IMPOSING zero tariffs on hybrid vehicles is “not justifiable” right now as doing so would go against government’s goal of having electric vehicles (EVs) ubiquitous in the industry, according to Trade and Industry Secretary Alfredo E. Pascual.
This Pascual underscored amid the National Economic and Development Authority (Neda) Board’s ongoing review on the potential expansion of Executive Order (EO) 12 to cover e-motorcycles and hybrid vehicles.
Pascual told reporters at a briefing last Friday that the objective of reducing tariffs on pure electric vehicles is to “have the critical mass of EVs to make the setting up of charging stations a feasible business, feasible operation.”
“Kung magpapasok ka ng hybrid nare-reduce mo yung ano… it will not contribute to the attainment of that objective,” the Trade chief, who co-chairs the Board of Investments (BOI), noted. According to Pascual, government aims to encourage the setting up of charging stations, thus creating the “infrastructure that will support our transition to electric vehicles.”
Saying the government wants this objective to “materialize,” Pascual explained while the BOI is not totally against imposing zero duties on hybrid vehicles, it is “not justifiable” right now.
BOI Managing Head Ceferino S. Rodolfo supports his boss’s view and emphasized the importance of building “sufficient level” of market demand to justify assembly.
Rodolfo said that when it comes to hybrid vehicles, the Philippines is “far behind” its neighbors when it comes to supply chain for [internal combustion engine] ICE vehicles.
“So we really like to focus on EVs dahil ‘yung hybrid galing yan sa Japan, Thailand and Indonesia, andiyan ‘yung supply chain ng ICE,” the BOI managing head said.
Should the government decide to impose zero duty on hybrids, Rodolfo said there would be an increase in imported hybrid vehicles from these countries.
The BOI managing head also stressed that hybrid vehicles are already subject to 50-percent exemption from excise tax.
According to Revenue Regulation (RR) 5-2018 pursuant to the provisions of Republic Act 10963 (Tax Reform for Acceleration and Inclusion) law), purely electric vehicles shall be exempt from the excise tax on automobiles while hybrid vehicles shall be subject to 50 percent of the applicable excise tax rates on automobiles.
With this, Pascual said, the country needs to focus first on increasing the “population” of electric vehicles before allowing the Philippine market to welcome imported hybrid vehicles at zero-tariffs.
“Over time yan eh kaya sabi ko eventually pag free market na, kailangan muna natin ma-increase ‘yung population ng [EVs],” the Trade chief said.
A statement issued by the Neda last Tuesday announced the socio-economic planning agency is initiating discussions with other relevant agencies on the potential expansion of EO 12 to cover e-motorcycles and hybrid vehicles.
EO 12, which became effective on February 20 last year, temporarily reduced the rates of import duty on certain EVs and their parts and components for five years, according to the Neda.
Pursuant to Section 2 of the said measure, which provides for the review of the EO after one year of implementation, the Tariff Commission shall be requested to conduct a public hearing for this purpose.
The review shall follow the tariff modification process under Section 1608 of the Customs Modernization and Tariff Act and shall be presented to the Committee on Tariff and Related Matters and the Neda Board.