Pulling the handbrake on progress

Pulling the handbrake on progress | Daily Tribune

The government’s decision to remove funding from the Comprehensive Automotive Resurgence Strategy (Cars) and the Revitalizing the Automotive Industry Competitiveness Enhancement (Race) programs may be framed as fiscal prudence. But for the automotive sector and the broader manufacturing ecosystem, it feels more like a policy U-turn at just the wrong time.

Cars and Race were never intended to be permanent subsidies. Both were strategic, performance-based incentives designed to attract large-scale investments, anchor vehicle manufacturing in the country, and develop a deep supplier base.

Under Cars alone, participating automakers committed billions in capital expenditures. Toyota Motor Philippines invested more than P5 billion to expand and modernize its production facilities, while Mitsubishi Motors followed with roughly P7 billion in investments in local manufacturing and supplier development. These were not paper commitments, as they translated to jobs, technology transfer, and real industrial capacity.

The now-defunded Race program was meant to build on these gains, extending incentives to parts manufacturers and future-ready technologies. Both programs were designed as a continuum, helping the industry reach scale, then pushing it toward competitiveness. Ending both abruptly breaks that logic.

The Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) has been direct about the risks. In a public statement, the group stressed that program participants “should be able to receive their incentives based on their actual performance that already generated economic benefits,” warning that the removal of funding creates uncertainty for manufacturers that have already delivered on their commitments. Campi also underscored that Cars and Race are not standalone perks but fundamental pillars of industrial development.

That concern goes beyond carmakers. The automotive industry supports thousands of jobs across assembly plants, parts manufacturing, logistics and services. Every locally assembled vehicle sustains an ecosystem of small and medium suppliers, engineers, and skilled workers. When incentives are withdrawn without a transition plan, the risk is not just slower car production — it is weakened supply chains and stalled investments across the board.

The timing makes the decision even more troubling. Globally, the automotive industry is undergoing its biggest transformation in decades, driven by electrification, automation, and greener manufacturing. Across Southeast Asia, governments are recalibrating — not abandoning — incentives to attract electric vehicle and battery investments. In this context, removing Cars and Race sends a signal that the Philippines may be stepping back just as others are accelerating.

To be clear, subsidies must always be scrutinized. Public funds should be tied to performance, transparency, and clear outcomes. If programs need reform, tightening, or redesign, that debate is valid. But reform is not the same as outright removal. Abrupt policy shifts in capital-intensive industries erode investor confidence and raise doubts about long-term policy reliability.

As a Poll Starter, if the government’s intention is to move beyond incentives, then the alternative must be stronger fundamentals: faster permits, reliable and affordable power, skilled labor pipelines, and world-class infrastructure. Without these, removing incentives simply exposes existing structural weaknesses rather than addresses them.

Industrial policy is ultimately about direction. The real risk in ending Cars and RACE is not the loss of subsidies per se, but the perception that the country is losing its industrial compass. In a fiercely competitive region, standing still or stepping back can be the most expensive decision of all.