QuestionsQuestions (EXECUTIVE ORDER No. 877)
EO No. 877 creates the Motor Vehicle Development Program (MVDP) and covers the manufacture and/or assembly in knock-down (KD) condition of specified motor vehicles and certain vehicle assemblies: Passenger Cars (Classification I), Commercial Vehicles (Classification II), Motorcycles (Classification III), and Other Vehicle Assemblies (Classification IV).
Production/assembly covered by MVDP must be in knock-down (KD) condition only. Only brand-new Original Equipment Manufacturer (OEM) of KD parts/components for assembly purposes are eligible for importation, subject to limitations imposed by the BOI.
Entities organized under Philippine laws that manufacture and/or assemble brand new motor vehicles may qualify. They must assemble and/or manufacture brand new quality vehicles; establish a new facility or use an idle/operational existing facility provided there is investment in parts/components manufacturing; obtain either a Technical Licensing Agreement with a foreign OEM (for foreign-branded vehicles) or a Long-term Supply Agreement (for locally-developed vehicles); and perform at least basic assembly processes such as welding, painting, trimming, and quality testing/inspection.
A new participant is a local manufacturer/assembler not registered under EO 156 or its predecessor programs. Within one (1) year from registration, it must invest at least US$2 million for motorcycle assembly (subject to periodic BOI review), through specified schemes such as in-house parts/components manufacturing, equity investment in parts/components companies, or cost-sharing for tooling/modernization/upgrading. If purely assembly, BOI may impose conditions.
Investments may be in: (1) in-house motor vehicle parts and components manufacturing; (2) equity investments (minor or major holdings) in new/existing parts and components manufacturing companies; or (3) cost-sharing schemes with parts/components manufacturers for tooling, modernization, and/or facility/technology upgrade. Investments must result in increased capacity or improved production efficiency.
Applications for registration are submitted to the BOI with an undertaking to invest. The BOI must decide within thirty (30) working days from official acceptance. Approved participants are issued a Certificate of Registration containing commitments and BOI-imposed terms/conditions.
The participant must present proof of investments within one (1) year from registration; otherwise, the Certificate of Registration is automatically cancelled after due process, and penalties may apply such as refund of incentives availed of, if any.
Existing participants remain members of the MVDP and continue to avail of its privileges, provided they are in good standing.
There is no limitation on the number of models a participant may assemble/manufacture, as long as registered with the BOI. However, as a general rule, the BOI shall not register the same models under two (2) participants. A participant may register multi-brands.
Participants may avail tariff rates for KD parts/components for assembly under MVDP tariff lines, subject to issuance of Certificates of Authority (CA) by the BOI. Assembly/manufacture of motor vehicles and parts/components manufacturing are also to be listed in the annual Investments Priorities Plan (IPP) for five (5) years from EO effectivity.
Importation into the customs territory/Philippine territory outside secured fenced-in Freeport zones of all types of used motor vehicles is prohibited, except for enumerated exemptions.
Exemptions include: (a) vehicles owned for personal use by returning residents/immigrants under the No-Dollar Importation Program with GVW not exceeding 3 tons, with a prohibition on resale for at least three (3) years; (b) vehicles for diplomatic corps officials authorized by DFA; (c) trucks with GVW 2.5 tons and above authorized by DTI; (d) buses with GVW 6 tons and above authorized by DTI; (e) various special purpose vehicles and enumerated specific categories (e.g., fire trucks, ambulances, crane lorries, tractor heads/truck tractors, boom trucks, tank vehicles, reefers, mobile radiological units, wrecker/tow trucks, concrete mixers/pump trucks, aerial/bucket flat-form trucks, street sweepers, vacuum trucks, garbage compactors, man lift trucks, lighting trucks, trucks with special purpose equipment, and other vehicles designed for specific use); and (f) motorcycles covered by DTI authority.
DTI must monitor all used motor vehicle importations and submit monthly reports on monitoring results and impact to DTI; when necessary, DTI may suspend/restrict types after due public consultation. Bureau of Customs (BOC) must submit detailed shipment/import information monthly to DTI. Land Transportation Office (LTO) must submit registration information monthly to the Council via DTI/COORDINATION. Additionally, LTO may only register imported vehicles that comply with emission standards under the Clean Air Act (RA 8749).
All vehicles imported found to be in violation are subject to seizure and re-exportation at the expense of the importer/consignee immediately.
EO No. 877 creates a Council for the motor vehicle industry under the supervision of the Department of Trade and Industry (DTI). It is chaired by the DTI Secretary and includes various DTI officials and undersecretaries from DENR, DOE, DOLE, plus LTO/LTFRB/BOC representatives and four (4) industry representatives appointed by the President.