BoI rejects 6 companies interested in third slot under CARS program
THE BOARD of Investments (BoI) has turned down a handful of car companies that wanted to apply for the third slot for the government’s automobile resurgence program after requesting lower requirements, an official said.
Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo said six firms are seeking to apply for the final slot of the Comprehensive Automotive Resurgence Strategy ( CARS) program, but had asked to lower requirements even if it came with less incentives.
“Six na yung nagtatanong (Six companies were asking),” he told reporters on Monday on the sidelines of an automotive industry award ceremony, but declined to reveal names.
“So far we’ll be maintaining the high level of ambition. Particularly, the growth of the Philippine economy and the growth of the market. Nandito eh. So bakit natin igi- give up basta-basta to a player that has a low level of ambition? (It’s here. So why should we give this to a player with a low level of ambition?)”
“That player, if he intends to be a part of the CARS program, should match, even surpass the level of ambition of the Philippines, consistent with the growth trajectory of our market.”
Established by Executive Order under former President Benigno S. C. Aquino III, the CARS program provides incentives to three car makers to locally produce three car models with a production volume of at least 200,000 units for up to six years, or an average of 33,333 vehicles per year.
The program provides auto manufacturers and parts makers operating in the Philippines P4.5 billion in annual support for six years, or P27 billion in total, as well as other non-fiscal measures.
So far, only two car makers have been registered under the program — Mitsubishi Motors Philippines Corp. (MMPC) and Toyota Motor Philippines Corp. (TMP).
Mr. Rodolfo said the CARS program was designed in a way to reach economies of scale, a concept which pertains to an increase in the output of a product so as to lower the per-unit fixed costs.
Adjusting the program requirements in favor of other automakers, such as lowering the mandatory volume production, would defeat the purpose of the CARS program, he noted.
The current growth of the automobile industry, he noted, would show that there would always be firms interested in applying for the program.
The auto industry currently revised its target earlier this year, expecting to deliver 500,000 units in 2020, which was first set for 2022, but was adjusted due to favorable market demand.
Meanwhile, MMPC awarded 25 local parts makers that would help it comply with the CARS program requirement of localization.
These local firms would supply various small parts, according to MMPC President and Chief Executive Officer Yoshiaki Kato. This would translate to an initial number of 300 localized parts in each vehicle — a small portion of the overall 30,000 parts that comprise a Mirage unit.
The automobile company is currently doubling its production shifts in its manufacturing plant in Laguna in order to meet the country’s market demand.