New developments in electric batteries and the global clamor to drastically reduce greenhouse gas emissions to avert a planetary climate change catastrophe has accelerated innovations to transition from fossil burning modes of transportation to hybrid and purely electric powered vehicles or “Evs.”
We now see big motor vehicle manufacturers marketing more EV models with load and range capacities comparable to what an expensive full tank of petrol can deliver.
Pre-pandemic data from the Department of Environment and Natural Resources – Environment Management Bureau from 2002 to 2018, vehicles spewed out over half of total nationwide emissions.
This is attributed to the rising number of new vehicles being registered.
The disruption by the pandemic evidently improved air quality when the lockdowns kept everybody indoors, but now that we have opened up the economy again, the smoke belchers are back out on the streets.
As the transportation sector is a highly regulated industry, change starts with policy.
To encourage millions of motorists to shift to EVs, considering that current prices are still at the early adaptor (expensive) level, President Marcos Jr. recently signed Executive Order 12 which suspends EV import duties to zero for five years.
While this policy is in effect, EV importers will be able to offer more accessible prices to the local market to start reducing the carbon emitting vehicles on the road.
EO 12 complements the Electric Vehicle Industry Development Act (Republic Act 11697) which became law in April 2022 but did not really motivate investments from manufacturers because the current EV market cannot sustain even one EV factory.
Hence, encouraging fore affordable EV imports is the faster strategy that will hopefully attract consumers to invest in EVs to replace their petrol guzzlers.
As published in the government’s official gazette, EO 12 lists the kinds of vehicles that will have zero tariff rates for five years most of which we use or see in the daily traffic jams of Mega-Manila.
However, it seems to have exempted, or needs to clarify on motorcycles which is now the dominant transportation mode of the masses because of its low cost of ownership.
Players in the motorized 2-wheel industry are feeling discriminated by their perceived exclusion from the tax breaks of EO 12.
Section 1 of the order on states that the articles specifically listed in its “Annex A” with the corresponding import tax rate as prescribed, which is zero for five years. The last paragraph of the section further states that:
“The rates of import duty on tariff headings and subheadings which are not listed in Annex A hereof, and those listed but represented by the symbol XXX shall remain in full force and effect.”
From the list of items with the heading number 87.11 described as “Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars; side cars”. Under this is listed tariff code number 8711.60 described “with electric motor for propulsion” followed by the XXX and the corresponding import tax column is blank which according to the provision in Section is “exempt” from the EO’s coverage. The other items that followed such as 871160.92 (Kick scooters…) and 8711.60.94 (Bicycles, with auxiliary electric motor…) is clearly specified at zero rate for 5 years.
According to December 2020 data disclosed by the Land Transportation during a recent Senate Blue Ribbon Committee hearing, there were a total 7,328,116 registered motorcycles which include those with or without sidecar and three-wheeled vehicles.
Add to that over 47 thousand unregistered motorcycles.
Even without knowing this data, we can see how streets all over the country are swarming with motorcycles used for daily commutes, courier services, and motorcycle taxis.
This is an obvious environment by which EO12 must be responsive and inclusive for the wide majority of the working class and not just for the rich individuals and enterprises that can afford to fork out millions to buy a few or even fleets of 4-wheeled vehicles
I am hoping this is not a deliberate exclusion and may just be an unclear policy that can be rectified quickly.
After some consultation with tax experts, there is a need for clarity EO 12 which may be remedied by either a memorandum circular from the Bureau of Customs, an amending law from Congress, or the President amending EO12, Congress, which would be the fastest solution.
Motorcycles are proven to be a valuable enabler during the pandemic as a last mile connector for deliveries of goods, for livelihood, and alternative mode of commute in lieu of an efficient mass transport system.
Add the high price of air polluting petroleum and the environmental benefits of EVs, there is more than enough impetus to incentivize the importation, production, and user support of all types of electric powered transportation.
