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To boost the country’s biofuels industry, the government should give tax perks to local and foreign car assemblers and manufacturers of flexi-fuel vehicles, an industry official said.

Fernando L. Martinez, president of Eastern Petroleum Corp. and chairman of the Independent Philippine Petroleum Companies Association (IPPCA), said providing incentives would encourage car manufacturers to produce more flexi-fuel type vehicles.

“These are all manufactured in the US by Chevrolet and Ford – let them bring it in the country. In two years time, I’m looking forward to immediately introduce E50,” he said.

He said if possible, it would be best to cut taxes by half on these kind of vehicles.

“They must cut by 50 percent the specific tax on vehicles since the multiplier effect in the local economy is more. One has technically given back to the local economy instead of throwing dollars for importing crude,” he said.

He said the development of alternative sources energy such as biofuels would help in the attainment of the country’s goal to eventually become energy self-sufficient.

“We’re just growing it. I’m advocating it, because the multiplier effect will be much more. Can you imagine growing it here and not going out to import gasoline? We’d rather grow the raw materials needed for ethanol in the country. All I need is 100,000 hectares to grow 200,000 metric tons of ethanol feedstock,” he said.

Martinez added the government should consider tax incentives as a form to promote the use of biofuels.

“Hopefully, the government will look at the proposal considering the improved fiscal position. It will also be covered by the demand generated, because the lower the price is, there is a propensity to consume. You cut by 50 percent the specific tax on flexible fuel vehicles, particularly those consuming 85 percent ethanol blend,” he said.

Recently, Ford launched the Ford Focus to both domestic and export markets which is capable of using 20 percent ethanol blend. Plans are underway for vehicles that could run up to 100 percent ethanol.

In January last year, President Arroyo signed Executive Order 448 which provides for the modification of the rates of import duty on components, parts and accessories for the assembly of hybrid, electric, flexible fuel and compressed natural gas motor vehicles.

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

Prior to the EO issuance, the rates of import duty for motor vehicle parts and components range between one percent and three percent.