No way to treat investors

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Is it still any wonder why foreign investors are staying away from the Philippines?

Perhaps, some just refuse to see how our successive governments seem to disregard institutional knowledge and wisdom in dealing with our investors.

In short, a total disregard and appreciation for institutional knowledge and policies.

We have repeatedly witnessed how with each new government, economic policies are changed and disregarded without first doing a deep dive and analysis of how certain policies have done in terms of attracting and bringing in investments and why certain policies should be maintained or just carefully tweaked to retain the original investors, or perhaps to attract and include new investors.

Instead, because of our disregard for continuity and institutional memory and knowledge, each successive government undertakes an almost clean sweep of sitting  government officials, replacing key personnel with political appointees, who, in turn, likewise bring in their own people and put them on top of knowledgeable key and strategic staff who have years of experience and knowledge about the department.

Out with the old, in with the new.

One such policy that the current government has not properly studied and appreciated is no less than the defunct CARS program or the Comprehensive Automotive Resurgence Strategy program that was crafted during the term of the late president Benigno Aquino III and took effect on May 29, 2015.

The CARS itself is a continuation of several other automotive industry programs that the Department of Trade and Industry and the Board of Investments have implemented over five  decades -- from the Progressive Car Manufacturing Program in 1973, the  Car Development Program from 1987 to 1990, the Motor Vehicle Development Program from 1996/1998 to 2006, and then by CARS in 2015.

At present, the DTI and BOI is in the process of crafting a new automotive program to be known as the Revitalizing the Automotive Industry for Competitiveness Enhancement or RACE program.

The CARS program  committed to giving fiscal incentives to Toyota Motor Philippines and Mitsubishi Motors Philippines to boost their local production.

Unfortunately, President Marcos may not have been properly briefed by the current trade secretary about how the CARS program has performed under the originally six-year program. Perhaps, the current secretary herself is not too familiar with the automotive industry?

Likewise, the President himself may have actually forgotten that he had been supportive of program, even approving in May 2023 an extension of CARS.

And yet, nobody in Malacanang had the presence of mind  to first ensure that the budget veto items he was about to sign would result in an embarrassing and damaging blow to investors in the automotive sector.

Unfortunately, perhaps because of funding constraints, lack of proper advice, vetting, understanding of its negative effect, explanation, warning or misled, the President vetoed the P4.32 billion funding for the CARS program.

And only after the ensuing brouhaha did Malacanang realize that it had dropped the ball at a crucial time when investors were making it clear that the Philippines is no longer a desirable investment destination for so many different reasons -- with graft and corruption just one of the numerous reasons why the Philippines is a no go investment destination.

And that simply citing graft and corruption as a major problem only highlights the Philippines’ lack of deep understanding that consistency and continuity in economic and regulatory policies, and keeping their financial commitment, are more important to foreign investors.

I think that a key factor why foreign investors flock to China and Vietnam is their stable and consistent strong leadership that ensures policies will not be changed at the whim of a new administration who chooses to sweep out technocrats in favor of (sometimes clueless) newbies.

And, of all the top investors to shaft (pardon my French) is Toyota!!... which, if Malacanang is not aware (HOW COULD THEY NOT?) is the UNDISPUTED global auto leader.

My God, somebody call an exorcist to drive out the bad juju from Malacanang! Hello? Anybody home to save the country?

Talk about being in a political crisis, although I am not really sure of our chances of finding a good successor to our current leadership. At present, none of the above.

But politics is not my area of expertise.

But even in the face of all this insult, Toyota last week reiterated its commitment and willingness to continue serving and meeting the automotive needs of the Philippines -- with TMP president Masando Hashimoto and senior vice president Jose Maria “Jing” Atienza reiterating Toyota’s continued commitment to the country after 37 years of service, maintaining a market leadership of 46 percent with 228,447 units sold, posting a 5.2 percent growth from 2024,  and willingness to continue assembling the Vios and their new Tamaraw and Innova models in the country.

Toyota’s economic contribution to the Philippines includes $1 billion in export sales of export suppliers, of which 50 percent is from the Toyota Group and less than 26 percent from Philippine auto parts exports; P43 billion in taxes and duties paid to the government; P17 billion procured from local suppliers and P3.9 billion paid in wages and benefits to its employees.

Atienza, who is also the new head of the Chamber of Automotive Manufacturers of the Philippines, Inc. or CAMPI, is hopeful that the still being crafted RACE program will continue to encourage local production, while diplomatically acknowledging the need to improve the program and encourage more participants with the entry of Chinese, Korean and even Vietnamese car brands.

Responding to my probing question that new brands should put in “skin in the game,” Atienza responded, “ I think production environment should be improved and  further enhanced. It’s something that we can work on with government and how to improve that environment.”