
“We do understand the challenging unforeseen circumstances including the impact of the pandemic on automotive demand,” he added.
In addition, Rodolfo emphasized that the program participants have not yet availed of any incentive from the program but have already frontloaded their investments and are already producing their enrolled models.
TMP has invested P5.38 billion for the CARS program. These investments include the local parts production of the Toyota Vios at the Resin Injection Molding Facility for bumpers and instrument panels, Roller-Hemming Robots at the welding line, and the newly-inaugurated A0 Press Line for stamping of side member panels.
Through these investments, TMP has started its journey towards “smart manufacturing,” integrating high-tech equipment in the Toyota Production System. Such facilities use robots to automate repetitive tasks, making production processes more efficient. To handle new production technologies, TMP also made substantial investments in manpower training for the acquisition of new skills.
Manwhile, MMPC also invested P4.3 billion, including the P2-billion stamping shop facility located at the 21-hectare Greenfield Automotive Park in Sta. Rosa, Laguna that it acquired from Ford Motor Co. Philippines, which abandoned its car production operation in the country. MMPC opened the shop in 2018 for the production of its enrolled models Mirage and Mirage G4.
Then President Benigno S. Aquino III signed EO 152 or the CARS Program in May 2015, while the Implementing Rules and Regulations was completed in May 2018. The CARS program requires each participant to produce at no lower than 200,000 units of the model life of the enrolled vehicles over a maximum of six years.
With their investments, these CARS program participants are also entitled to tax incentives both for the fixed capital investments and the volume produced.