EXECUTIVE ORDER NO. 156
EXECUTIVE ORDER NO. 156 - PROVIDING
FOR A COMPREHENSIVE INDUSTRIAL POLICY AND DIRECTIONS FOR THE MOTOR
VEHICLE DEVELOPMENT PROGRAM AND ITS IMPLEMENTING GUIDELINES
WHEREAS,
Executive Order No. 226 empowers the Board of Investments (BOI) to
formulate and implement rationalization programs for certain industries;
WHEREAS, Executive Order No. 248, issued on July 24, 1987, amending
Executive Order No. 906, issued on August 4, 1983, directed the review
by the BOI of the Progressive Car Manufacturing Program (PCMP) and the
Progressive Truck Manufacturing Program (PTMP), in order that the
Government may adopt fundamental reforms;
WHEREAS, Memorandum Order No. 346 series of 1996, as amended by
Memorandum Order No. 473, series of 1998, promulgated the Guidelines on
the Car Development Program (CDP), Commercial Vehicle Development
Program (CVDP) and the Motorcycle Development Program (MDP),
collectively known as the Motor Vehicle Development Program (MVDP);
WHEREAS, the ASEAN Industrial Cooperation Agreement commonly known as
the AICO Agreement was signed on April 27, 1996 by ASEAN Member
Countries, that would enhance ASEAN Industries’ competitiveness and
effectiveness through, among others, closer collaboration between
companies in ASEAN to bring about increase in the volume and value of
intra-ASEAN trade;
WHEREAS, Republic Act No. 8749 otherwise known as the Philippine Clean
Air Act (CAA) of 1999 was promulgated to promote and protect the
environment including its air sheds against pollution from mobile
sources, among others;
WHEREAS, Memorandum Order No. 51 was issued on January 22, 2002, as
amended by M.O. 73 issued on September 12, 2002, further amending M.O.
346 providing compliance with the Philippines’ commitment to the TRIMS
Agreement under the World Trade Organization (WTO) for the motor
vehicle sector;
WHEREAS, the motor vehicle industry is a significant contributor to the
country’s economic output, employment, investments, exports and the
development of small and medium scale parts and component manufacturing
establishments;
WHEREAS, the motor vehicle industry is a major component of the
government’s continuing industrial development program, which is tasked
to enhance the capabilities of the Philippine motor vehicle
manufacturing firms to be globally competitive producers of completely
build-up units (CBUs) and their parts and components for the local and
export markets;
WHEREAS, there is a need to restructure the MVDP for the primary
purposes of the establishment and/or expansion of production facilities
by global vehicle manufacturers to allow export of CBUs, and the
increase of exports of motor vehicle parts and components;
WHEREAS, there is a need to rationalize the importation of used motor
vehicles taking into consideration the needs of local government units,
small and medium enterprises and the public transport sector;
WHEREAS, it is necessary to adopt a clear and stable industrial policy
framework consistent with core requirements of the above-mentioned
issuances and taking into account recent global developments in the
industry, thereby creating a clear and level-playing field both within
and outside among competitors and encourage proactive participation
among players and ensure success of the MVDP;
WHEREAS, the President, as Chief Executive, is vested with the power of
control over all Executive Departments and Agencies;
WHEREAS, to accelerate the sound development of the motor vehicle
industry in the Philippines, the government has declared the following
policies:
Prohibition of Used Vehicles Importation — To ban importation of all
types of used motor vehicles and parts and components, except those
that may be allowed under certain conditions.
Restructuring of Most Favored Nation (MFN) Tariff Rates — To
restructure MFN tariff rates for motor vehicles and their raw materials
and parts and components at such rates that will encourage the
development of the Philippine motor vehicle industry.
Rationalization of Excise Taxes — To restructure the current excise tax
system for motor vehicles with the end view of creating a simple, fair
and stable tax structure.
Regional Complementation under the AICO Scheme — To advocate the
continued application of AICO scheme as may be adopted by the
Association of Southeast Asian Nations (ASEAN) consistent with the
implementation of the ASEAN Free-Trade Agreement — Common Effective
Preferential Tariff (AFTACEPT).
Provision of Export Incentives — To the extent allowed by law and
international commitments to grant incentives to assemblers and parts
and components makers for the export of CBUs and parts and components.
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President of the
Philippines, do hereby order:
ARTICLE
1.
Restructuring of the Motor
Vehicle Development Program
Section 1. Coverage
1.1
The Program shall cover the manufacture and assembly of the following
motor vehicles:
1.1.1.
Classification I – Passenger Cars
Passenger cars shall refer to
any four-wheeled motor vehicle, which is propelled by gasoline, diesel,
electricity or any other motive power and principally designed to
transport persons and not primarily to transport goods.
1.1.2.
Classification II – Commercial Vehicles
Commercial Vehicles — shall
refer to any four or more wheeled motor vehicle, which is propelled by
gasoline, diesel, electricity and any other motive power and
principally designed to transport persons and/or goods/cargoes, such as
light commercial vehicles, buses, trucks, and special purpose vehicles
(for example, ambulances, fire trucks, and the like).
Light Commercial Vehicles shall
refer to vehicles whether 4-wheeled drive or not, which may be
classified under but not limited to the following: utility vehicles,
sports utility vehicles, Asian utility vehicles, commuter vans,
pick-ups, which are designed to carry both passengers and goods/cargoes.
1.1.3.
Classification III – Motorcycles
Motorcycles shall refer to any
two or three-wheeler vehicle fitted with an auxiliary motor, with or
without sidecars.
1.2
The assembly of motor vehicles covered in the MVDP shall be in
completely knocked down (CKD) condition only. CKD shall refer to
completely knocked-down parts and components that are either locally
produced or imported for assembly purposes by registered participant of
the MVDP. The imported CKDs refer to sub-parts/parts and
sub-assemblies/assemblies/components minus local parts and components,
as may be determined by the Board of Investments. The definition of CKD
shall be anchored on the following premises:
1.2.1.
Promotion and development of efficient and competitive local motor
vehicle industries;
1.2.2.
Increase in value-added of motor vehicle products to the economy; and
1.2.3.
Retention and creation of jobs, transfer of skills and technology.
Sub-assemblies/assemblies/components
— shall refer to major parts and components such as engines,
transmissions, axle assemblies, chassis, body assemblies and the
like.
Sub-parts/parts — shall refer to
parts that are necessary for producing
subassemblies/assemblies/components and/or other parts forming part of
the CKD pack.
1.3
Only brand-new Original Equipment Manufacturer (OEM) CKD parts and
components for assembly purposes shall be allowed for importation under
the Program.
Sec. 2. Participants
2.1
Any foreign-owned or Filipino-owned companies organized under the
Philippine laws that will engage in the manufacture/assembly of motor
vehicles shall qualify as participant under the MVDP. The participant
shall:
2.1.1
Obtain a technical licensing agreement with the foreign OEM that will
supply the CKD and provide technology transfer/technical assistance,
adequate parts and support services;
2.1.2
Establish new assembly facility or utilize an existing assembly
facility, which is either idle or in operation; and,
2.1.3
Assembly/manufacturer brand new quality motor vehicles.
The assembly operation shall
involve at least the basic assembly processes, i.e., welding, painting,
trimmings and quality testing/inspection.
2.2.
A new participant of the MVDP refers to a local assembler/manufacturer,
which is neither registered under any of previously issued Memorandum
Orders on MVDP and its predecessor programs.
2.3 As a major
commitment under the MVDP, each new participant, over a period of one
(1) year, shall invest and/or bring in investments in the manufacture
of motor vehicle parts and components for both export and domestic
markets, equivalent to US$10 million for passenger car assembler, or
US$8 million for commercial vehicle assembler or US$2 million for
motorcycle assembler.
2.4 The
investments in the manufacture of motor vehicle parts and components
shall be in any of the following schemes:
2.4.1
Equity investment, either minor or major stockholdings in new or
existing motor vehicle parts manufacturing company; or
2.4.2
Investments in in-house motor vehicle parts manufacturing; or
2.4.3 Cost
sharing schemes with existing motor vehicle parts manufacturing
companies in terms of toolings and/or modernization/upgrade of
facilities; or
2.4.4
Participation under the Department of Industry’s (DTI) SME Assistance
Program (Center Satellite Company for SME Guarantee and Facility); or
2.4.5 Other
investments that BOI may consider for the development of the motor
vehicle industry.
2.5
Existing participants registered under previous MOs shall continue to
be member of the MVDP and continue to avail of the privilege hereof,
provided that they are in good standing.
2.6
Application for registration as participant in the MVDP shall be
submitted to BOI, together with commitment/s and undertaking to
invest/bring in investments for the manufacture of motor vehicle parts.
The BOI shall decide on the accepted application within sixty (60)
workings days from the date of official application thereto.
2.7 Approved
participant shall be issued a Certificate of Registration by the BOI
and shall comply with the terms and conditions specified therein. The
Certificate of Registration shall include the commitments made by the
participant in the proposal. The participant shall present to BOI proof
of investments in motor vehicle parts manufacturing in accordance with
its commitment submitted to BOI, within one (1) year from date of
registration; otherwise the BOI shall automatically cancel after due
process the Certificate of Registration, subject to imposition of
penalties, such as refund of duty differential between the CBU and CKD
on all importations and other government incentives, if any.
Sec. 3. Models and Variants
3.1
There shall be no limitation in the number of models that participant
may assemble/manufacture provided the same are registered with the BOI.
A participant may register multi-brands of motor vehicles.
3.2 The BOI
shall not register the same models under two (2) participants.
Sec. 4. Local Content Requirement
4.1
The local content requirement under M.O. 346, as amended, shall be
phased-out in accordance with the provisions of M.O. 73.
4.2 New and
existing participants shall continue to comply with the local content
requirement as provided for under M.O. 73 until this requirement is
phased-out, after which their registration shall be classified
accordingly consistent with this E.O.
Sec. 5. Foreign Exchange Requirement
5.1
The foreign exchange requirement under M.O. 346, as amended, shall be
phased-out in accordance with the provisions of M.O. 73.
5.2 New and
existing participants shall continue to comply with foreign exchange
requirement as provided for under M.O. 73 until this requirement is
phased-out, after which, their registration shall be classified
accordingly consistent with this E.O.
Sec. 6. Privileges
6.1
The participants shall continue to avail of CKD tariff rate under the
CKD tariff lines as may be determined by BOI. The CKD tariff rate shall
be established taking into consideration the availability of local
parts and components pursuant to Article 3 hereof.
6.2 The BOI
shall continue to issue Certificates of Authority (CA) to import to
allow the participant to import CKD at CKD tariff rate.
Sec. 7. Implementing Agency
7.1
The DTI, through the BOI, shall continue to implement the guidelines
for the MVDP.
Sec. 8. Review Committee
8.1
A Review Committee shall be formed to serve as the consultative body to
recommend measures that will enhance competitiveness of the motor
vehicle industry. It shall be composed of government and private sector
representatives. The Secretary of DTI shall approve the Terms of
Reference.
ARTICLE
2.
Prohibition of Used Vehicles
Importation
Section 1. Definition of Terms
1.1
For purposes of determining the type of motor vehicles that are allowed
for importation, the following descriptions shall be used:
1.1.1
Vehicle imported under the no dollar import program — a motor vehicle
personally owned by a returning resident or immigrant with GVW not
exceeding 3 tons in accordance with the Program’s
guidelines.
1.1.2 Truck —
any motor vehicle whose body configuration is designed to carry heavy
loads, general freight, or for special purpose regardless of gross
vehicle weight, provided that pick-ups are not considered as trucks.
1.1.3 Bus — a
motor vehicle intended for mass transport or carrying of passengers.
1.1.4 Special
Purpose Vehicles — a range of motor vehicles specially constructed or
adapted, equipped with various devices that enable them to perform
certain non-transport functions (i.e. fire trucks, crane lorries,
mobile radiological units, mobile drilling derricks, concrete mixer
lorries etc.) or a specialized type of motor vehicles used for the
transport of persons or goods. (i.e. ambulance, hearses)
1.1.5 Fire
truck — fire fighting vehicle with pump, usually driven by the
vehicle’s engine.
1.1.6 Crane
lorry — an equipment consisting of a motor vehicle chassis on which a
cab and a rotating crane are permanently mounted.
1.1.7 Mobile
drilling derrick — a lorry fitted with a derrick assembly, winches and
other appliances for drilling.
1.1.8
Ambulance — a vehicle equipped with medical equipment or facilities and
used for transportation the injured or sick.
1.1.9 Hearse —
a vehicle for conveying the dead.
1.1.10 Truck
tractor/tractor head — a vehicle constructed essentially for hauling or
pushing another vehicle, appliance or load.
1.1.11
Concrete-mixer lorry — a vehicle consisting of a cab and a chassis, on
which is permanently mounted a concrete mixer, capable of use for both
making and transporting concrete.
1.1.12 Mobile
radiological unit — a vehicle fitted with an examination room, dark
room and complete radiological equipment.
1.1.13 Pickup
truck — a light truck having an enclosed cab and an open body with low
sides and tailgate. For purposes of this EO, pickup truck is a vehicle
with gross weight of up to 3 tons.
Sec. 2. Brand new vehicles
2.1
The importation of brand new motor vehicles shall be allowed pursuant
to Executive Order No. 264, series of 1995 and Monetary Board Circular
No. 92, series of 1995. To be considered brand new, the motor vehicle
shall be (a) of current or advance year model in the country of origin
and/or manufacture, or (b) of year model immediately preceding year in
the country of origin and/or manufacture provided that:
2.1.1
The motor vehicle has a mileage of not more than 200 kilometers; and
2.1.2 The
motor vehicle has been acquired by the importer from the dealer as
first owner.
Sec. 3. Used motor vehicles.
3.1
The importation into the country, inclusive of the Freeport, of all
types of used motor vehicles is prohibited, except for the following.
3.1.1
A vehicle that is owned and for the personal use of a returning
resident or immigrant and covered by an authority to import issued
under the No-Dollar Importation Program. Such vehicles cannot be resold
for at least three (3) years;
3.1.2 A
vehicle for the use of an official of the Diplomatic Corps and
authorized to be imported by the Department of Foreign Affairs;
3.1.3 Trucks
excluding pick-up trucks;
1.
with GVW of 2.5–6.0 tons covered by an authority to import issued by
DTI.
2. With GVW above 6.0 tons.
3.1.4
Buses:
1.
with GVW of 6–12 tons covered by an authority to import issued by DTI;
2. with GVW above 12 tons.
3.1.5 Special
purpose vehicles:
1.
fire trucks
2. ambulances
3. funeral hearses/coaches
4. crane lorries
5. tractor heads or truck tractors
6. boom trucks
7. tanker trucks
8. tank lorries with high pressure spray gun
9. reefers or refrigerated trucks
10. mobile drilling derricks
11. transit/concrete mixers
12. mobile radiological units
13. wreckers or two trucks
14. concrete pump trucks
15. aerial/bucket flat-form trucks
16. street sweepers
17. vacuum trucks
18. garbage compactors
19. self loader trucks
20. man lift trucks
21. lighting trucks
22. trucks mounted with special purpose equipment
23. all other types of vehicles designed for a
specific use.
Sec. 4. Monitoring of Importation of Used Motor
Vehicles
4.1
To effectively implement the provisions of Article 2 of this EO, the
following shall be carried out:
4.1.1
The DTI shall monitor all importations of used motor vehicles. A
monthly report on the result of its monitoring and the impact of
imports shall be submitted to the DTI Secretary. The DTI Secretary may,
upon review when necessary, issue an order suspending or restricting
the entry of certain types of motor vehicles without prior approval
from the President.
4.1.2 The
Bureau of Customs (BOC) is hereby directed to submit the following
information pertaining to the importation of motor vehicles to the DTI:
•
Name of importer;
• Importer’s address;
• Quantity and invoice values of vehicles;
• Make, model and identification numbers of vehicles;
• Date of importation;
• Assessed values of the vehicles;
• Tariff classification and rate of duty per vehicle;
• Total amount of taxes and duties paid on the
shipment; and
• Other relevant information on the importation of
the vehicles.
4.1.3 The Land
Transportation Office (LTO) is hereby directed to submit the following
information pertaining to the registration of imported motor vehicles
to the DTI:
•
Name of registrant;
• Registrant’s address;
• Quantity and invoice values of vehicles;
• Make, model and identification numbers of vehicles;
• Date of registration; and
• Other relevant information on the registration of
the vehicles.
Such information shall be
submitted every month not later than fifteen (15) days after the end of
the reference month. The DTI, in coordination with the BOC and LTO, may
issue additional guidelines, if necessary, to effectively implement
this directive.
4.1.4
Consistent with the provisions of RA 8749, the Clean Air Act (CAA), all
imported motor vehicles shall not be sold nor allowed to operate unless
it has complied with emission standards. The LTO shall only register
imported used motor vehicles upon compliance with emission standards.
4.1.5 The
Department of Finance (DOF) and the Department of Transportation and
Communication (DOTC), including the Bureau of Customs (BOC), Bureau of
Internal Revenue (BIR), Land Transportation Office (LTO), and other
agencies such as the Freeport Authorities, shall perform their duties
and responsibilities consistent with this Order.
4.1.6 All
agencies instructed under the provisions of this Order are directed to
issue additional directives, circulars, or orders, if necessary to
implement the provisions hereof within fifteen (15) days from the
effectivity of this EO.
Sec. 5. Penalty
5.1
All imported vehicles found to be in violation of any provision in this
EO shall be subject to seizure without redemption by the BOC and will
not be subject to registration by the LTO unless disposed of in
accordance with the Tariff and Customs Code.
5.2 Any
person, entity, government instrumentality or institution, found to be
violating or grossly negligent in executing the mandates of this EO
shall result in the expulsion from office of any or all of the
following personnel: the chief execution, responsible directors,
responsible rank and file and other responsible operating officers.
Notwithstanding any provision of law to be contrary, they shall
likewise be prohibited from holding any government position for at
least two (2) years.
ARTICLE
3.
Restructuring of Most Favored
Nations (MFN) Tariff Rates
Section 1. Consistent with the objective of the MVDP,
the tariffs for motor vehicle products shall be restructured at such
rates comparable to neighboring countries with similar development
programs.
Sec. 2. The DTI shall recommend to the Committee
on Tariff Related Matters (CTRM) the appropriate MFN tariff rates for
motor vehicles, its basic raw materials and parts and components taking
into consideration the following: (a) promotion and development of
efficient and competitive local motor vehicle industries; (b) increase
in the value-added of motor vehicle products to the economy; and, (c)
retention and creation of jobs, transfer of skills and technology.
ARTICLE
4.
Rationalization of Excise Tax
Section 1. Consistent with objective of the MVDP, the
current excise taxes system on automobiles shall be restructured to
shift to purely value-based tax system to create a fair, simple,
transparent and stable taxation system.
ARTICLE
5.
Regional Complementation under
the AICO Scheme
Section 1. Consistent with the objective of the MVDP,
the DTI shall aggressively pursue the continued application of AICO
Scheme in the ASEAN.
Sec. 2. The DTI, subject to the approval of the
President shall prepare the measures to accelerate processing of AICO
applications.
ARTICLE
6.
Provision of Export Incentives
Section 1. Consistent with the objective of the MVDP,
the DTI and the DOF shall implement a special incentives package for
the motor vehicle industry in accordance with existing laws and
international commitments.
ARTICLE
7.
General Provisions
Section 1. Amendments. — The DTI; after consultation
with the industry, may recommend to the President further amendments to
this EO, taking into account the attainment of Program objectives,
economic conditions and local manufacturing capabilities.
Sec. 2. Repealing Clause. — All other orders,
rules and regulations or parts thereof, which are inconsistent with the
provisions of this Executive Order, are hereby repealed, amended or
modified accordingly.
Sec. 3. Separability Clause. — The provisions of
this Executive Order are hereby declared separable and in the event any
of such provisions is declared unconstitutional, the other provisions,
which are not affected, thereby shall remain in force and effect.
Sec. 4. Effectivity. — This Executive Order shall
take effect immediately upon publication in at least two (2) national
newspapers of general circulation in the Philippines.
Done in the City of Manila,
this 12th day of December, in the year of Our Lord, Two Thousand and
Two.
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Since 19.07.98.