Objectives of Car Development Program (CDP)
- Primary goal: Develop a viable automotive parts manufacturing industry with economies of scale driven by exports.
- Emphasis on assemblers' ability to offer affordable passenger cars to middle-income groups.
Definitions Related to CDP
- SKDs (Semi-Knocked Down): Partially assembled imported parts/components, treated as CKDs for tariff if authorized.
- CKDs (Completely Knocked Down): Disassembled parts/components for assembly, including sub-assemblies.
- KD parts: Components excluded from CKD imports or warranty parts used for replacement.
Implementing Agency for CDP
- Department of Trade and Industry (DTI) through Board of Investments (BOI) is responsible.
- BOI may delegate tasks but must follow government rules.
Participants in CDP
- Opens applications for Categories I, II, and III to Filipino and foreign-owned companies with qualifications.
- New participants must have investment capability of US$10 million, assembly facility, and performance bond.
Coverage of CDP
- Categorized by engine displacement: Category I (<=1200 cc), Category II (up to 2190 cc), Category III (above 2190 cc).
- SKD imports restricted for participants selling domestically unless exporting significant percentages.
- Includes future guidelines for electric and non-conventional cars.
- Brand-new completely built-up (CBU) imports allowed following government rules.
Models and Variants
- No limit on number of models/variants if registered with BOI.
Local Content Requirements
- Max 40% local content for Categories I and II, with incentives for achieving 50%.
- BOI encourages policies supporting local parts purchase.
- Audits of local content to be conducted by designated Technical Review Committee.
- Mandatory deletion list discontinued.
- Local content requirement to be terminated by 2000 per GATT agreements.
Joint-Venture Projects
- Foreign exchange concessions (10% NFEE) granted to new joint-venture assembly operations with at least 30% local equity for first 2 years.
- Additional concessions for joint ventures between parts vendors and local manufacturers.
Pricing and Foreign Exchange Requirements
- BOI monitors retail prices and may require documentation.
- Foreign exchange earnings credits required to import CKDs, with varying ratios for different categories increasing up to 15-55% by 2000.
- Certificates of Authority to Import issued by BOI.
- Foreign content requirements to end in 2000 per GATT.
Commercial Vehicle Development Program (CVDP) Objectives
- Supports rural development and transport affordability.
- Encourages compliance with safety, roadworthiness, and emission standards.
Definitions and Participants in CVDP
- Includes Asian Utility Vehicle (AUV) with local body parts or major components.
- Accepts applications for Categories I-V from qualified entities with investment of US$8 million.
- Informal sector integrated with specific BOI guidelines.
- No presidential concurrence needed for participation.
Coverage and Models
- Adds Category V for trucks over 18 tons and special-purpose vehicles.
- Allows import of brand-new CBU trucks, buses, LCVs, and AUVs.
- Unlimited models/variants if registered; price ceilings monitored.
CVDP Local Content
- Categories I & II local content cap at 45%, with awards for 55% or higher.
- Categories III, IV, and V must meet specified minima.
- Mandatory deletion list discontinued.
- Local content ends in 2000 per GATT.
CVDP Joint Ventures
- Foreign exchange concessions similar to CDP for joint ventures with 30% local equity.
CVDP Pricing and Foreign Exchange
- Foreign exchange ratios for Categories I & II rising to 15%, others at 5% by 2000.
- BOI issues Certificates of Authority to Import and monitors earnings.
- Foreign content requirements to end by 2000.
Motorcycle Development Program (MDP) Objectives
- Supports rural development with affordable transportation alternatives.
Participants and Coverage
- Accepts applications for Categories A and B with investment of US$2 million.
- Allows brand-new motorcycle imports aligned with government policies.
MDP Models and Variants
- No limitation on models/variants; must be registered; prices monitored.
MDP Local Content
- Category A capped at 45%, Category B at 35%, with foreign exchange awards for 55% or above.
- Audits coordinated by Technical Review Committee.
- Local content phased out by 2000 per GATT.
MDP Joint Ventures and Foreign Exchange
- 10% NFEE concessions for joint ventures with 30% local equity.
- Foreign exchange ratios rising to 15% by 2000.
- BOI issues import certificates and monitors compliance.
Consolidation and Oversight
- Technical Review Committees for CDP, CVDP, MDP consolidated.
- Committee to oversee compliance with safety and emission standards for used trucks/buses.
Funding and Operational Expenses
- BOI may collect fees and grant honoraria related to assessments and technical reviews.
Government Procurement
- Government units urged to prioritize locally assembled vehicles, especially in foreign-funded projects.
- Department of Transportation encouraged to adopt locally produced taxis.
Penalties
- BOI can impose fines for misrepresentation, fraud, or non-compliance.
- Recovery of fraudulently earned foreign exchange awards possible.
Incentives and Awards
- Additional credits/awards for high local value added, R&D, training, and foreign investments.
- Special incentive packages for exporters meeting export thresholds.
Amendments, Separability and Repealing Clauses
- BOI may recommend further amendments considering economic and industry conditions.
- Provisions are separable if declared unconstitutional.
- Inconsistent previous orders or rules repealed or modified accordingly.
Effectivity
- Amendments take effect 15 days after publication in a newspaper of general circulation.