Better late than never

Better late than never

PHILIPPINE STAR/ MIGUEL DE GUZMAN

Metro Manila is now considered at “moderate risk” with respect to the spread of the COVID-19 virus, and no longer “high risk,” as the virus’s reproduction rate in the National Capital Region continues to drop. In this line, Metro Manila mayors have already decided to shorten curfew hours in the capital. With this, further easing of restrictions may be expected in the coming days.

In Makati City, the number of active COVID cases have gone down considerably since last month. From an all-time high of 3,298 active cases on Sept. 9, the number has dropped to 733 as of Oct. 12. For the period March 1-Oct. 12, the case count was at its lowest on July 11 at 419. Perhaps by November, we can be back at this level from 733.

Given improvements in the active case count, which is down to just over 82,000 nationwide as of Oct. 12, and assuming the downtrend continues, then maybe we can also anticipate a change in the Alert Level, particularly for Metro Manila, by the end of the month. This can potentially mean a rise in economic activity going towards the Christmas season.

But while this may be good for the economy, we are also now grappling with a fuel price crisis that can dampen activity as it impacts prices. Public transportation is already limited because of COVID-19, and now the public also faces seemingly unending increases in fuel prices. The impact is going to be significant on the cost of transport of goods and people, production, and electricity.

Crude oil supply in the international market is now short relative to demand, as more economies reopen. And oil-exporting countries have decided to limit supply, meantime. Oil and fuel prices have thus gone up significantly. Oil importers like the Philippines are hit with a double whammy, especially when the peso-dollar exchange rate is high. Then, there are local fuel taxes, which have also gone up.

Cycling is an option for some, although maybe not for children, seniors, persons with disabilities, and those physically or financially challenged to buy and use a sturdy, roadworthy bicycle for moving around. Public transportation, if available, remains the most viable option for most. That is, if transport costs can remain reasonable amidst the unnerving hikes in fuel costs.

Already, there is talk of fare increases, and possibly government assistance for the transport industry. Retail fuel prices have been increasing for seven consecutive weeks, prompting senators to ask President Duterte to order a freeze on fuel prices. A bill has also been filed at the Senate to suspend the value-added tax on petroleum products.

An option is to immediately suspend all taxes and duties on oil and fuel products while world oil prices remain high. This way, fuel price hikes can be mitigated, to protect the economy from stalling and to ease the burden of consumers. When world oil prices drop and stabilize, then local taxes can be reimposed. The difficulty with this option is that the government is cash-strapped as it is, and suspending oil taxes will result in a major drop in government revenues.

Of course, these are all stop-gap measures. The long-term solution is to actually wean the country from imported oil and fuel by developing more indigenous or local sources, if any, and by shifting consumption and demand to renewable energy sources. For transportation, one of the options is providing support and incentives for the development of the electric vehicle industry.

It is in this line that I laud the Senate and the House for considering bills on establishing an Electric Vehicle (EV) industry. While a bit late, in my opinion, as we could have done this even before the pandemic hit in 2020, I still believe we are finally taking a step in the right direction. Better late than never.

Among others, the proposed law serves as the runway for an EV industry to finally take off by providing for dedicated parking slots and charging points for EVs; tax incentives for EV manufacturers, entities maintaining charging stations, and research and development centers; exemption from customs duties and value-added taxes for EVs, charging stations, and materials for their assembly; and, establishing an Electric Vehicles Advisory Board to formulate policy encouraging the development and commercialization of EVs.

To date, BusinessWorld reported that the Department of Energy has endorsed an investment project to bring in 20,000 imported vehicles, and is targeting the establishment of up to 5,000 electric vehicle charging stations within five years. Bills on establishing the EV industry are now up for discussion at the bicameral conference committee. I hope the Senate and the House, despite the coming elections, will still find time to pass a unified bill before the end of the year.

Now is the time for interest groups and technical experts to start lobbying lawmakers to immediately act on the proposed law. And to present data and research on how best to craft a law that will result in the greatest good. World oil prices will always be out of our control. The country’s transportation sector will always be at the mercy of oil-exporting countries. Shifting to public and private transport to EV, powered by electricity from renewable sources, is a feasible alternative.

But how can we develop and grow the EV market locally if we do not provide for a suitable legal and regulatory framework for the industry to prosper? Such an industry will need incentives and support to grow. Market forces are not enough to prompt the shift to EV and away from fossil fuel-run transportation. There should be a deliberate and concerted effort to develop the EV industry.

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council

matort@yahoo.com

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