Olongapo SubicBay BatangGapo Newscenter

Wednesday, October 25, 2006

Customs to ban next month entry of used motor vehicles

The Bureau of Customs (BOC) will finally implement by November the ban on the importation of used motor vehicles following the issuance of Customs Memorandum Circular No. 241-2006 dated Oct. 17, 2006 and which is supposed to be disseminated in the next 15 days.

All obstacles to the implementation of the ban have been cleared by the Supreme Court (SC) which initially ruled on Feb. 20, 2006 that the Presidential ban on the importation of second-hand vehicles is valid.

A subsequent ruling on Aug. 22, 2006 reaffirmed the SC’s Feb. 20 decision after denying the motions to clarify and reconsider was filed by Southwing Heavy Industries, Inc. and Ventures Corp.

The Aug. 22, 2006 en banc resolution of the SC clarified that even with the issuance of Executive Order No. 418 which imposed a P500,000 specific tax on the importation of used motor vehicles, Executive Order No. 156 supersedes EO 418.

EO 156 bans the importation of used motor vehicles into other parts of the Philippines and limits such importation, storage, use and trading of such vehicles only within the presently fenced-in former Subic Naval Base or exported to other countries.

The BOC issued its own circular following a memorandum from the Department of Finance dated Oct. 16, 2006 ordering the BOC to implement the SC ruling on the prohibition on the importation of used motor vehicles.

The implementation of the ban has been eagerly awaited by the Chamber of Automotive Manufacturers of the Philippines (CAMPI) which is hoping that with the ban, sales of locally assembled motor vehicles will finally improve.

Malacañan had issued EO 418 to stop the entry into the local market of second-hand used vehicles which pose both an environmental and safety hazard.

The Arroyo administration imposed the specific tax on used car imports after failing to stop the importation of second hand vehicles through the freeports which questioned the legality of a government imposed ban through EO 156 on such vehicle importations.

Imported second-hand vehicles are supposedly environmentally hazardous because in their country of origin they are normally at the end of their life span and their assemblers no longer produce replacement parts.

Such vehicles are exported as scrap and end up in the Philippines. The P500,000 specific tax would be on top of the 30-percent most favored nation (MFN) rate, an excise tax ranging from two per cent to 60 percent depending on the price, and the 10 percent value- added tax imposed on the landed cost.

Most of the second-hand vehicles also being imported are right-hand drive vehicles which are then converted to left-hand drive.

Unfortunately, the conversion poses a safety hazard to both the driver and the public in general since the vehicles no longer comply with vehicle safety standards.

The local auto industry has been complaining that used cars stunt the growth of the industry.

Auto makers said more than half of the vehicles registered with the Land Transportation Office (LTO) last year were imported used cars. By MARIANNE V. GO -- The Philippine Star


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