By Bernie Cahiles-Magkilat Toyota Motor Philippines is expanding its manufacturing operation in the country but is asking the government to retain the current incentives scheme since the proposed second package of the comprehensive tax reform program will impact on its investment in the country. Charito B. Plaza, director-general of the Philippine Economic Zone Authority (PEZA), said the Japanese-owned car giant is expanding its local business but is “asking PEZA to fight for the retention of incentives.” The Toyota group has even requested PEZA to come up with a counter proposal to the Package 2 of TRAIN (Tax Reform for Acceleration and Inclusion) saying the current proposal will adversely impact on their investments in the country. As a PEZA-registered company, Toyota is entitled to income tax holiday (ITH), and a perpetual five percent tax on gross income earned (GIE) after the expiration of the ITH, among other perks. Proponents of TRAIN 2, however, seek to remove the ITH and to cap the perpetual five percent GIE. In lieu of that, the Department of Finance (DOF) has proposed for the reduction of corporate income tax from 30 percent to 25 percent. Package 2, which the DOF designed to be revenue-neutral, proposes to modernize incentives for companies to make these performance-based, targeted, time-bound, and transparent. DOF has sought to correct the incentives enjoyed mostly by big businesses such as income tax holidays and other perks with no time limits as it is costing the government in over R300 billion annually in foregone revenues. Plaza did not elaborate on the expansion projects of Toyota, but the company is currently participating in the government’s Comprehensive Automotive Resurgence Strategy (CARS) program where it is investing R5.2 billion for the assembly of its updated model the New Vios at its special economic zone in Sta. Rosa, Laguna. Toyota is also putting up a state-of-the-art plastic injection facility, expanding its press parts facility and introducing new hemming technology. In addition, Toyota is localizing additional press parts on top of the 50 percent total body shell weight requirement under CARS. Already, the Board of Investments has approved four companies with investments of P1.3 billion for the production of automotive parts to be supplied for the assembly of Toyota Vios. The approved firms include Manly Plastics, Inc., Technol Eight Philippines Corporation, Toyota Boshoku Philippines Corporation, and Valerie Products Manufacturing, Inc. These companies will be producing body shell and large plastic parts (BSLP) for the New Vios. These parts projects constitute Toyota’s main out-house localization investments. Aside from the four main CARS suppliers, Toyota has also approved 26 local direct suppliers for the New Vios. These localization projects have generated investments of P600 million on top of the BSLP investments. Toyota has also invested P1.9 billion in in-house parts manufacturing to complement its out-house localization. Earlier, Toyota Motors Philippines President Satoru Suzuki said investments in new parts manufacturing capability constitute a significant portion of their CARS investments. He said that its major auto parts localization projects will drive its goal of advancing Philippine manufacturing. For this year, Toyota has set a sales target of 175,000 to 180,000 units which is five to 10 percent lower than last year as the TRAIN 1, which imposes higher excise tax on motor vehicles, continued to dampen consumer appetite for big ticket items.