BUSINESS groups welcomed reform initiatives announced by Cabinet officials last Friday, saying this would help strengthen governance and boost industry and overall economic growth.
Among the concerns addressed during the “Big Bold Reforms” event were changes to the way the tax bureau conducts audits and continued payments to companies that participated in an automotive industry development program, funding for which was vetoed by President Ferdinand Marcos Jr. in this year’s national budget.
Finance Secretary Frederick Go said a “funding solution” had been found for the Comprehensive Automotive Resurgence Strategy (CARS) program, which lost its P4.32-billion allocation, and also said that the Bureau of Internal Revenue would be digitizing its audit system after all audit operations were halted in November following complaints of abuse.
The Federation of Filipino Chinese Chambers of Commerce and Industry Inc. (FFCCCII), in a statement, said Go’s assurance that issuances of BIR letters of authority (LOAs) would be “more controlled and data-driven” marked a “seminal advancement” in fiscal governance.
“By anchoring the audit process to a digitized, risk-based, data-driven system, the policy minimizes discretion, strengthens accountability, and definitively curtails the potential for arbitrary measures,” FFCCCII President Victor Lim said.
“The commitment to reduce both the offices authorized to issue LOAs and the number a taxpayer may receive one in a year instills powerful and necessary predictability,” he added.
“Continuous, progressive, and intelligently crafted policies of this caliber are needed to encourage both domestic and foreign investments, providing the stable and equitable environment essential for sustained Philippine economic growth.”
The Philippine Parts Makers Association (PPMA), meanwhile, said that finalized funding for CARS would help sustain investor confidence and reaffirmed the government’s commitment to revitalizing domestic automotive manufacturing.
The CARS program, launched in 2015, provided fiscal and non-fiscal incentives to automakers that committed to produce at least 200,000 units over six years. The program was extended for five years in 2023 and prior to the veto, officials had said that funding had been secured for incentives due to Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp.
“The P4.32 billion allocation for CARS is vital in supporting the continued operations and production plans of the program’s participants, including vehicle manufacturers and the local supplier base that supports them,” PPMA President Ferdinand Raquelsantos said on Saturday.
But funding for another vetoed auto industry development program, the P250 million for the Revitalizing the Automotive Industry for Competitiveness Enhancement (RACE) initiative, has yet to be secured, and Raquelsantos said the PPMA was hoping that this would be settled as soon as possible.
“We underscore that only P125 million is needed to initiate and operationalize RACE, an amount that can unlock significant benefits for the broader industry, especially for local automotive parts manufacturers who are key contributors to inclusive industrial growth,” he said.
RACE is envisioned as CARS’ successor, with perks to be extended to automakers that produce 100,000 units of a registered model.
The PPMA said RACE would be the “natural complement” to CARS as it would strengthen the domestic supply chain by supporting investments in tooling, technology upgrades, quality and safety certifications, productivity improvements and local content expansion.
“These are critical interventions that enable more Filipino parts makers to participate meaningfully in local vehicle production and compete within the Asean region,” Raquelsantos said.
He also raised the need to finalize the Electric Vehicle Incentive Strategy (EVIS) program, saying that local parts manufacturers would play a major role in building the supply chain for electric mobility.
Friday’s “Big Bold Reforms” forum for business leaders was aimed at boosting private sector sentiment, which has been dampened by a massive corruption scandal that has markedly slowed economic growth.
Officials have said that last year’s 5.5- to 6.5-percent growth goal would be missed, with growth likely to have again fallen below target in the fourth quarter after the July-September slowdown to 4.0 percent.
Preliminary October-December and full-year figures will be released next week.
In addition to the CARS and BIR reforms, Go also told a briefing that the grant of visa-free entry to Chinese nationals entering the country via Manila and Cebu could boost investments, and that a National Single Window platform would facilitate imports and exports.
During the same briefing, Public Works Secretary Vince Dizon said his department would be spending P200-250 billion in the first quarter alone to boost economic growth after markedly cutting expenditures in the wake of flood control project anomalies.
Economic managers last month lowered the growth targets for this year and the next to 5.0-6.0 percent and 5.5-6.5 percent, respectively, from 6.0-7.0 percent previously, given continued global uncertainties and the lingering impact of the corruption scandal.
