P3-B subsidy for E-PUV manufacturing pushed

Published June 2, 2021, 3:31 PM

by Bernie Cahiles-Magkilat

An executive order granting P3-billion subsidy package for the electric vehicle manufacturing sector has been submitted to Malacanang and is awaiting approval by President Duterte as part of the incentives to encourage more investments to modernize the transport sector and to support the country’s positioning as a global manufacturing hub for lithium ion batteries.

Trade and Industry Undersecretary Rafaelita Aldaba announced at the “Open for Business” forum organized by the Australia Philippines Business Council to mark the 75 years of Philippines-Australia Diplomatic Relations that this subsidy package forms part of the incentives being made available to Eco-PUV manufacturers for both domestic and export markets.

“We’re still waiting for the president’s approval of this particular executive order,” said Aldaba. Under the EO, the P3-billion subsidy will be granted through tax credits to manufacturers of Euro 4 vehicles and electric public utility vehicles.

Aside from the proposed subsidy, manufacturers of battery for electric vehicles are entitled to zero excise duty, and 50 percent of the statutory rate for hybrid vehicles. Under the TRAIN Law, traditional motor vehicles are imposed excise duties excise duties from 4 percent for vehicles priced at P600,000 and below, and 50 percent for vehicles priced at P4 million and above.

Under the new CREATE Law, manufacturers could take advantage of the incentives, such as the corporate income tax holiday and special corporate income tax rate, along with an enhanced deduction component for a total of 17 years.

The country’s EV ecosystem is composed of 54 manufacturers and importers, 19 charging stations and 11 parts manufacturers.

In terms of industry focus, the Philippines is leveraging its current strengths not only in EV assembly, but particularly in auto electronics engineering services, outsourcing and EV battery charging energy storage systems and recycling.

“We are also gearing, our strategy towards the development of the electrified public transportation sector,” added Aldaba.

The DTI is projecting a total of 6.6 million electric vehicles by 2030. Another important strategy is on the battery segment, where the Philippines positioning as a global manufacturing hub for lithium ion batteries, given the rich nickel and cobalt resources in the country, which could be used as cathode materials.

Currently, Philippines is number six in terms of nickel reserves in the world and number two in nickel production. Annual copper production is placed between 300 to 323,000, metric tons and 4.8 million metric tons of ore.

Relatedly, the Philippines also plays an important role in the global value chains for electronics products.

The electronics industry comprises 60 percent of the total Philippine exports, representing a global share of 10 percent in semiconductor manufacturing. There are more than 500 companies contributing 3.2 million, direct and indirect employment.