Local automakers interested in RACE program

Local automakers have also expressed interest in participating in the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) program, the Department of Trade and Industry (DTI) said.

At a budget hearing on Wednesday, Trade Secretary Ma. Cristina A. Roque said that the new auto revival strategy has yet to be implemented.

“We want more companies to avail. Francisco Motors and other local companies have also expressed their interest to avail of this program,” she said.

“It is open to everyone. And the bottomline is, if they can [manufacture] 100,000 units in three years, then they will be able to avail of the incentives,” she added.

She said that the government is aiming to fast-track the release and the implementation of the joint administrative order that will govern the strategy.

“There are other departments involved, so it really needs to be cleared first by all the departments, and then from there, we will roll out,” she said.

“There’s no timeline yet, but we are fast-tracking it so that more players can join,” she added.

Aside from the DTI, the other departments involved in the RACE program are the Department of Finance and the Department of Budget and Management.

According to the secretary, the program will be open to as many players as possible, unlike its predecessor program, the Comprehensive Automotive Resurgence Strategy (CARS), which only had three slots.

“We already discussed this with different companies and stakeholders that may want to avail of this program,” Ms. Roque said.

Aside from local players, other companies that have expressed interest in participating in the RACE program are Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. Both Toyota and Mitsubishi were also participants in the CARS program.

In the National Expenditure Plan, the RACE program is provided with a budget of P250 million, while fiscal support arrearages for CARS are valued at around P225 million.

However, these programs faced closer scrutiny from lawmakers, who were concerned that foreign manufacturers benefit more than local manufacturers.

“Instead of funding local industries using taxes paid by citizens, why are we funding industries or foreign companies that are already successful,” Kabataan Party-list Rep. Renee Louise M. Co said in Filipino during the hearing.

In response to this, Ms. Roque said that the strategies emphasize the need for the automakers to support the local industries.

“Parts of the car must come from local industries… In the RACE program, part of the requirement is for them to buy a certain percentage of the parts from the local manufacturers, and that is their contribution to the industry,” she said.

Similar incentives

Board of Investments (BoI) Executive Director Fe L. Del Rosario said that the government will still provide the same incentives under the RACE program, which include the fixed investment support (FIS).

“More or less for the RACE, it will have the same incentives, but in terms of volume requirements per model, it will be lower,” she said, noting that the requirement was 200,000 under the CARS program.

“In the RACE program, we [will] actually provide so-called FIS, which is equivalent to not more than 40% of capital expenditure in the form of tax certificates,” she added.

However, Ms. Del Rosario said that the FIS will not be automatically given, as there is a committee that will evaluate the claims of the company according to the guidelines.

The same provision is also present in the CARS program, where Mitsubishi and Toyota are expected to receive PHP 484 million and PHP 1.3 billion in FIS.

“The amount in the budget referring to the arrearages is the one that will cover these unpaid FIS,” said Ms. Del Rosario.

However, she said that the BoI is currently conducting an audit on the claims in terms of what was approved and what should be paid to the companies.

“Once our audit is done, the P225 million should cover the claim of the companies, whatever it can cover,” she added.

Deputy Minority Leader Antonio L. Tinio, however, raised the issue of whether the government should include technology transfer requirements in the strategy.

“In other countries like India, Indonesia, and Malaysia, they invite the foreign manufacturers, but the requirement is at some point the technology can be used by their own people,” he said.

In response, the DTI stated that it is open to studying technology transfer provisions that would benefit local manufacturers in the strategy. — Justine Irish D. Tabile, Reporter