The Department of Trade and Industry (DTI) is asking Congress to increase its 2018 budget by 41 percent, or nearly P2 billion more of its allocation this year, as the agency gears up to release the first tranche of government support for the Comprehensive Automotive Resurgence Strategy (CARS) Program.
According to the DTI’s budget proposal, the DTI is eyeing a total new appropriations for next year to amount to P6.57 billion, from 2017’s P 4.6 billion. The P6.57 billion excludes the budget for attached corporations, such as the Philippine Economic Zone Authority and Small Business Corp.
Among the Office of the Secretary’s five attached agencies partaking in the budget, the heftiest increase will be allocated to the Board of Investment (BOI), or a 415.8 percent hike, from last year’s P390 million to P2 billion.
The P1.6-billion increase is due to the roll-out of the BOI’s CARS, program next year, where an amount of P1.64 billion was proposed to fund the Fixed Investment Support (FIS) incentive promised to carmakers.
The BOI pledged total government support of P27 billion to be given to three carmakers over the six-year duration of the program.
However, since only two participants qualified for the program, the total support may be reduced.
The other attached agencies with a share in the budget include the Construction Industry Authority of the Philippines (CIAP), the Philippine Trade Training Center, Design Center of the Philippines and the Construction Manpower Development Foundation. Of these, only the CIAP’s budget was reduced by 8 percent.
On a program basis, the DTI has a budget of P5.1 billion.
The CARS fall under the Exports and Investments Promotion and Development program of the DTI. The umbrella program is getting 48 percent of the total P5.1 billion, or P2.5 billion.
Micro, small and medium enterprises development corners the next biggest share of 27 percent, or P1.3 billion.
Industry Development Program’s share is at 11 percent, amounting to P550 million.
The BOI, under the DTI, spearheaded the creation of the CARS in 2013, in a bid to attract investments in the auto industry and make the Philippines an automotive hub in the Asean region.
Currently, vehicles locally assembled in the country face a $1,800 gap in production cost compared to neighboring manufacturing countries.
The program aims to boost the local auto industry’s competitiveness by bridging this gap, essentially providing a $1,000 per unit fiscal support through CARS.
In return, the BOI demands a mandatory local production of body shell and large plastic parts as part of its localization requirement, and a 200,000-unit production per model requirement over the course of the program.