BOI IPP Guidelines – Preferred Activities: Manufacture of Motor Vehicles

This covers R&D activities and the establishment of research/testing laboratories, Centers of Excellence (COE) and technical vocational education and training institutions.

A. Manufacture/Assembly of Motor Vehicles

The project shall involve the manufacture/assembly of brand new motor vehicle units, excluding 2-stroke engine motorcycles and traditional tricycles that are compliant with the prevailing national standards and regulations on the registration, use and operation of motor vehicles.

Any of the following may qualify as new:

• Projects that will involve the establishment of a factory complete with production machinery/equipment and facilities such as welding section, assembly section, metal treatment section, painting section, testing facility for road worthiness and emission standard compliance, and pre-delivery inspection section.
• Projects of an existing motor vehicle manufacturer/assembler of passenger car/commercial vehicle that involves the production of a new model or a full model change (FMC), provided there is new investments of at least Php200 million which may include manufacture of parts and components.

Any of the following may qualify for pioneer status:

• Projects covered under paragraph a.1 above for manufacture/assembly of passenger cars and/or commercial vehicles with investments of at least US$50 million and for the manufacture/assembly of motorcycle with investments of at least US$4 million. Investments may include the cost of the acquisition of an existing assets or facilities.
• Projects covered under paragraph a.2 above with investments of at least US$20 million for passenger cars and/or commercial vehicles, US$1.5 million for motorcycles
• Projects on the manufacture/assembly of alternative fuel vehicle and electric vehicles. Alternative fuel vehicles include the following:
– Hybrid vehicles are vehicles that run on electric batteries and gasoline/diesel/other fuels;
– Electric vehicles are vehicles that run solely on electric power;
– Flexible-fuel vehicles are vehicles that run on gasoline/diesel in combination with alternative fuel such as but not limited to:
• Bioethanol vehicles that run on gasoline and a minimum ethanol content/blend of at least 20%
• Biodiesel vehicles that run on diesel and a minimum biodiesel blend/content of at least 5%
• Compressed Natural Gas Vehicles are vehicles that run on Compressed Natural Gas (CNG)
• Other vehicles powered by LPG, fuel cell and other alternative fuels; and
– Manufacture/assembly of brand new three or four-wheel Philippine utility vehicles for cargos and/or passengers.

Entitlement to ITH is subject to a Net Value Added (NVA) of at least 40% with full exemption for projects with NVA of at least 65%. ITH exemption for projects with NVA between 40% and 60% shall be subject to pro-ratio.


B. Manufacture of parts and components

This covers the manufacture of motor vehicle parts and components either as original equipment manufacturer (OEM) or after-market products.

Any of the following may qualify for pioneer status:

• Manufacture of engines and transmissions;
• Manufacture of tool & die to produce chassis and engine;
• Establishment of common facility for heat treatment, forging, stamping of motor vehicle parts and components;
• Production of electric motors, batteries other than lead acid batteries, controller assembly and battery charger for electric vehicles.

Reference: (accessed June 18, 2014).