The Board of Investments (BOI) is looking at asking the two participants of the incentive-driven Comprehensive Automotive Resurgence Strategy (CARS) program to assemble another model or offer a value addition in exchange for the grant of their request to extend the six-year program.
BOI Managing Head Ceferino S. Rodolfo said Trade and Industry Secretary Alfredo E. Pascual, who is also BOI chairman, has already met with CARS participants - Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp.
Under the program each participant must produce 200,000 units over a six-year period. Mitsubishi applied to produce 200,000 units of the Mirage/Mirage G4 while Toyota applied for the production of 230,000 units of an all new (full model change) Vios. As participating carmakers, they are required to localize the production of body shell and large plastic parts and components.
The deadline for Mitsubishi to comply would end in 2023 for Mitsubishi and 2024 for Toyota. Rodolfo said BOI has yet to ascertain if any of the two participants already produced at least half of the required volume, which is the basis for their tax incentives.
Should the program be extended, Rodolfo said that Pascual would like the CARS participants to give back in the form of value add like assembly of another model.
“They are still finalizing their offer,” said Rodolfo adding that they have also impressed upon the program participants that there will be no additional incentives or additional government budget to be allocated for the extension sought. The two CARS program participants were asking for a three-year extension following the disruption in their operations during the pandemic period causing delays in their production schedule.
“What is the value addition for the Philippines if we extend this (program),” he said adding the BOI is exploring the potential for the two car companies to add another model in exchange for the extension of the program.
The request for value addition by BOI is also in consideration to the fact that the enrolled CARS models are already close to the end of their model life, which is five years for every car model.
But Rodolfo also recognized that the Philippines already gained from Toyota and Mitsubishi their required fixed investments and machineries for the assembly of the units. Investments from each of the CARS participant was expected at P9 billion for a total of P18 billion.
As participating carmakers, they are required to localize the production of body shell and large plastic parts and components.
Currently, large body parts and components are imported and render local vehicle manufacturing uncompetitive. These and other parts not currently produced in-country are expected to be introduced during the six-year CARS program period.
He also stressed that the CARS program is not just about the two giant car firms but also the supply chain so they have partner parts makers and local parts makers, as well.
The implementation of the CARS program over the next six years is expected to benefit the chemicals, metalworking, tool & die, plastics, electronics, rubber, glass, and textile sectors.
Currently, large body parts and components are imported and render local vehicle manufacturing uncompetitive. These and other parts not currently produced in-country are expected to be introduced during the six-year CARS program period
Toyota and Mitsubishi’s initial investments were expected to create some 14,000 new jobs, salaries and wages of which will also amount to P8 billion over a six-year period. Parts makers working with Toyota and Mitsubishi are expected to generate over P18 billion fresh investments for the country.