Law Summary
Eligibility and Obligations of Participants
- Entities organized under Philippine laws engaged in manufacture/assembly of new motor vehicles qualify.
- Facilities can be new or existing but must include investment in parts manufacturing if utilizing existing facilities.
- Participants must secure technical licensing or long-term supply agreements and conduct core assembly operations (welding, painting, trimming, testing).
Investment Requirements for New Participants
- New participants not previously registered must invest at least US$2 million within one year in manufacturing or assembly.
- Investment can be in-house manufacturing, equity shares, or cost-sharing for tooling and upgrades.
- Pure assembly investment subject to BOI conditions and regular periodic review.
Application and Registration Procedure
- Applications submitted to the Board of Investments (BOI) with investment undertaking.
- BOI decides within 30 working days.
- Registered participants receive a Certificate of Registration including commitments and terms.
- Failure to prove investment within one year results in cancellation and penalties.
Vested Rights of Existing Participants
- Participants under prior EO 156 remain members of MVDP and retain available privileges if in good standing.
Model Registration and Limitations
- No limit on number of models a participant may produce but each model generally registered to only one participant.
- Multi-brand registrations are permitted.
Privileges Granted to MVDP Participants
- Tariff privileges on KD parts and components subject to BOI import certificates.
- Listing in the annual Investment Priorities Plan (IPP) for five years.
- Additional privileges as may be granted.
Prohibition on Used Vehicle Importation
- Importation of all used vehicles generally prohibited except for specific cases: returning resident personal use, diplomatic officials, trucks/buses above certain GVW with DTI authority, special purpose vehicles, and motorcycles with DTI authority.
- Definition of various vehicle types provided for clarity.
Brand New Vehicle Import Conditions
- Permitted under conditions in EO 264 and related circulars.
- Vehicles must be current or immediate preceding year models, with less than 200 km mileage and first owner purchase.
Importation Authority and Monitoring
- Used vehicle importation requires an authority to import from Department of Trade and Industry (DTI).
- DTI tasked with monitoring, reporting, and issuing orders on imports.
- Bureau of Customs and Land Transportation Office must regularly report import and registration data to DTI.
- Emission standards compliance mandatory for registration under Clean Air Act.
- Multiple agencies tasked with cooperation and enforcement.
Penalties for Unauthorized Importation
- Violating imported vehicles are subject to seizure and re-exportation at importer’s expense.
Tariff and Excise Tax Restructuring
- Tariff rates for motor vehicle products to be aligned with ASEAN countries.
- Excise tax system restructured to be fair, simple, transparent, stable, and to promote industry development.
Export Incentives
- Incentive packages granted to support exports of vehicles, assemblies, and parts to enhance diversification and participation.
Standards, Technical Regulations, and Mutual Recognition
- Standards for quality, safety, and environmental performance established.
- Adoption of Mutual Recognition Agreements (MRA) encouraged.
- Privileges extended to support infrastructures.
Support for Parts Manufacturing and Auto-Supporting Industries
- Implement measures to develop competitiveness and capacity utilization of parts and supporting industries.
Utilization of ASEAN Free Trade Agreements
- Aggressive use of ASEAN free trade agreements and programs to benefit the motor vehicle industry.
Creation and Composition of the Motor Vehicle Industry Council
- Council formed under DTI supervision as central policy coordinating body.
- Includes government representatives from various departments and four industry representatives.
Powers and Functions of the Council
- Oversee implementation of MVDP and programs.
- Harmonize policies and regulations.
- Coordinate agency efforts to:
- Attract investments
- Develop innovative technologies
- Promote niche manufacturing
- Increase exports and regional production hub status
- Enhance parts manufacturers’ competitiveness
- Perform necessary incidental acts.
Organizational Structure and Secretariat
- BOI establishes Motor Vehicles Industry Department as Council Secretariat.
- Headed by a Director with duties approved by BOI Board.
Authority and Operations of the Council
- May require assistance from government and private entities.
- To be organized within 30 days, meeting at least quarterly.
- Quorum of 7 members required.
- May provide honoraria and allowances within existing rules.
Funding and Budget Allocation
- Initial P20 million allocated for organizational and operational expenses.
- Subject to regular budget appropriations thereafter.
Industry Development Fund (IDF)
- Established to fund research, development, equipment upgrading, and exports.
- Sources include Council budget, private contributions, grants, and donations.
- Accounted and disbursed per applicable laws and rules.
Penalties for Participants and Government Entities
- Participants violating EO or registration terms may be required to refund benefits, pay fines, or face registration cancellation.
- Government personnel found negligent or violating mandates may be removed from office and barred from government service for 2 years.
General Provisions
- Inconsistent orders and rules repealed or amended.
- BOI to promulgate implementing rules within 60 days.
- Provisions separable; invalidity of one does not affect others.
- EO effective 15 days after publication in two national newspapers.