The proposed extension of the Comprehensive Automotive Resurgence (CARS) Program hangs with the Board of Investments (BOI) still working on harmonizing the rules amid the implementation of the CREATE Law.
Trade and Industry Undersecretary Ceferino S. Rodolfo explained that the CARS Program was still based on Executive Order 226 or the Omnibus Investments Code but with the passage of CREATE, the new law governing the granting of incentives to investments, there is a need to “recraft” the proposed extension of the CARS Program.
According to Rodolfo, who is also BOI managing head, a member of the CARS Program Inter-Agency Committee raised the CREATE Law issue in the crafting of the proposed CARS Program extension via an executive order.
The CARS Program, which grants tax perks to participants for their investments in the production of a particular car model in the country, is a six year program. Within that six-year timeframe, program participants are required to produce 200,000 units of the enrolled car model to fully avail of the tax incentives under the program.
Only two car companies have enrolled in the program -- Mitsubishi Motors Philippines Corp. (MMPC) and Toyota Motors Philippines Corp. (TMP)
However, with the onset of the COVID-19 pandemic the two car giants were not spared from the ensuing mobility restrictions, resulting in lost production days at their manufacturing facilities and dampened sales in the domestic market.
This prompted both MMPC and TMP to seek for extension of their compliance timetable. The BOI deemed the request reasonable and was amenable to a three-year extension of the program, particular to the compliance of the required 200,000 unit car production for each participant.
“We are going to work on this compliance to the program particularly on volume requirement citing in particular the pandemic situation that led to lower sales by participants,” said Rodolfo.
He explained the IAC will just harmonize the proposed extension with the provisions of the CREATE Law, which IRR also provides for temporary measures due to extreme circumstances.
In addition, he said that under the CREATE the BOI Board approval of the IAC recommendation will now go through the Fiscal Incentives Review Board. But it could also be that a BOI Board Resolution extending the compliance timeframe will suffice and there will be no need for the issuance of an EO.
He expressed hopes to have the approval for the extension of the CARS Program in February next year. The BOI, however, has yet to ascertain the reckoning date of the start of each the program participants.
MMPC, the first to be approved by the BOI for the production CARS Program, broke ground on June 17, 2016 for its P2 billion stamping shop facility. Including the setting-up of the line for its entry models, fixed investments shall reach about P4.3 billion.
The said shop was fully operational in the early part of 2018 for the production of Philippine-made Mirage and Mirage G4 models.
Meanwhile, TMP unveiled its P5.38 billion investments in the CARS Program on October 19. 2017 at its Sta. Rosa, Laguna manufacturing facility for the production of the Vios car model.