The Board of Investments (BPI) believes it should help car assemblers and importers improve their sales in a market that has never seen the present rate of growth.

The BOI is looking at tax and non-fiscal incentives. The glitch is in the plan to make it attractive for everyone to replace vehicles 10 years or older.

The authority is to prohibit old vehicles from being on the road does not belong to the BOI. Not registering old cars may also be politically unpalatable. The indication is incentives can be withdrawn from those who do not comply.The incentives will be given without going through the legislative mill, according to Lucita Reyes, director of the BOI.

She said the main objective is to reduce cost in making and buying cars and spur sales.Buying cars has already been made less expensive by the banks which charge an average of five per cent a year in interest cost. Few units are repossessed. This means that the buyers have adequate incomes to buy cars in easy instalments.

The BOI wants to make it even easier with tax and non-fiscal incentives. Requiring assemblers and importers to replace or re-fleet 10 year old units is a non-fiscal incentive that has the effect of selling more. Reyes pointed out 50 per cent of the vehicles on the road is 10 years old or older, as borne out by the records of the Land Transportation Office.

Reyes said the BOI plans to grant lower excise tax on vehicles that are locally produced over a limited period, which she said has long been in a practice other countries when an assembler introduces a new model.Cars imported from any member of the Association of Southeast Asian Nations are also made cheaper by the ASEAN Free Trade Association by dropping tariffs.

The current scheme of excise tax depends of the value of the vehicle, Reyes said.The more expensive the car, the higher the tax.But since tax revisions require a law that would take much longer time to become operative, the BOI is looking at grants of incentives instead of a tax holiday provided under the law creating the Omnibus Investment Code.

Reyes said the BOI is seeking an opinion of the Department of Justice on how they can push the ITH as EO 226 requires a 60-40 Filipino ownership structure for projects that cater to the domestic market.

Reyes said the BOI may consider mere listing automotive assembly in the IPP and allow assemblers to enjoy ITH if their projects are classified as pioneering. Reyes pointed out that if an assembler introduces new technology that makes vehicles more fuel-efficient, incentives may also be granted.So far, Reyes said only Toyota Motor Philippines was able to avail of the incentives for about two years after it qualified as a majority Filipino-owned company.

Reyes said assemblers are being encouraged to developed fuel-efficient and lower-priced vehicles to increase the volume of sales of units that are locally-assembled.Reyes said under a planned automotive policy, the government hopes to raise the ratio of completely knocked-down (CKD) vehicles with those imported completely built-up (CBU) which as of 2012 was at 48:52.Reyes said if government does not intervene, the ratio could be lopsided 9:91 by 2030 against local assemblers.

One other this fiscal measure, the BOI also plans to push for the imposition of a ban on the road of old vehicles and replace them with new and fuel-efficient units. Reyes said the LTO data would show there are still about 1.7 million 10-year old vehicles on the road out of the total 3.1 million.

Both Chamber of Automotive Manufacturers of the Philippines and the Association of vehicle Importers and Distributors are bullish this year saying the initial 10-percent growth forecast is "conservative."

The industry sold about 185,000 units in 2012.