Philippine President Gloria Macapagal-Arroyo Thursday issued an order to make components, parts and accessories for the assembly of vehicles powered by alternative energy sources such as biodiesel, bioethanol, compressed natural gas (CNG) and electricity tariff-free to reduce the country's dependence on imported crude.

Arroyo issued Executive Order No. 488 imposing zero import duty on components, parts and accessories for the assembly of hybrid, electric, flexible fuel and CNG motor vehicles.

"It is the declared policy of the government to promote the judicious conservation and efficient utilization of energy resources in light of the continuing increase in world prices of imported fuel oil," Arroyo said in her order.

The President earlier had set a target of 5 percent reduction in fuel consumption by road transport users.

"There is a need to promote the efficient use of fuel in the transport sector, being one of the highest fuel consuming sectors, " the president said.

She noted the emerging alternative fuel vehicle technology presented opportunities for improving energy efficiency of transportation in support of the government's energy independence agenda.

The president has also established a "Comprehensive Industrial Policy and Directions for the Motor Vehicle Development Program" that would provide for the development of the Philippines as a manufacturing hub for certain motor vehicles, parts and components.

Current rates of import duty for motor vehicle parts and components are 1 percent and 3 percent for Most Favored Nation ( MFN) and Common Effective Preferential Tariff (CEPT) respectively.

CEPT rate applies for importations coming from the Association of Southeast Asian Nations (ASEAN) countries while the MFN rate applies for importations coming from non-ASEAN countries.

The development and promotion of indigenous alternative fuels is one of the key pillars of the Arroyo Administration's energy independence agenda.

Through increased utilization, the government hopes to reduce our country's dependence on imported fuels and thereby lessen our vulnerability to the volatility of world oil prices.

Source: Xinhua