The government is looking to soon settle its entire ₱5.16-billion obligation to participants in its pioneer car manufacturing incentive program before moving forward with new initiatives, according to the Department of Trade and Industry (DTI).

Trade Secretary Cristina Roque told reporters that the Board of Investments (BOI) is currently securing funding sources to clear the remaining liabilities under the Comprehensive Automotive Resurgence Strategy (CARS) program.

She noted this includes savings from the Department of Public Works and Highways' (DPWH) budget last year, which are expected to cover the bulk of the arrears.

“When there are savings, we use them to pay the incentives we owe under the CARS program so that companies invest more in the Philippines rather than in other countries,” Roque said on Wednesday, Aug. 26.

Under CARS, the government offers incentives to automotive firms that manufacture at least 200,000 units of an enrolled vehicle model within six years.

The program also supports local parts suppliers that feed into participating companies' production pipelines.

Toyota Motor Philippines Corp. (TMP) and Mitsubishi Motors Philippines Corp. (MMPC) are the two auto assemblers enrolled in the program.

Trade Undersecretary and BOI Managing Head Ceferino Rodolfo said the government still owes ₱5.16 billion in incentives to these firms and their suppliers.

The incentives are issued as tax payment certificates (TPCs), which companies use to settle tax and duty liabilities.

An allocation of ₱4.32 billion was earlier earmarked to reduce the remaining CARS liabilities, but President Ferdinand Marcos Jr. vetoed the line item in this year’s budget.

Rodolfo said the BOI intends to utilize around ₱4.08 billion in identified DPWH savings from last year to help bridge the gap. This comes on top of the proposed ₱255.65-million allocation for CARS under the National Expenditure Program (NEP) for next year’s national budget.

The BOI is working to settle all CARS commitments as soon as possible as it prepares to roll out the Electric Vehicle Incentive Strategy (EVIS). Established under Executive Order (EO) No. 121, EVIS seeks to encourage local EV manufacturing by offering TPCs as incentives.

Roque said MMPC and local vehicle manufacturer Francisco Motors Corp. have already expressed interest in joining the new program.

“There are four slots, so we're hoping for two more,” she said.

Meanwhile, the government is finalizing guidelines for the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program, the planned successor to CARS.

TMP has already signaled its intent to join RACE by enrolling its Tamaraw model.

“We're still talking to others about joining RACE, but I'm sure they will,” Roque said.