QuestionsQuestions (OP Executive Order No. 182)
EO No. 182 adopts and implements the Comprehensive Automotive Resurgence Strategy (CARS) Program to attract strategic automotive investments, stimulate demand, effectively implement industry regulations, revitalize the Philippine automotive industry, and develop the country as a regional automotive manufacturing hub—through time-bound, performance/output-based fiscal support, while continuing non-fiscal measures under existing laws.
The program is limited to the manufacture of only three (3) Models of four-wheeled motor vehicles and covers: (1) production of enrolled models; (2) manufacture of body shell assembly and large plastic assemblies; (3) manufacture of common parts and strategic parts not currently produced in the country at OEM standards; and (4) a shared testing facility for vehicles and/or parts.
A “Model” is a nameplate not currently manufactured in the country; however, a full model change of a nameplate already manufactured in the country is considered a Model under the CARS Program.
Common Parts are automotive parts not currently produced in the Philippines at OEM standards that enrolled Participating Car Makers (PCMs) agree to source from one parts supplier (e.g., automotive glass, seat fabric). Strategic Parts are specific parts not currently produced in the Philippines at OEM standards (e.g., struts/shock absorbers, head lamps). Both require OEM-standard production not currently available locally.
BOI is the lead implementing and coordinating agency. It: acts on inter-agency committee recommendations; oversees program implementation; submits annual reports to the OP; coordinates automotive industry development efforts of concerned agencies; and performs other necessary acts incidental to its functions.
The Department of Trade and Industry (DTI)-BOI representative acts as Chairperson. Members include DOF, Department of Transportation and Communication, Department of Science and Technology, NEDA, Technical Education and Skills Development Authority, and the co-chairmen of the Industry Development Council and the National Competitiveness Council.
The committee evaluates: (1) applications for Model enrollment; (2) applications for registration of PCMs and makers/service providers for body shells/large plastics/common/strategic parts; (3) eligibility and availment of fiscal support; (4) monitors program performance and audits compliance; (5) prepares the annual performance report for submission to the OP through BOI. It also recommends issuance of certificates and withdrawal/forfeiture of support, undertakes studies/research, and performs other necessary functions.
Criteria include: track record and model competitiveness; new investments in body shell assembly and large plastic parts assemblies; planned volume not lower than 200,000 vehicles over the Model Life up to a maximum of 6 years; economic impact (linkages, jobs, consumer welfare); overall competitive environment and long-term industry development; and compliance with fuel efficiency and emission standards not lower than those under the Clean Air Act.
Car Makers must be an internationally-recognized car maker/brand owner and/or its authorized in-country licensed manufacturer acting jointly with an internationally-recognized carmaker/brand owner; have a proven global track record; and have existing multinational operations.
Parts Makers must be endorsed by the PCM to manufacture parts of its enrolled model; consist of either an “EM automotive Parts Maker” and/or its authorized in-country licensed manufacturer acting jointly with an internationally-recognized carmaker/brand owner; have a proven track record; and be a member in good standing of the Philippine Parts Maker Association.
It must be collectively endorsed by the PCMs and have a proven track record.
During the BOI-prescribed application period, a PCM can apply for enrollment of only one (1) Model. If the three (3) Models are not fully subscribed within that period, BOI may set a new application period for additional Model(s), and then more than one (1) Model may be granted to a PCM.
Upon approval, BOI issues a Certificate of Registration to the PCM, which must post a performance bond in an amount to be determined by BOI. It functions as a financial assurance tied to compliance with program conditions (e.g., investment timelines, parts delivery, and commitments).
The two fiscal supports are Fixed Investment Support (FIS) and Production Volume Incentive (PVI). Both may be granted during the enrolled Model Life up to a maximum of six (6) years.
For FIS: must involve new investments in parts manufacturing and/or establishment of shared testing facility; must deliver parts to the PCM within the BOI-prescribed period; must introduce the enrolled model using parts manufactured under the program; must consistently meet PCM enrollment criteria; and must satisfy other BOI-imposed conditions. For PVI: must manufacture at least 50% by weight for body shell assembly and manufacture major components for large plastic parts; must exceed 100,000 units in production volume; and must meet other BOI conditions at registration.
Fiscal support is computed based on these defined measures: Segment Weighted Average Price, Standard Production Support, and Logistics Efficiency Index, during manufacture of the enrolled models—meaning incentives are tied to the price/profit reference formula, the production support ratio, and logistics cost efficiency.
The total fiscal support is capped at P27 billion, with each enrolled Model qualified to a maximum of P9 billion. Allocation: 40% for FIS (with an additional limitation for parts/shared testing facility—FIS shall not exceed 40% of capital expenditure for tooling/equipment including initial training costs) and 60% for PVI.
A TPC is a non-transferrable certificate evidenced by the fiscal support, provided by law. It is used to defray participants’ tax and duty obligations to the National Government—specifically excise tax, income tax, import duties, and VAT. BOI, DBM, and DOF must draft an efficient TPC mechanism.
No Double Availment: registered participants cannot register their activity under any other incentive-granting program. Monitoring: periodic audits ensure production volume/parts delivery commitments and prevent parts trading. Failure to invest in parts manufacturing and/or establish the shared testing facility within two (2) years from certificate issuance and failure to deliver parts within the prescribed period can cause cancellation and/or forfeiture of support and expulsion. Noncompliance with EO/IRR/certificate terms may lead to cancellation, suspension, forfeiture, fines, and other penalties as allowed by existing laws.