Columns on CARS wrong

TWO RECENT Breaktime columns by Conrado R. Banal III (“CARS on the table,” Business, 1/12/16; “House of CARS,” Business, 1/14/16) commented on the recently approved Comprehensive Automotive Resurgence Strategy (CARS) program introduced by Executive Order No. 182. Banal presented CARS as inappropriate, wasteful and more beneficial to foreign interest than to Philippine firms, workers and the economy at large. Banal downplays the role that a more robust automotive manufacturing industry can play toward building a broad-based industrial sector to help meet the Philippines’ development objectives.

Currently the Philippine automotive industry is made up of 10 active vehicle assembly plants and more than 250 parts, components and autobody manufacturers with in-country manufacturing facilities valued at over P22 billion. Complementing this hardware is a pool of over 60,000 workers trained in automotive production processes and technology. It is this currently productive and expansion-ready industry that has been selected by government as one of the major building blocks for revitalizing the economy’s manufacturing sector.

In 2015, some 321,000 new vehicles were sold, out of which close to 100,000 were locally assembled, using parts, components and supplies from the 250 manufacturing firms of the auto industry. This manufacturing network with 60,000-plus trained workers is expected to contribute 1.7 percent to the country’s gross domestic product when the CARS program is implemented.

The year 2014 saw our parts makers, already active for decades in the global market, export $4.3 billion of auto parts and components for use in new vehicle assembly plants as well as in the after-sales market.

The auto industry’s role is not limited to the production side of vehicles, parts and components. As the Philippine economy is expected to continue on its growth path, it is forecast to need over 500,000 new vehicles per year by 2020. This requirement, both for replacements for aging units as well as for fleet expansions, provides the ideal base market for large-scale production. Specifically, it is this industry’s characteristic to produce needed products and to generate high-value manufacturing activities with economy-wide impact that the CARS program seeks to harness. The program’s launch is also timely as numerous vehicle brand and parts manufacturers are currently studying where best to locate their regional factory expansions.

CARS, therefore, answers the country’s need to broaden and increase the country’s vehicle and parts production capabilities and establish the country as base plant for full vehicle manufacture. Adopting the CARS program is thus appropriate, timely and consistent with the country’s aspirations to revitalize its manufacturing sector so that it can play its proper role in support of the nation’s balanced growth objectives. The federation and its member-associations and -firms fully support this initiative of the Board of Investments.

—VICENTE T. MILLS JR., president, Federation of Automotive Industries of the Philippines