The Department of Trade and Industry (DTI) is proposing to base the extension of compliance period for Comprehensive Automotive Resurgence Strategy (CARS) program participants on the number of years the country is under a state of national emergency.
Trade Undersecretary Ceferino S. Rodolfo, in a recent press briefing, said this move is in line with the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which allows the adoption of reasonable measures to recover. It is subject to approval by the Financial Incentives Review Board upon the recommendation of the investment promotion agency.
“Since [we are] under CREATE [already], we have to recraft the extension to comply with provisions of the CREATE law. We are going to work on this with the Inter-Agency Committee,” he said.
The Philippines is under a state of national emergency until September 2022—or an extension by another year—following a government pronouncement. In this scenario, the extension period for CARS participants will also be two years.
Rodolfo said the DTI aims to release the new directive by February next year.
Earlier, it was proposed to extend the compliance period by three years, but Rodolfo said amendments were needed in consideration of the CREATE law.
CARS program is an initiative to boost local automotive production.
Under the program, the participants were originally given 6 years to manufacture at least 200,000 units and to produce body shells and large plastic parts. In return, each enrolled model will be provided fiscal support of P9 billion; but none of the participants, however, have availed of the incentives yet. The program, which was signed in 2015, is given a total allocation of P27 billion.
Toyota Motors Philippines Corp. and Mitsubishi Motors Philippines Corp. enrolled Mirage and Vios, respectively, in the incentives program. Initial investments of both participants amounted to P8 billion.
Currently, Toyota and Mitsubishi have a deadline to complete their production by 2024 and 2023, respectively, according to DTI.
Their production, however, has not yet reached the halfway mark as of April.
Sales of Toyota surged by 46.1 percent to 92,318 units in January to September from 63,182 a year ago. It accounts for nearly half of the local car market.
Mitsubishi, meanwhile, sold 26,830 units as of end-September, which is 2.1 percent more than last year’s 26,287 units. It represents 14 percent of the industry sales for the 9-month period.
In total, the automotive sector registered 29.5-percent year-on-year sales growth in January to September with 191,605 units, according to the joint report by the Chamber of Automotive Manufacturers of the Philippines and the Truck Manufacturers Association.