CARS crosses the finish line

Doing right is its own reward

NEWS OF the restoration of funding for the Comprehensive Automotive Resurgence Strategy (CARS) Program was welcomed by the auto industry and the business sector at large with a resounding cheer. This swift action by the government reflects its resolve to sustain efforts in shoring up foreign investor confidence and strengthening the business environment in the country. It is a clear signal that the government is steadfast in its commitments to investors and that it honors a transparent rules-based approach toward progress and development.

In his announcement of the finalization of the funding solution for CARS, Finance Secretary Frederick Go stressed that this is in response to the private sector’s concerns on “the ease of doing business, the cost of doing business and the predictability of doing business” in the Philippines. He assured that “car manufacturers enrolled in the program that the government will fulfill its commitment to investors.”

Business leaders hailed the resolution of the funding issue. In a report by BusinessWorld, Philippine Chamber of Commerce and Industry (PCCI) President Ferdinand A. Ferrer was quoted as saying that the return of funding for CARS “is a clear indication that the government will support critical industries and prior commitments.”

In the same article, Federation of Philippine Industries Chairperson Elizabeth H. Lee was also quoted as saying that, “Only by sustaining industrial programs with credibility can the Philippines position itself as a trusted destination for long-term manufacturing investments.”

This year, the Philippines will chair the Association of Southeast Asian Nations (ASEAN). This is an excellent platform to elevate the standing of the country as a partner of choice for investors. Accordingly, a clear show of consistency in policy direction, implementation and governance is an unequivocal validation that the Philippines is open for business and a dependable investment destination.

Indeed, I believe that the government clearly demonstrated its responsiveness and ability to act quickly and with determination in addressing a clear pain point of the business sector. The returned funding of CARS is particularly important because it impacts the government’s goal of revitalizing the industry under the Philippine Development Plan (2023 to 2028).

The automotive industry — especially insofar as local vehicle production is concerned — is an essential pillar of the manufacturing sector. It is a significant contributor in transforming the production sector by generating more quality jobs and competitive products. Senator Loren Legarda, in a proposed Senate Bill back in 2022, cited the observation of the National Economic and Development Authority (NEDA) Former Director-General Cielito Habito that the manufacture of motor vehicle parts “has strong backward linkages with local industries, indicating strong multiplier effects for the local economy.” Director Habito referred to a study — albeit dating back to 2010 — that “every P100 worth of production in industry leads to a rise in total economic output by P367.” Apart from its spillover effects to other industries, it provides for technology transfer to local firms, thus increasing the overall potential of the domestic economy.

The strategic value of the automotive industry is significant, to be sure. In 2017 — the peak of auto sales prior to COVID — it was noted by then Executive Secretary Salvador Medialdea that the output value of the industry reached P300 billion or 4% of the country’s gross domestic product (GDP). At the same time, the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) reported that combined investments of auto industry players had reached P120 billion while the Technical Education and Skills Development Authority (TESDA) cited in a report that every P100 billion in investments would translate to 169,000 jobs. Further, a more recent report by the International Trade Council in December 2024 projected that automotive exports from the Philippines would reach US$1.28 billion in 2025.

Given that domestic motor vehicle sales are estimated to have reached over 490,000 in 2025, the scale of economic contributions by the auto industry must be even more compelling. In an economy that is driven by local consumption (up to 70%), increasing local production capacity is a strategically important pillar of sustainable development for the country. This will allow us to improve our balance of trade, minimize our vulnerability to imported inflation, mitigate supply chain disruptions and fluctuations in logistics costs, increase local value add, and create more jobs.

Motor vehicles are even more important in light of the rising mobility needs of the country. The ASEAN Statistics Report for 2024 showed that the number of registered motor vehicles (including four- and two-wheelers) per 1,000 people in the Philippines as of 2023 stood at 128. This compares with 1,097 in Malaysia, 682 in Thailand and in 473 Indonesia. Vietnam — with data only from 2020 — was reported at 42. Given the archipelagic nature of the Philippines, the need for transport vehicles cannot be ignored — for farm-to-market use, retail, commerce, commuting, private use, and special purposes such as ambulances, police vehicles, and other civic needs. “Mobility security” should, therefore, be a priority concern of the government.

However, in the return of funding for CARS, it was also mentioned that funding for RACE (Revitalizing the Automotive Industry for Competitiveness Enhancement) was not included. I am confident that this is not because of any lack of appreciation for the strategic importance of the proposed program by the Board of Investments (BoI). I believe that the government is just taking a more deliberate approach to assuring that — once approved and announced — there will be no further hitches to realizing the program goals and benefits.

We will move forward as a nation, taking one measured step at a time. After all, haste does make waste.