Only pure EVs are eligible for zero import duty -DTI

The government has stood pat on its decision that only pure electric vehicles (EVs) can enjoy the zero import duty privilege for five years as the move is intended to encourage investments in EV infrastructure, particularly charging stations, according to the Department of Trade and Industry (DTI).

DTI Undersecretary Ceferino S. Rodolfo said the Executive Order removing the import duty on pure EVs is expected to be issued by President Ferdinand Marcos Jr. during Congressional recess. Congress went on Christmas break starting Wednesday, Dec. 14. The EO has already been approved by the Cabinet-level Trade and Related Matters (TRM) committee chaired by DTI Secretary Alfredo E. Pascual and consequently approved by the National Economic and Development Authority Board, which is chaired by the President.

Rodolfo, however, said that the EO provides for a review clause to assess the coverage of the products in the EO a year after the issuance of the EO.

He explained that hybrid EVs will not be included in the zero-duty import privilege because hybrids do not need charging stations, defeating the purpose of the EO which is to encourage investments in EV infrastructure. Hence, the grant of zero-duty is exclusive only to pure EVs only.

“Pure EVs will spur investments in charging stations,” he said. There has been a slow roll out of charging stations in the country as there is not enough pure EVs or plug-in EVs to service.

Rodolfo explained that the ultimate goal of the DTI is to achieve the dream of being the EV manufacturing and assembly hub in ASEAN.

In pursuing this goal, Rodolfo said the Philippines leverages on the abundance of green metals and is pursuing investments for the development of value-added products in this sector. It is also leveraging on the huge local market, and the country’s strength in software development.

Already, Rodolfo reported that EU businessmen who met with President Ferdinand Marcos Jr. and the DTI delegation during the recent trip to Brussels welcomed the decision of the Philippines to remove the tariffs on EVs temporarily.

EU businessmen engaged in EV manufacturing said the removal of the import duty is a tangible proof that the visit of the President was not just a simple “Hi-Hello” but the Philippines has done its work to bring good news to EV firms.

The local EV group - EV Association of the Philippines (EVAP) - has been pushing for the grant of zero tariff importation on pure EVs and plug-in hybrid EVs (PHEVs) only. EVAP estimated that the removal of the 30 percent duty on EVs could reduce the cost of EVs by as much as P300,000 a unit.

Earlier, however, foreign business groups urged the government to make the planned temporary zero duty privilege on the importation of EVs be more inclusive by opening it to all countries and for all types of EVs.

Representatives from the American Chamber (AmCham) of Commerce of the Philippines, Japanese Chamber of Commerce, Korean Chamber of Commerce, and the Australia-New Zealand Chamber aligned their position with the EU Chamber of Commerce of the Philippines (ECCP) to open the zero duty privilege to all.

Ebb Hinchliffe, AmCham executive director, said they fully support the ECCP statement on the planned executive order on EV importation.

Aside from pushing for five-year zero tariff on all types of EVs to include trikes and jeepneys, among others, Hinchliffe said the zero-duty importation privilege should also be granted to “all countries” and not just to the Philippines’ special trading partner countries.

He further noted that when Sri Lanka first opened importation on EVs, it included hybrid EVs, not just pure EVs and plug-in hybrid EVs (PHEVs). Hinchliffe further said that AmCham is also pushing for the eventual manufacture of EVs in the country, not just importation.

Likewise, Um Hyunchong, president of the Korean Chamber of Commerce of the Philippines, cited the need to include all types of EVs to facilitate the development of EV infrastructure, particularly the EV charging stations in the country.

He said that the combination of pure EVs and hybrids will be a good way to start the change from the internal combustion engine cars. Other countries started with some form of subsidies to lower the cost of EVs, but the zero tariff for EVs will greatly support and bring change in the country, he said.

Nobuo Fujii, vice-president and executive director of Japan Chamber, said that Japanese car companies are concentrating on hybrid EVs, making Japan it behind other European countries in EV development.

With that, he said, Japanese firms also support the inclusion of hybrid EVs in the grant of zero tariff on EV importation and to include all other countries not just those with special trading deals or those with free trade agreements with the Philippines.

Bradley Norman, vice-president of the Australia-New Zealand Chamber of Commerce, said that the planned zero tariff on EVs will be positive for the Philippine economy.

ECCP President Lars Wittig said they had a meeting with Trade and Industry Undersecretary Ceferino S. Rodolfo last week and was informed that the executive order (EO) on EV zero tariff importation is expected to be signed and issued by President Ferdinand Marcos before Christmas.

Wittig said they are urging for the grant of zero-tariff privilege to all types of EVs coming from other countries, not just Asian or ASEAN but also from Europe. Once the EO is signed by the Philippines, Wittig said, the Philippines would be the first Asean country to grant zero tariff on EV importation.