Completely knocked down (CKD) parts and components
- Document symbol
- G/LIC/N/3/PHL/15/Rev.1
- Original language
- English
- Published on
- 21/02/2023
Outline of Systems
Q1. Give a brief description of each licensing system as a whole and, with respect to each, reply to the following questions as relevant, placing all of the material with respect to a given system in sequence together, and using cross references as appropriate when elements which have already been described are also present in another system.
The electronic Certificate of Authority to Import (e-CAI) is required for the importation of completely knocked down (CKD) parts and components at 0% to 1% tariff duty (hereinafter referred to as "CKD tariff rate") under the Motor Vehicle Development Program (MVDP), which is implemented by the Board of Investments (BOI). Only brand-new CKD parts and components sourced from a foreign Original Equipment Manufacturer (OEM) shall be allowed for importation under the MVDP by registered participants with approved model registrations. The BOI is responsible for the evaluation and approval of applications for participation in the MVDP, as well as the subsequent evaluation and approval of model registrations.
The e-CAI is issued by the BOI on a per shipment basis through a designated third-party network service provider prior to importation.
Purposes and Coverage of Licensing
Q2. Identify each licensing system maintained and state what products, appropriately grouped, are covered.
The e-CAI system regulates the importation of CKD parts and components at CKD tariff rate, which is limited only to registered MVDP participants. The imported CKDs refer to sub-parts/parts and sub-assemblies/assemblies/components minus local parts and components, as may be determined by the BOI.
The HS codes of the MVDP tariff lines may be found under AHTN 2017 subheadings 8702.90, 8703.80, 8703.90, 8704.90, 8711.60, and 8711.90 (Please see Products for the complete list).
Q3. The system applies to goods originating in and coming from which countries?
The e-CAI applies to the importation of CKD parts and components originating in and coming from all countries, without exceptions.
Q4. Is the licensing intended to restrict the quantity or value of imports, and if not, what are its purposes? Have alternative methods of accomplishing the purposes been considered and if so which? Why have they not been adopted?
The e-CAI system does not intend to restrict the quantity or value of imported CKD parts and components.
Q5. Cite the law, regulation and/or administrative order under which the licensing is maintained. Is the licensing statutorily required? Does the legislation leave designation of products to be subjected to licensing to administrative discretion? Is it possible for the government (or the executive branch) to abolish the system without legislative approval?
The legal basis for the issuance of the e-CAI is Executive Order (EO) No. 156, series of 2002 entitled Providing for a Comprehensive Industrial Policy and Directions for the Motor Vehicle Development Program and its Implementing Guidelines. The MVDP covers the production and/or assembly of motor vehicles and other vehicle assemblies in knocked down condition, which is aimed at promoting high value added in motor vehicle manufacturing and high degree of vehicle production operations.
Procedures
Q6. For products under restriction as to the quantity or value of imports (whether applicable globally or to a limited number of countries or whether established bilaterally or unilaterally):
Q6.I. Is information published, and where, concerning allocation of quotas and formalities of filing applications for licences? If not, how is it brought to the attention of possible importers? Of governments and export promotion bodies of exporting countries and their trade representatives? Is the overall amount published? The amount allocated to goods from each country? The maximum amount allocated to each importer? How to request any exceptions or derogations from the licensing requirement?
Q6.II. How is the size of the quotas determined: on a yearly, six-monthly or quarterly basis? Are there cases where the size of quota is determined on a yearly basis but licences are issued for imports on a six-monthly or quarterly basis? In the latter case, is it necessary for importers to apply for fresh licence on a six-monthly or quarterly basis?
Q6.III. Are licences allotted for certain goods partly or only to domestic producers of like goods? What steps are taken to ensure that licences allocated are actually used for imports? Are unused allocations added to quotas for a succeeding period? Are the names of importers to whom licences have been allocated made known to governments and export promotion bodies of exporting countries upon request? If not, for what reason? (Indicate products to which replies relate.)
Q6.IV. From the time of announcing the opening of quotas, as indicated in I above, what is the period of time allowed for the submission of applications for licences?
Q6.V. What are the minimum and maximum lengths of time for processing applications?
Q6.VI. How much time remains, at a minimum, between the granting of licences and the date of opening of the period of importation?
Q6.VII. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
Q6.VIII. If the demand for licences cannot be fully satisfied, on what basis is the allocation to applicants made? First come, first served? Past performance? Is there a maximum amount to be allocated per applicant and, if so, on what basis is it determined? What provision is made for new importers? Are applications examined simultaneously or on receipt?
Q6.IX. In the case of bilateral quotas or export restraint arrangements where export permits are issued by exporting countries, are import licences also required? If so, are licences issued automatically?
Q6.X. In cases where imports are allowed on the basis of export permits only, how is the importing country informed of the effect given by the exporting countries to the understanding between the two countries?
Q6.XI. Are there products for which licences are issued on condition that goods should be exported and not sold in the domestic market?
Q7. Where there is no quantitative limit on importation of a product or on imports from a particular country:
Q7.a. How far in advance of importation must application for a licence be made? Can licences be obtained within a shorter time-limit or for goods arriving at the port without a licence (for example, owing to inadvertency)?
The participant must apply for the e-CAI in advance of the importation.
The e-CAI is issued automatically upon application and should be used within 90 days from the date of issuance; otherwise, the e-CAI will be forfeited.
Q7.b. Can a licence be granted immediately on request?
The e-CAI is granted automatically and issued immediately upon application.
Q7.c. Are there any limitations as to the period of the year during which application for licence and/or importation may be made? If so, explain.
There are no limitations as to the period of the year during which application for e-CAI and subsequent importation may be made.
Q7.d. Is consideration of licence applications effected by a single administrative organ? Or must the application be passed on to other organs for visa, note or approval? If so, which? Does the importer have to approach more than one administrative organ?
Application for the e-CAI and issuance thereof is effected by the BOI through the BOI Trade System, an automated import documentation system developed and maintained by InterCommerce Network Services Inc. (hereinafter referred to as "InterCommerce"). The conditions of eligibility to apply for the e-CAI are decided upon by the BOI, i.e. approval of participation in the MVDP and approval of model registration of the participant.
Upon approval of a participant's registration in the MVDP, said participant is advised to enrol in the BOI Trade System for access to their registration documents and subsequent import transactions, which includes the application for and issuance of the e-CAI.
Q8. Under what circumstances may an application for a licence be refused other than failure to meet the ordinary criteria? Are the reasons for any refusal given to the applicant? Have applicants a right of appeal in the event of refusal to issue a licence and, if so, to what bodies and under what procedures?
Under what circumstances may an application for a licence be refused other than failure to meet the ordinary criteria?
Issuance of the e-CAI to a participant may be refused due to violation of the terms and conditions of its registration under the MVDP, as laid out in EO No. 156.
Are the reasons for any refusal given to applicants? Have applicants a right of appeal in the event of refusal to issue a licence?
In such cases, the participant is informed by the BOI of the reason for refusal, as well as the steps that may be taken to regain compliance with the terms and conditions of its registration.
Eligibility of Importers to Apply for Licence
Q9. Are all persons, firms and institutions eligible to apply for licences: (If not, is there a system of registration of persons or firms permitted to engage in importation? What persons or firms are eligible? Is there a registration fee? Is there a published list of authorized importers?) a) under restrictive licensing systems? b) under non-restrictive systems?
The BOI is responsible for evaluating and approving applications for registration under the MVDP. Upon approval of application, newly-registered participants in the MVDP are issued with a Certificate of Registration by the BOI, after which the BOI conducts an inspection of their local assembly/manufacturing facility. On the registration of models for assembly and/or manufacture, there is no limitation on the number of models that a participant may register with the BOI; however, the same model shall not be allowed for registration under two different participants.
Only registered participants of the MVDP with approved model registrations by the BOI are eligible to apply for the e-CAI and subsequently import CKD parts and components at CKD tariff rate.
The filing fee for application of registration in the MVDP is PHP 50,000 for Classification I & II, and PHP 30,000 for Classification III. The filing fee for application of registration for participating models (per basic and/or variant model of motor vehicle) is PHP 5,000 for Classification I & II, and PHP 3,000 for Classification III.
There is no published list of MVDP participants and registered models of motor vehicles for assembly and/or manufacture.
Documentational and Other Requirements for Application for Licence
Q10. What information is required in applications? Submit a sample form. What documents is the importer required to supply with the application?
The application for the e-CAI is completed online through the BOI Trade System using the participant's account. The online system allows the participant to simply tick or select the required information with respect to the importation. This includes the vehicle model and the quantity to be imported, as well as the specific CKD parts and components. The technical details such as the HS codes and specific HS descriptions are automatically generated upon selection of the vehicle model and its CKD parts and components.
Q11. What documents are required upon actual importation?
Aside from the e-CAI, there are no further documents required upon actual importation other than the documents and information required in accordance with Philippine customs procedures by virtue of Republic Act No. 10863, s. 2016 or the Customs Modernization and Tariff Act.
Q12. Is there any licensing fee or administrative charge? If so, what is the amount of the fee or charge?
The issuance of the e-CAI requires a processing fee payment of which is completed online through an auto-debit facility immediately upon application for the e-CAI.
A processing fee of PHP 650.00
Q13. Is there any deposit or advance payment requirement associated with the issue of licences? If so, state the amount or rate, whether it is refundable, the period of retention and the purpose of the requirement.
A participant may opt to make advance deposits to the online fund linked to the BOI Trade System, from which the processing fee for the e-CAI is auto-debited per transaction.
Please refer to https://boi.gov.ph for further information.
Conditions of Licensing
Q14. What is the period of validity of a licence? Can the validity of a licence be extended? How?
The e-CAI may be used only once on a per shipment basis. The e-CAI is valid within 90 days from the date of issuance and cannot be extended. If the e-CAI remains unused within 90 days from the date of issuance, the e-CAI will be forfeited and the participant must apply for a new e-CAI.
Q15. Is there any penalty for the non-utilization of a licence or a portion of a licence?
There is no penalty for the non-utilization of the e-CAI. However, the e-CAI will be forfeited if not used within 90 days from the date of issuance.
Q16. Are licences transferable between importers? If so, are any limitations or conditions attached to such transfer?
The e-CAI is non-transferrable between and among importers.
Q17. Are any other conditions attached to the issue of a licence? a) for products subject to quantitative restriction? b) for products not subject to quantitative restriction?
There are no other conditions attached to the issuance of the e-CAI apart from the conditions specified above.
Other Procedural Requirements
Q18. Are there any other administrative procedures, apart from import licensing and similar administrative procedures, required prior to importation?
There are no other administrative procedures required prior to importation of CKD parts and components at CKD tariff rate under the MVDP.
Q19. Is foreign exchange automatically provided by the banking authorities for goods to be imported? Is a licence required as a condition to obtaining foreign exchange? Is foreign exchange always available to cover licences issued? What formalities must be fulfilled for obtaining the foreign exchange?
There is no provision under the MVDP that provides for the treatment of balance-of-payments. However, as a general rule, except under conditions of a national emergency or an economic crisis that threaten among others the stability of the balance-of-payments, a holder of an import license may purchase foreign exchange from authorized agent banks to pay for the importation in accordance with BSP rules.