Removing EV-import duties gets EVAP nod

By Andrea San Juan

INDUSTRY group Electric Vehicle Association of the Philippines

(EVAP) announced backing the removal of import duties for twowheeled vehicles, saying the move would make electric vehicles (EVs) more affordable and help the country achieve its goal of reducing greenhouse gas emissions.

EVAP President Edmund Araga said the association has been working “tirelessly” to promote and advance the adoption of EVs in the country.

EVAP’s statement issued last Tuesday read that its advocacy has always been zero-tariff for all EVs, especially 2-wheeled vehicles. The group excludes e-Jeeps and e-Trikes as EVAP said these have local manufacturing and assembly.

“EVap has been working closely with the government and other stakeholders to create a more favorable environment for EVs in the country,” the group said in a statement on Tuesday.

In particular, EVAP said it has been advocating for the implementation of supportive policies, such as tax incentives and charging infrastructure development, to encourage the adoption of electric vehicles.

The group also noted that it supports the position of the Department of Trade and Industry’s (DTI) to scrap import tariffs for e-Motorcycles.

The alteration of the tariff for 2-wheeled EVs was ushered by Executive Order 12 (series of 2023) issued in January by Malacañang.

However, under the motorcycles classification, only kick scooters, selfbalancing cycles, pocket motorcycles and bicycles with auxiliary motors not exceeding 250 watts and with a maximum speed of 25 kilometers per hour have zero import duties while electric motorcycles are still subject to a 30-percent tariff rate.

However, Consumer Advocate

Louie C. Montemar said the EO 12 is discriminatory and should be amended so that tax breaks given to owners of EVs could be enjoyed by Filipinos from the working class. (See https:// businessmirror.com.ph/2023/02/16/ palace-urged-to-widen-scope-of-eoon-ev-tax-incentives/ )

“The current EO is discriminatory because it covers only four-wheeled vehicles. It does not cover the majority of the working class, many of whom use 2-wheeled and 3-wheeled vehicles, or even public utility jeepneys,” Montemar, co-convenor of Bantay Konsyumer, Kalsada, Kuryente, has said.

On the sidelines of the ADB Annual Meeting last Tuesday, Finance Undersecretary Mark Dennis Y.C. Joven told the BusinessMirror that the “era of cheap money is over” and countries like the Philippines should tap innovative financing mechanisms to continue undertaking key infrastructure projects.

Joven said while it will take some time to go into asset recycling, efforts to work toward it will benefit not just the country’s financing needs for key infrastructure projects but also improve its balance sheet.

“’Asset recycling’ means you take public assets, you basically privatize them or ‘PPP’ [public-private partnership] them, get money, use the money to pare down the debt so you decrease the government balance sheet,” Joven explained. “So, basically it’s just like a PPP; except that you also off-load the asset from your balance sheet. So it improves also [the] debt metrics.”

The Department of Finance (DOF) official said countries like the Philippines who are faced with projects worth $3 billion each would have to obtain financing through other means. He noted that projects like the Bataan-Cavite bridge and Laguna Lakeshore (Expressway Dike) are just examples of the magnitude of financing needed for infrastructure.

“We realize that, moving forward, the era of cheap money is over. So you need to figure out a new way of raising money in not only a sustainable way but in a cheaper and less expensive manner [or] fashion,” Joven added.

Meanwhile, the debt-to-nature swap—employed by Manila over three decades ago—is also making a comeback as one of the innovative financing models being eyed by the Asian Development Bank (ADB) to address infrastructure backlogs in the region.

Debt-for-nature swap

THE debt-for-nature swap (DFNS) was implemented in the Philippines in 1988 when the World Wildlife Fund (WWF) Inc. purchased the $390,000 debt of the country.

The ADB said DFNS is one of 12 innovative financing models that include: blended finance; asset recycling; green bonds; public private partnerships; crowd financing; and, carbon credit markets.

An ADB report noted that developing Asia will need to invest $13.8 trillion ($1.7 trillion annually from 2023 to 2030) to sustain economic growth, reduce poverty, and respond to climate change (climate-adjusted estimate).

The report added that the total infrastructure investment needed for the Association of Southeast Asian

Nations (Asean) region is estimated at $2.8 trillion (baseline estimate) and $3.1 trillion (climate-adjusted estimate), placing the annual-investment needs at $184 billion and $210 billion, respectively.

Documents from the Food and Agriculture Organization (FAO) stated that DFNS involves the purchase of foreign debt and converting tbe debt into local currency. The funds raised can be used for conservation activities. The ADB said the DFNS could provide some relief to countries while ensuring that environmental objectives and Sustainable Development Goals (SDGs) are achieved.

The Manila-based multilateral development bank said the Philippines employed the DFNS in 1988 after selling at a discounted cost or 51 percent of the value of the foreign debt pegged at $200,000 to the WWF that year.

Critical for economies

THE ADB report explained that the Central Bank of the Philippines (the predecessor of the Bangko Sentral ng Pilipinas) redeemed the debt at the full-face value of the original debt in local currency.

“The arrangement enabled the central bank to retain the money in the country and utilize it for conser-