January 31, 2023

Filipino Guardian

Sentinels of Filipino Free Press

Marcos lowers tariffs on electric vehicles and parts

A SIGN is pictured on a charging station for electric cars at the United Nations in Geneva, Switzerland, June 2, 2017. — REUTERS

The Board of the NATIONAL Economic and Development Authority (NEDA), chaired by President Ferdinand R. Marcos Jr., has approved an Executive Order (EO) that will reduce tariffs for some electric vehicles (EVs) and guidelines for public-private partnership projects (PPPs) and a new Pta11.42 billion Fisheries and Coastal Resilience Project.

Minister of Socio-Economic Planning Arsenio M. Balisacan said the EO, to be issued by Malacañang, will temporarily reduce most-favoured-nation nation (MFN) tariffs on fully built units (CBU) of some electric vehicles to zero percent for five years.

The order includes electric vehicles such as cars, buses, minibuses, vans, trucks, motorcycles, tricycles, scooters and bicycles, but excludes hybrid electric vehicles.

It will also temporarily lower tariffs on certain EV parts and components from 5% to 1% for five years, Mr Balisacan added.

“The EO aims to expand market sources and encourage consumers to consider purchasing EVs, improve energy security by reducing dependence on imported fuel, and promote the growth of the domestic EV industry ecosystem “, he said.

Mr. Balisacan, vice chairman of the NEDA board, said the tariff adjustments would need to be reviewed after a year of implementation to assess their impact on the development of the domestic electric vehicle industry.

“The aim of this tariff reduction is to ensure that there are enough e-vehicles [and] Incentives for service providers to set up chargers. Those things aren’t going to come in unless they see a market,” Mr. Balisacan said.

Earlier this year, then-President Rodrigo R. Duterte signed legislation accelerating the transition to electric vehicles by requiring operators to use electric cars for at least 5% of their fleet.

Philippine Chamber of Commerce and Industry President George T. Barcelon welcomed the EO but said it will not automatically result in a significant increase in EV users in the Philippines.

Speaking over the phone, Mr Barcelon said the government should also ensure there are entities to support the massive adoption of electric vehicles, noting that the country needs more charging points to make electric vehicles more attractive to consumers.

Several companies such as Ayala Land, Inc., Robinsons Land, Inc. and Manila Electric Co. have recently opened electric vehicle charging stations in malls around Metro Manila.

Mr Barcelon said he expected the country to import more electric vehicles from China and Vietnam, which are cheaper than those from western countries.

“This is a game changer for EV adoption as it ensures better pricing for all types of EVs,” Terry L. Ridon, a public investment analyst, said in a Messenger chat. “By eliminating tariffs, electric vehicles will become more affordable for the affluent masses and the mass market as the government foregoes part of its revenue to encourage adoption.”

As well as importing electric vehicles, Mr Ridon said the government should also add the VAT exemption to its list of incentives to encourage more consumers to switch to electric vehicles.

Consumers in the Philippines currently shell out $21,000-$49,000 for an electric vehicle, versus $19,000-$26,000 for conventional vehicles.

Of the more than five million automobiles registered in the country, only 9,000 are electric vehicles, mostly passenger vehicles, government data shows. Personal electric vehicles make up just 1% of the market and are largely owned by extremely wealthy individuals, data from the United States’ International Trade Administration shows.

The Southeast Asian country’s automotive sector relies mainly on imported fuel. It also buys oil and coal abroad for its power generation needs, making it vulnerable to price fluctuations.

Meanwhile, Mr. Balisacan said the NEDA board, which held its first meeting under the Marcos administration on Thursday, also approved guidelines for handling PPP proposals.

He said the new rules would “harmonize” the review and approval of the NEDA Board and the Investment Coordination Committee (ICC). Government agencies will now prepare and submit PPP projects with the joint assessment of the NEDA Secretariat, the PPP Center and the Ministry of Finance.

The new rules also include the updated list of documentation requirements for solicited and unsolicited PPP proposals.

The publication of the guidelines is in line with the recently revised implementation provisions and ordinances of the Construction Operation Handover Act.

At the same time, the NEDA Board approved the Philippine Fisheries and Coastal Resiliency (FishCoRe) project and gave the go-ahead for changes to five other projects.

The Department of Agriculture – Bureau of Fisheries and Aquatic Resources’ FishCoRe project aims to improve fisheries resource management and fisheries production.

The NEDA Board approved the Department of Transportation’s request to use savings, extend the life of the loan and change the scope of a maritime safety project that includes the purchase of response vessels for the Philippine Coast Guard.

It also gave the green light to an application by the DoTr to extend the validity of the loan for an air traffic management system project in Manila by 19 months.

Also approved was the Department of Public Works and Highways (DPWH) request to extend the implementation period and loan validity for the Samar Pacific Coastal Road project by 12 months.

The NEDA Board also approved DPWH’s proposal to change the scope of work, increase costs and reallocate contingent costs for a disaster risk reduction and climate change adaptation project in Macabebe, Masantol, Minalin and Sto. Tomas in the province of Pampanga.

Also approved was the Philippine Competition Commission’s move to change the scope of its capacity-building plan. – Kyle Aristophere T. Atienza with Reuters