MMPC opens PH largest stamping plant, files for perks

Mitsubishi Motors Philippines Corp.(MMPC), the first participant in the CARS Program, has filed tax incentives availment with the Board of Investments after having invested a total of R4.27 billion in fixed assets, including the opening of its R2.4-billion stamping plant facility, the biggest in the country, in Sta. Rosa, Laguna.

Trade and Industry Secretary Ramon M. Lopez said in a keynote speech at the inauguration of the stamping plant that the Board of Investments may decide to approve on February 27 the proposal for incentive availment.

Of this total R5.74-billion total capital expenditure, R4.89 billion, or 40 percent, is eligible for CARS’ Fixed Investment Support (FIS).

So far, MMPC has submitted for approval for tax availment under FIS R4.27 billion worth of investments, comprising of its R2.41-billion stamping plant and welding shop, and R1.85 billion worth of locally sourced parts from 7 participating parts makers for the production of Mirage Hatchback/G4, its entry model in the CARS (Comprehensive Automotive Resurgence Strategy).

MMPC Vice President Dante Santos said this means that MMPC and the local parts suppliers will start claiming its tax incentives availment this year as this has been part of the national government budget for 2018. The CARS program grants $200 million in tax perks to each of the intended three participants, based on investment and volume production requirements.

Aside from the stamping plant, which is the largest component of its investment, the other local parts include metals and large plastic parts makers also submitted their proposal for approval by BOI.

With the country’s first-ever two thousand-ton stamping machine, the country’s second largest car company, has just started producing bulky automotive parts such as vehicle body side outer panels, roof panels, floor panels, and door panels, among others.

With the stamping and welding shop plus the other parts such as steering wheel, the suspension, and the radiator by its accredited local parts manufacturers, MMPC’s Mirage/G4 has already attained as much as 37 percent local content.

The target for the CARS is for the participants to attain as much as 50 percent local content, but Santos said this can be attained on the fourth to fifth year of the 6-year program.

Santos said the FIS will cover, as it functions like a subsidy, part of the huge investment because the overall stamping plant and welding facility cost them R2.8 billion.

“On its own it cannot recover the cost,” Santos said adding the facility, which is the biggest in the country, could pave the way for more usage in the future should there be further expansion in the country’s motor vehicle market.

In fact, Lopez said that the remaining MMPC investment of R1.6 billion in its FIS allocation can be used to support as much as R4 billion worth of possible incremental investments in more strategic and common parts.

Lopez said that many of these parts were earlier identified in MMPC’s original CARS business plan for Stage 2 and 3 localization.

He further encouraged MMPC to also participate in the government’s thrust to develop the local commercial vehicle segment as the DTI in tandem with other government agencies such as the Department of Transportation working on the implementation of the Philippine Utility Vehicle Modernization Program.

As such, DTI is aligning the remaining vacant third CARS slot to support the local manufacture of replacement vehicles for PUV modernization program. The second slot in the CARS Program had been taken by Toyota Motor Philippines Corp. (TMP).

The CARS Program Management Office (CARS-PMO), in consultation with OEM (Original Equipment Manufacturers) platform manufacturers and their local partner body builders, is in the final stages of devising the modernization program’s features and mechanics, he said.

The DTI will be seeking sometime in April this

year President Duterte’s approval for a separate executive order (EO) for its (PUV third slot) implementation.

“Mitsubishi Philippines, through its truck division, Fuso, can participate in the government’s eco-PUV program that we intend to roll-out soon,” Lopez said.

Likewise, mindful of the synergies between CARS and the eco-PUV program, particularly in the utilization of equipment and tooling already in place under CARS, Mitsubishi PH can use the excess capacity of your press plant to produce parts for the replacement PUVs, he added.

Lopez further raised hopes of more car production in the country. Based on a study he quoted from the Japan International Cooperation Agency (JICA), the Philippines annual car production is seen at 1 million annual car production by 2027.

“We believe that the government’s engagement with the PH automotive industry cannot stop with CARS and the eco-PUV programs,” he said.

The JICA study maybe boosted by the government’s CARS program where the two participants are expected to produce 400,000 units or 200,000 each over a six-year period and the 200,000 units of old jeepneys up for replacement. There could also be additional local production as the market demand expands.

In 2017, domestic motor vehicle sales already reached over 475,000 units. Sales could breach the 500,000 unit level by this year already.

MMPC President and CEO Matsuhiro Oshikiri cited in his message the government for initiating the CARS Program, which paved the way for the country’s first-ever 2,000 ton tandem stamping machine.

“This became an avenue for MMPC to invest on its own stamping facility that will help place the country as one of the production hubs in the ASEAN region,” he said.

“The opening of our new stamping shop is the beginning of a new chapter in the story of Mitsubishi Motors’ operations here in the Philippines. This stamping shop enables us to turn the aspiration of localized production into a reality, further building our presence in the Philippines, at the same time strengthening our offering to consumers,” said Oshikiri.

Minoru Kinoshita, general manager of Mitsubishi Motors for Philippines Business Department, said the plant can produce up to 50,000 units a year. The plant in Sta. Rosa has already provided 600 additional jobs.

“As we expand the industrial footprint of Mitsubishi Motors, we have every intention of deepening this partnership and enhancing our competitiveness in this crucial market,” he said as he committed to MMPC producing 200,000 units of Mirage by 2023.