CREATE, Evida law factors in bid to extend government’s CARS program

THE government and the private sector are threshing out a number of issues related to the extension of the Comprehensive Automotive Resurgence Strategy (CARS) program, including the grant of perks to electric vehicles.

“We are closely working with the industry on a CARS extension,” Trade Undersecretary Ceferino S. Rodolfo told reporters at a media briefing on Monday in Pasay City.

However, Rodolfo said that while the previous administration has supported the CARS extension for three years, there were questions raised regarding where to “anchor” the particular extension.

“Because an issue was raised that it should be anchored on  [Corporate Recovery and Tax Incentives for Enterprises] CREATE law and not on a specific executive order, which was anchored on the BOI EO,” Rodolfo explained, speaking partly in Filipino.

With this, the Trade undersecretary and Managing Head of Board of Investments (BOI) said the unoccupied third slot in the CARS program “would have to be consistent with the Electric Vehicle Industry Development Act [Evida] law.”

Under the Evida law, Rodolfo said, there’s a mandate to formulate an electric vehicle (EV) incentives scheme. “So the task now of the inter-agency that’s looking into this, including our CARS IAC, is to craft that EVIS that will be consistent with the CREATE law.”

While there are interested participants for the third slot in the CARS program, Rodolfo stressed that there has been a change in the framework since the CREATE law already entered into the picture.

“When the CARS program was introduced, CREATE was still not there, so any new program would have to be consistent with the overall framework,” said Rodolfo.

Rodolfo said “the Department of Trade and Industry [DTI] fully understands the impact of the pandemic on all industries including particularly on the automotive industry. The demand was really hit together with the supply chain.”

He said the CARS program participants have already put in the fixed investments, noting that it’s not just the two registered participants that contributed, but also their supply chain players, including the parts makers that the program attracted.

The CARS program is a government stimulus program aimed at reviving the country’s declining manufacturing sector by specifically targeting the auto industry, given its strong linkages to other industries and its so-called multiplier effect.

It provides for a government support fund of P27 billion, or a budget of P9 billion for each enrolled vehicle model.

The P9-billion support includes all the incentives that parts makers, shared service providers and the vehicle assembler will avail of.

The CARS program mandates a minimum production goal of 200,000 units for a maximum of six years, or the life span of the particular model enrolled.

Toyota Motor Philippines Corp. (TMP) and Mitsubishi Motors Philippines Corp. enrolled Vios and Mirage, respectively, in the incentives program.

Toyota must deliver its commitments under the program by 2024. As of July 2022, Toyota said it has already produced around 60 percent of the 200,000 units required under the CARS program.

Trade Secretary Alfredo E. Pascual said on Monday, “We also must focus on the development of suppliers—that’s also the biggest deterrent to the manufacturing of vehicles. We don’t have yet a good supply chain support.”

The Trade chief bared plans to scout  for “foreign investors who would start the production components.”

Image credits: Alysa Salen