Manila Bulletin (June 12, 2015)
WHEREAS, Articles 2 and 7 of Executive Order (EO) No. 226 (s. 1987) or the “Omnibus Investments Code of 1987,” as amended, declare that the State shall encourage private Filipino and foreign investments in industry which shall provide significant employment opportunities, provide a foundation for the future development of the economy, and meet the tests of international competitiveness and empower the Board of Investments (BOI) to formulate and implement rationalization programs for certain industries to address impediments to economic growth, and formulate guidelines for progressive manufacturing programs;
WHEREAS, EO Nos. 156 (s. 2002) and 877-A (s. 2010) provide for a comprehensive industrial policy and directions for the Motor Vehicle Development Program to accelerate the sound development of the Philippine Motor Vehicle Industry, recognizing the need to attain competitiveness in the ASEAN region in particular;
WHEREAS, there is a need to augment and enhance policy and directions of existing motor vehicle development programs towards ensuring a resurgent automotive industry that supports innovation, technology transfer, environmental protection, and Small and Medium Enterprises (SMEs) development;
WHEREAS, there is a need to enable the country’s automotive industry to seize market opportunities opened by the ASEAN Economic Community and deepen its participation in the regional upply chain; and
WHEREAS, the improvement of the automotive industry will boost manufacturing capability of the overall industrial sector, spur growth of SMEs and create more jobs in the country.
NOW, THEREFORE I, BENIGNO S. AQUINO III, President of the Republic of the Philippines, by virtue of the powers vested in me by law, do hereby order:
SECTION 1. Comprehensive Automotive Resurgence Strategy Program. The Comprehensive Automotive Resurgence Strategy Program, herein referred to as the “CARS Program,” is hereby adopted and implemented in order to attract new investments, stimulate demand and effectively implement industry regulations that will revitalize the Philippine automotive industry, and develop the country as a regional automotive manufacturing hub.
The thrust of this Program is to provide time-bound, and output or performance-based fiscal support to attract strategic investments in the manufacturing of motor vehicles and parts thereof. Other non-fiscal measures already provided by existing laws, rules and regulations, shall continue to be systematically implemented by the relevant government agencies.
SECTION 2. Coverage. The CARS Program shall be limited to the manufacture of three (3) Models of four-wheeled motor vehicles, and shall cover the following activities:
SECTION 3. Definition of Terms. As used herein, the following shall mean:
SECTION 4. Functions of the BOI. The BOI, as the lead implementing and coordinating agency of the CARS Program, shall perform the following:
SECTION 5. Inter-agency Committee on Automotive Industry Development . An Inter-agency Committee on Automotive Industry Development, herein referred to as “the Inter-agency Committee,” is hereby created to administer and implement the CARS Program.
The Department of Trade and Industry-BOl representative shall act as Chairperson of the Interagency Committee, with members from the following:
The BOI shall also act as the Secretariat of the Inter-Agency Committee.
SECTION 6. Functions of the Inter-Agency Committee. The Inter-agency Committee shall perform the following functions:
SECTION 7. Criteria for Enrollment of a Model. The criteria for the enrollment of a Model shall be based on, but not limited to, the following:
SECTION 8. Eligibility and Qualifications of Participants. The participating Car Makers, Parts Makers and Shared Testing Facility Proponent must meet the following qualifications, and such other criteria as may be required by BOI:
Minimum Qualifications for Car Makers
Minimum Qualifications for Parts Makers
Minimum Qualifications for the Shared Testing Facility Proponent
SECTION 9. Application and Selection Process. The BOI shall establish the application and selection process for Model enrollment and the qualifying program for Participants, imposing such terms and conditions as it may deem necessary to promote the objectives of the CARS Program.
The BOI shall prescribe an application period during which a PCM can apply for the enrollment of only one (1) Model. However, if the three (3) Models are not fully subscribed within the said period, the BOI can set a new application period for enrollment of additional Model(s), in which case, more than one (1) Model may be granted to a PCM.
Upon approval, the BOI shall issue a Certificate of Registration to the PCM which shall post a performance bond in an amount to be determined by the BOI. The registered PCM shall be deemed a member under the Motor Vehicle Development Program.
SECTION 10. Fiscal Support. The registered Participants may be entitled to two (2) kinds of fiscal support during the enrolled Model Life, up to a maximum of six (6) years, namely: (1) Fixed Investment Support (FIS); and (2) Production Volume Incentive (PVI); Provided, that the Participants satisfy the following qualifications:
Criteria to be Eligible to FIS
Criteria to be Eligible to PVI
This fiscal support shall be computed based on the Segment Weighted Average Price, Standard Production Support, and Logistics Efficiency Index, as defined in this Executive Order, during the manufacture of the enrolled Models.
SECTION 11. Establishment of the Automotive Development Fund in the General Appropriations Act. The Department of Budget and Management (DBM), in coordination with the BOI, shall propose, through the National Expenditure Program, the inclusion of an Automotive Development Fund (ADF) in the annual General Appropriations Act (GAA), to fund the fiscal support to be granted to registered and eligible Participants.
The total fiscal support for the CARS Program will be given beginning 2016, and shall not exceed Twenty-Seven Billion Pesos (P27 Billion), with each enrolled Model qualified to a fiscal support in an amount not exceeding Nine Billion Pesos (P9 Billion), to be allocated as follows:
The DBM shall likewise propose that the GAA includes a special provision providing that the use and disbursement of the ADF shall be pursuant to this Executive Order.
SECTION 12. Annual Appropriations. The DBM shall indicate in the annual National Expenditure Program the annual estimated expenditure necessary to support the CARS Program for that year, until the amount of Twenty-Seven Billion Pesos (P27 Billion) is fully utilized and/or the financial obligations to the program Participants are fully paid, subject to DBM policy and guidelines on budget preparation.
SECTION 13. Tax Payment Certificate. The fiscal support for the registered and eligible Participants shall be evidenced by a non-transferrable Tax Payment Certificate (TPC)-as provided by law. This shall be used to defray the tax and duty obligations of the Participants to the National Government, specifically, excise tax, income tax, import duties, and Value Added Tax (VAT).
Towards this end, the BOI, DBM, and DOF shall draft an efficient and effective TPC mechanism.
SECTION 14. No Double Availment of Incentives. Registered Participants shall not be allowed to register their activity under any other program granting incentives.
SECTION 15. Monitoring and Compliance. The production volume, including parts importation volume, among others, deliverables and commitments, shall be subject to periodic audit. Further, parts makers and/or service providers shall be audited to prevent parts trading. Registered Participants shall be audited and strictly monitored.
Failure to meet the following shall cause the cancellation of the Certificate of Registration and/or forfeiture of support, and/or expulsion from the CARS Program:
The Board may limit availment of support as it may deem necessary. Further, failure to comply with any of the provisions of this Executive Order, its Implementing Rules and Regulations, and the terms and conditions of the Certificate of Registration shall be subject to cancellation, suspension, forfeiture of support, fines and such other applicable penalties as may be allowed or prescribed by existing and applicable laws, rules and regulations.
SECTION 16. Implementing Rules and Regulations. The BOI, in coordination with the DOF, DBM and other concerned government agencies shall promulgate the rules and regulations to implement the objectives and provisions of this Executive Order.
SECTION 17. Review of EO 156 and EO 877-A. The Inter-agency Committee constituted under this Executive Order is hereby further ordered to review the existing Motor Vehicle Development Program and other relevant incentive schemes in the light of the implementation of the CARS program and recent regional and global economic developments. The review, which should be completed within six (6) months from the issuance of this EO, may, among others, explore the possibility of providing for new entrants intending to eventually participate in the CARS program a set of incentives during a limited transition period.
SECTION 18.Repealing Clause. All executive orders, rules and regulations and other issuances or parts thereof, which are inconsistent with this Executive Order, are hereby revoked, amended, or modified accordingly.
SECTION 19.Separability Clause. If any provision of this Executive Order is declared invalid or unconstitutional, the other provisions not affected thereby shall remain valid and subsisting.
SECTION 20. Effectivity. This Executive Order shall take effect immediately upon its publication in a newspaper of general circulation.
DONE, in the City of Manila, this 29th day of May in the year of Our Lord, Two Thousand and Fifteen.
(SGD.) BENIGNO S. AQUINO III
By the President:
(SGD.) PAQUITO N. OCHOA, JR.
Executive Secretary