The government will lean on unused funds from the Department of Public Works and Highways (DPWH) and savings from last year’s national budget to settle its obligations to investors under the recently vetoed automotive incentive program.

Department of Trade and Industry (DTI) Secretary Cristina Roque said the government will use these existing funds to cover the entire ₱4.32-billion budget for the fiscal support arrearages of the Comprehensive Automotive Resurgence Strategy (CARS) program.

“If investors know that the incentives are really being granted to them, and they are that substantial, then of course they would want to invest in the Philippines,” said Roque in a chance interview.

The government aims to settle the validated obligations through the existing support arrearages line item under the 2025 General Appropriations Act (GAA).

Under last year’s national budget, the CARS program was ₱87.97 million for fiscal support arrearages, alongside ₱1.47 million for its operating requirements.

In addition, the government will also tap “declared and verified savings” from the DPWH's budget last year, which posted a surplus largely due to corruption in flood control projects.

These funding sources will still be approved by President Ferdinand “Bongbong” Marcos Jr., in accordance with existing laws and applicable budgetary rules and regulations.

It was Marcos himself who vetoed the ₱4.32-billion budget for the CARS program in this year’s national budget, which was supposed to fulfill the entire remaining obligations of the program.

For the year, the program will have a budget of only ₱1.49 million for operating costs.

The arrearages for the CARS program were among the line items under unprogrammed appropriations scrapped by Marcos, totaling ₱92.5 billion.

The government’s obligations to investors are unpaid incentives, in the form of tax payment certificates (TPCs), that participants may use to settle their tax and duty obligations.

Based on the TPCs already issued and validated, the government has the capacity to settle dues to participating car manufacturers and eligible autoparts makers.

Under the CARS program, the government provides fiscal support to companies that manufacture at least 200,000 units of their enrolled model within six years.

Toyota Motor Philippines Corp. (TMPC) and Mitsubishi Motors Philippines Corp. (MMPC) are the two participating companies, enrolling their Vios and Mirage models, respectively.

“The government recognizes the automotive industry’s vital role in job creation, technology development, and industrial growth. We are committed to ensuring that the incentives under the CARS Program continue to encourage investors to do business in the Philippines,” said Roque.

Several business automotive industry groups have earlier opposed the veto of the CARS program, describing it as a move that could not only erode investor trust but also undermine the country’s automotive industry base.

With the funding solution now in place, Federation of Philippine Industries (FPI) chairman Elizabeth Lee said this is a critical step toward rebuilding investor confidence and honoring commitments to manufacturers.

“Only by sustaining industrial programs with credibility can the Philippines position itself as a trusted destination for long-term manufacturing investments," said Lee.

TMPC, in a statement sent to the media, said it welcomes the government's commitment to honor its obligations under the CARS program.

“TMPC sincerely appreciates the government’s decisive action to reassure investors and stakeholders who have long supported the Philippine automotive manufacturing industry,” it said.

The Department of Budget and Management (DBM) said validation of TPCs is still ongoing, while the DTI is working to ensure that all claims are compliant with program guidelines prior to any fund release.

Further, the DBM said remaining validated requirements that have not yet been issued TPCs may be considered for the National Expenditure Program (NEP) for next year’s national budget.

“Should these be included in the 2027 NEP, they will be subjected to cash programming to ensure the orderly, continuous, and fiscally responsible settlement of government obligations, consistent with available fiscal space,” it said.

Meanwhile, Roque said the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program will still be implemented despite the veto of its proposed ₱250-million budget.

“DTI will push for the implementation [of RACE]. We're working on it, to be honest, at this moment,” she said.

Seen as successor to CARS, the RACE program aims to grant incentives for automotive companies with a focus on four-wheeled internal combustion engine vehicle models and a lower production requirement.