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BoI keeps CARS rules intact

The Board of Investments will keep its rules governing the Comprehensive Automotive Resurgence Strategy Program for the third participating car maker, an official of the agency said Monday.

On the sidelines of the awarding of CARS Program certificates to suppliers of Mitsubishi Motors Philippines Corp. in Makati City, Trade Undersecretary and BOI Managing Head Ceferino Rodolfo told reporters that the agency could not relax yet the rules on CARS Program in order to fill up the last slot for the program.

Currently, MMPC and Toyota Motors Philippines committed to join CARS.

Rodolfo, on the other hand, noted that some six industry players had been inquiring with the BOI about the CARS Program.

He said some of the manufacturers interested to join the CARS Program requested BOI to lower the 200,000 units production requirement within the six-year period of the program, but they are also open to receive lower incentive package compared to the two car makers.
The 200,000-unit volume requirement also means that participating car manufacturers must produce at least 40,000 units per model -- the minimum volume of production in the automotive industry to attain economy of scale.
“It [CARS Program] is really designed for those who, like the Philippines, share a high level of ambition. It’s important for the economy of scale,” said Rodolfo.
“We will be maintaining the high level of ambition particularly as we have seen the growth of the Philippine economy, and the growth of the market is here,” he stressed.
The official reiterated that the Philippines is a competitive market for automotive vehicle production with its robust economic growth -- the fastest expansion in the region -- and its 100 million market.
As the country also entered the era of rapid motorization with its capita gross domestic product reaching USD3,000, high demand for automotive vehicles is projected to continue.
“So why we will give up [the rules] to a player with a low level of ambition? That player, if it intends to be part of the CARS Program, should match or even surpass the level of ambition of the Philippines, consistent with the growth trajectory of our market,” the official stressed.
In CARS Program, the government partners with the players in the automotive industry to boost their local production by establishing a complete supply chain and make the Philippines as their regional hub.

This also aims to reduce production cost gap of locally assembled vehicles by providing participating car makers a tax incentive of USD1,000 per unit.