Sustained support for CARS Program pushed

Published July 26, 2021, 5:22 PM

by Bernie Cahiles-Magkilat

Domestic vehicle parts manufacturers have strongly urged government to sustain its support for the CARS (Comprehensive Automotive Resurgence Strategic) Program as they lost their fight for tariff protection on locally produced motor vehicles and to save local jobs, blaming it to “bullying and lobbying” by the big global motor vehicle companies.

Ferdinand Raquelsantos, president of the Philippine Parts Makers Association (PPMA), issued this call for strong government support to the CARS Program following the decision of the Tariff Commission (TC) against the imposition of safeguard duty on imported passenger cars and light commercial vehicles (LCVs) by the Department of Trade and Industry (DTI) Secretary, who imposed the preliminary safeguard duty of P70,000 per unit of imported passenger cars and P110,000 per unit of imported light commercial vehicles. The TC decision issued on July 23, 2021, is binding on the DTI Secretary and issue an order to be followed by the Bureau of Customs returning the cash bonds posted by importers.

“We were bullied and the big boys were able to lobby very well,” this was how Raquelsantos summed up their loss in their fight. He noted that PPMA was the only supported to the Philippine Metalworkers Alliance (PMA), the petitioner for the imposition of the safeguard measure against imported motor vehicles.

Right from the start, Raquelsantos said, the global “Goliaths” employed the top notch law firms in the country as against the local “Davids”, which had no lawyer.

But all is not lost, Raquelsantos said noting that while the DTI has to follow the TC decision it must also sustain support for local cars manufacturing under the CARS Program.

According to Raquelsantos, they were happy that for the past seven months when the provisional safeguard duty was implemented, local car manufacturing or the completely knocked down (CKD) operation of the two CARS participants — Mitsubishi Motors Philippines and Toyota Motors Philippines — were able to continue and sustained their sales.

Sales of Vios and Mirage, the two models enrolled by Toyota and Mitsubishi, respectively, increased because of the CARS program despite the pandemic, he said.

“Had it not for the CARS Program, we don’t have local motor vehicle production since last year yet,” he pointed out. But because of the CARS Program, the Philippines was able to hold on to two CKD car assembly operations and some LCV production, particularly the L-300 models.

“The CARS program was able to maintain local operation and sales of CKD packs,” he reiterated.

Likewise, he noted that importation of completely built up (CBU) packs declined although the industry was down 40 percent last year from 2019. He also expects sales to continue to decline this year although CBU imports are also expected to slowdown.

The CARS program provides tax and fiscal incentives to the participants and their local parts suppliers.

Now on its fourth year, the DTI and Board of Investments have already agreed to extend the six-year program to ensure that each of the participants can meet the 200,000 unit domestic car production level requirement and fully avail of the tax incentives offered under the program.

He, however, noted that the target in the CARS Program is to achieve local content in the locally produced car models to at least 60 percent, but the current local content is still stuck at 40 percent.

Car parts and components manufacturers also benefit from the program as they supply to the two car assemblers and received tax incentives in the form of tax credits.

The DTI-BOI is also planning of extending the program to include the government’s PUV Modernization Program.

Meantime, Raquelsantos doubt as to how the already collected safeguard duties can be refunded given government’s limited resources amid the pandemic. Ifever the safeguard measure will be refunded, Raquelsantos said it will be the first time in history.

A DTI official, however, said that PMA has a recourse to appeal the TC decision with the Court of Tax Appeals.