Economic managers, in a press statement, say that interpretation is wrong—and potentially damaging to investor confidence.
The big picture
The Department of Budget and Management (DBM), Department of Trade and Industry (DTI), and Department of Finance (DOF) jointly clarified that the veto of the CARS Program item in the FY2026 General Appropriations Act (GAA) does not signal a withdrawal of government support for the automotive industry.
Instead, the agencies stressed that funding mechanisms under the FY2025 GAA remain intact, allowing the government to honor validated obligations in a lawful and fiscally responsible manner—consistent with the Marcos administration’s policy that the auto industry remains a national priority.
What’s driving the confusion
The FY2026 GAA no longer includes a separate line item for “Fiscal Support Arrearages” under the CARS Program. This prompted speculation that the government would be unable—or unwilling—to pay incentives due to participating car manufacturers and parts makers.
Officials say that conclusion overlooks how budget execution actually works.
How payments will still happen
Under the FY2025 GAA, two budgetary items remain relevant:
While the arrearages item was not carried over to FY2026, the government can still settle validated obligations by augmenting the FY2025 fiscal support arrearages line item using declared and verified savings from the Department of Public Works and Highways—subject to constitutional rules, existing laws, and presidential approval.
Zoom in
Based on Tax Payment Certificates (TPCs) already issued and validated, the government has sufficient capacity to pay dues to participating manufacturers such as Toyota and Mitsubishi, as well as qualified auto parts producers.
These payments will be sourced from available FY2025 savings and released only after meeting all fiscal and legal requirements.
Any remaining validated claims that have not yet been issued TPCs—and are not covered under the current GAA—may be proposed for inclusion in the FY2027 National Expenditure Program (NEP). If approved, these will undergo cash programming to ensure payments remain orderly and aligned with available fiscal space.
What they’re saying
“The government’s position is clear: we will not abandon the auto industry,” Budget Secretary Rolly U. Toledo said. “Obligations supported by issued and validated TPCs will be paid in a legal, orderly, and responsible manner.”
Toledo added that DBM remains focused on releasing funds only when anchored on clear legal bases and sound fiscal direction, to maintain confidence among investors and the public.
Trade and Industry Secretary Cristina A. Roque emphasized that sustained collaboration with manufacturers remains central to the government’s industrial strategy.
The administration, she said, recognizes the auto sector’s role in job creation, technology transfer, and industrial growth—and intends to keep the CARS Program aligned with its original objectives.
Finance Secretary Frederick D. Go reaffirmed President Ferdinand R. Marcos Jr.’s directive to honor commitments made to investors. “The CARS Program is a key pillar of our manufacturing strategy,” Go said, adding that legitimate obligations will be paid in accordance with the law and the government’s fiscal capacity.
What’s next
Validation of TPCs is ongoing, with the DTI ensuring all claims comply with program rules before any fund release. Economic managers say the government remains open to dialogue and committed to practical solutions that balance industry support with responsible stewardship of public funds. —Ed: Corrie S. Narisma
