Import duty on parts for cars using alternative fuels scrapped

The Department of Energy (DOE) has announced the issuance of Executive Order 488 which will scrap import duties on components, parts and accessories for the assembly of vehicles powered by alternatives fuels.

The EO, signed by President Arroyo last Jan. 12, provides for the modification of the import duties on components, parts and accessories for the assembly of hybrid, electric, flexible fuel and compressed natural gas motor vehicles.

Specifically, the EO allows importations under the government’s Motor Vehicle Development Program at zero percent import duty on parts and components that will be used for the assembly and manufacture of vehicles powered by alternative fuels.

Before the EO, import duties on such motor vehicle parts and components range between one percent and three percent.

Energy Secretary Raphael Lotilla said with the EO in place, the Department of Energy anticipates that the car assemblers and manufacturers would be able to help the government promote broadly the use of high quality renewable fuels for motor vehicles and accelerate their integration in the mainstream fuel market.

Ford Motors earlier committed to invest $20 million for the establishment of a factory that would produce flex-fuel vehicles or those that run on alternative fuels, in the country.

Pending the passage of the Biofuels Law, the DOE also sees the EO as an important element of the comprehensive and long-term energy security strategy of the country.

The development and promotion of indigenous alternative fuels is one of the key pillars of the Arroyo administration’s energy independence agenda.

Through increased utilization, the government hopes to reduce the country’s dependence on imported fuels and thereby lessen vulnerability to the volatility of world oil prices.

Lotilla said the use of alternative energy sources will likewise improve air quality and promote investment and employment opportunities especially in the agricultural sector.