The Senate of the Philippines has approved on the third and final reading, Senate Bill No. 2856, seeking to provide incentives to the manufacturers and importers of alternative fuel vehicles. The approval comes nearly a year after the Congress approved House Bill 5460 to provide incentives for alternative fuel vehicles.

Senate Bill No. 2856, or the Alternative Fuel Vehicles Incentives Act, will grant auto brands (manufacturers and distributors, alike) a 9-year period in which vehicles that run on alternative fuels, electric vehicles and hybrid vehicles will be exempted from the payment of excise taxes and duties.

Senator Ralph Recto, the sponsor of the bill, said in a press release that the bill will "usher an era of cheaper, cleaner cars that will reduce the country's dependency on the use of fossil fuels."

"Every hour, our motor vehicles consume millions of liters of gasoline. Every hour, 2,200 metric tons of carbon dioxide is pumped into the air, a carbon footprint which requires the planting of 56,000 trees to absorb all that poison, every hour we spend P53,000 to treat pollution-related diseases and to compensate for productivity losses and every hour, four Filipinos die from dirty air,” said Recto.

The press release stated that under the proposed legislation, fiscal and non-fiscal incentives shall be granted to the importation and manufacture of electric, hybrid and other vehicles using alternative sources of energy such as, but not limited to, solar, wind, hydrogen fuel cell, compressed natural gas or liquefied natural gas, methane and liquefied petroleum gas.

Manufacturers and assemblers will also be exempted from the payment of the value added tax for the purchase and importation of raw materials, spare parts, components and capital equipment used in the manufacture or assembly of AFVs for nine years.

Importers of completely build units (CBU) of AFVs shall be exempt from payment of excise taxes and duties for nine years.

It's not just about the manufacturers and distributors, as owners of AFVs (which also covers hybrids) will be exempt from the payment of the Motor Vehicle User's Charge or the MVUC upon registration of their vehicles.

As an added incentive, plate numbers and registrations for AFVs will be granted priority, while franchise applications for public utility vehicles (i.e. hybrid/alternative fuel taxis, buses, etc.) will receive priority.

The approval of the bill has long been awaited by many auto manufacturers. Currently, Toyota (Prius, Prius C), Lexus (CT200h, GS450h, RX450h, LS600hL) and Mercedes-Benz (S-Class Hybrid) sell hybrid models. Other brands with hybrids or AFVs abroad include BMW (ActiveHybrid 3, 5, and 7 series), Honda (CRZ, Insight, FCX Clarity, Civic CNG), Mitsubishi (iMIEV, Outlander Hybrid).