The country’s largest automotive industry group has joined the domestic auto sector’s growing call opposing the budget cut to two “crucial” incentive programs, arguing that the government should stand by its word to companies that have delivered economic gains.

In a statement on Thursday, Jan. 8, the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) said it is alarmed by recent developments regarding funding for the Comprehensive Automotive Resurgence Strategy (CARS) program.

CAMPI said there are “serious concerns” that financial incentives committed by the government to CARS program participants will no longer be met.

“The participants should be able to receive their incentives based on their actual performance that already generated economic benefits,” the group said.

CAMPI is referring to Toyota Motor Philippines Corp. (TMPC) and Mitsubishi Motors Philippines Corp. (MMPC), which enrolled the Vios and Mirage models, respectively, for government incentives under CARS.

CARS was among the line items in the ₱92.5 billion worth of unprogrammed appropriations vetoed by President Ferdinand “Bongbong” Marcos Jr. under the ₱6.793-trillion national budget for the year.

CARS, a program implemented by the Board of Investments (BOI), grants fiscal support to participating companies that produce at least 200,000 units of their enrolled model within six years.

Trade Undersecretary and BOI Managing Head Ceferino Rodolfo has said that the investment promotion agency (IPA) is now working with other government agencies, including the Department of Budget and Management (DBM), to ensure payment of the government’s remaining obligations.

Rodolfo said the scrapped ₱4.32-billion budget for CARS was intended to cover the government’s arrearages to both TMPC and MMPC.

In addition, Marcos also axed the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program under the national budget, vetoing its proposed ₱250-million allocation.

While it has not yet been launched, RACE aims to grant incentives to auto companies, with a focus on manufacturing of four-wheeled internal combustion engine vehicles, but with a lower production requirement.

CAMPI said the new program was meant to be “an important transition to future industry development programs,” noting that it should be implemented as soon as possible.

CARS and RACE aim to attract strategic investments in manufacturing of vehicles and their components, a move seen as reviving a struggling sector.

With sudden removal of funding for the two programs, CAMPI said it is calling for firmer government collaboration to secure the “future viability” of the country’s automotive manufacturing sector.

“Both CARS and RACE are fundamental programs that contribute to the overall industrial development of the country,” the group said.

“Such is crucial in creating a positive environment for future investments and help develop a more robust local auto parts manufacturing industry,” it added.