GMA grants duty-free importation of car parts using alternative fuels

President Arroyo has issued Executive Order No. 488 making components, parts and accessories for the assembly of vehicles powered by alternative energy sources such as biodiesel, bioethanol, compressed natural gas and electricity tariff-free to reduce the country’s dependence on imported crude.

EO 488 imposes zero import duty on components, parts and accessories for the assembly of hybrid, electric, flexible fuel and CNG motor vehicles under Section 104 of the Tariff and Customs Code of 1978.

"It is the declared policy of the government to promote the judicious conservation and efficient utilization of energy resources in light of the continuing increase in world prices of imported fuel oil," the President said in her order.

Under EO 472 issued by the President earlier, the government set a target of five percent reduction in fuel consumption by road transport users.

"There is a need to promote the efficient use of fuel in the transport sector, being one of the highest fuel consuming sectors," the President said.

She said the emerging alternative fuel vehicle technology presents opportunities for improving energy efficiency of transportation in support of the government’s energy independence agenda.

Under EO 156, the President had established a "Comprehensive Industrial Policy and Directions for the Motor Vehicle Development Program" that would provide for the development of the Philippines as a manufacturing hub for certain motor vehicles, parts and components.

The National Economic Development Authority (NEDA) endorsed the EO for approval by the President as initiated by the Department of Energy, the Department of Trade and Industry and the Board of Investments in pursuit of the government’s twin thrusts of energy independence and sustainable growth.

The EO dated Jan. 12 provides for the grant of preferential Most Favored Nation (MFN) and Common Effective Preferential Tariff (CEPT) rates of zero percent on the importation of items that qualified Motor Vehicle Development Program participants use for the assembly or manufacture of hybrid, electric, flex-fuel (bio-ethanol and bio-diesel) and CNG vehicles.

The current rates of import duty for motor vehicle parts and components are one percent and three percent for MFN and CEPT, respectively.

CEPT rate applies to importations coming from ASEAN countries while the MFN rate applies to importations coming from non-ASEAN countries.

Upon approval, the BOI, pursuant to its Motor Vehicle Development Program, shall issue guidelines to implement the preferential tariff privilege.

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 its vulnerability to the volatility of world oil prices.

Energy Secretary Raphael Lotilla said that aside from energy conservation, the surest way to insulate the economy from the oil factor is through the use of indigenous alternative fuels.

In addition to its contribution to economic growth, he added that the use of alternative energy sources would improve the air and promote investment and employment opportunities, especially in the agricultural sector.

With the issuance of the EO, the government hopes to encourage more active participation from the automotive industry in mainstreaming alternative transportation fuels.

Just recently, Ford announced it will build a $20-million flexible fuel factory in the Philippines, its first in Asia.

The DOE this year intensified the promotion of indigenous alternative fuels, particularly coco-biodiesel and fuel ethanol. As of end November, more than 30 Flying V stations have been offering coco-biodiesel blended diesel at the pump. Seaoil, has also started to offer ethanol-blended gasoline since August.

More oil companies are expected to follow this year. Next year, 200 CNG-fueled vehicles are expected to ply the Batangas-Manila route.