The Board of Investments (BOI) said they are looking at the possibility of granting tax credits to auto manufacturers who are going to produce more vehicles in the country in order to make the Philippines a viable investment destination for car makers.
Currently, auto manufacturers have been choosing to locate in Thailand and Indonesia over the Philippines but BOI executive director Efren Leano said they are looking for ways to make the Philippines a more attractive investment site.
In an interview with reporters, Leano said that during their meeting with the auto manufacturers they will broach the idea of giving tax credits to manufacturers. Likewise, he said they will ask if the Philippines can be the hub for the manufacture of cheaper cars with a 1.2 liter engine.
“We are looking for ways wherein we can help the industry but the policy must not need congressional approval in order for the changes to be immediately implementable,” Leano said.
In an interview, Toyota Motor Philippines (TMP) Executive Vice President Rommel Gutierrez refused to say if a tax credit will be enough for them to increase their production in the Philippines. They also said they have not yet given any list of demands to the BOI. The BOI has asked car manufacturers for a government wish list that will help companies invest further in the country.
Leano said that they will have to present the issue of the tax credit to the Department of Finance because it means foregone revenue for the government. “Of course there is a trade off. We give them tax credits in exchange for an increase in locally produced cars that will in turn lower the price of vehicles.”
Leano said they are also mulling the possibility of relaxing the ownership policy in terms of incentives given to exports. Currently, foreign firms must export 70 percent of their production in order to enjoy tax perks. Leano said they may be able to reduce it to 50 percent.
The government is in the process of crafting the Implementing Rules and Regulations (IRR) for the Motor Vehicle Development Plan (MVDP). It is expected to be completed before the end of the month.
The government has asked the car manufacturers to submit a list of demands from the government in order to ensure additional investment in auto assembly in the next five years.
BOI said that they are waiting for car manufacturers to give them a list of what they need before investing further in the country. The BOI said that the investments in the auto industry must be made within five years or else the Philippines will be left behind in terms of auto assembly.