Philippines president Arroyo has removed the tariff on 22 car parts imported from Indonesia and Malaysia in keeping with the country's commitment to implement the Association of Southeast Asian Nations Industrial Cooperation (Aico) scheme, a local report said., Arroyo granted zero tariff to the "original equipment manufacture" components for motor vehicles from Indonesia and Malaysia in exchange for exporting complementary auto parts with the same preferential tariff.

"Upon [effect] of this executive order, the articles listed which are entered or withdrawn from warehouses in the Philippines for consumption shall be accorded the Aico rate of zero," she said.

The report noted that multinational automotive companies have benefited greatly since the Aico scheme came into force within Asean almost a decade ago as it allowed them to expand their market from the regional distribution of parts and completely knocked-down (CKD) vehicles.

The scheme, which superseded the Asean Industrial Joint Ventures and the Brand-to-Brand Complementation, seeks to promote the sharing of industrial activities among Asean-based companies with a minimum of two companies in two different member-countries required to form an arrangement.

Under the agreement with Indonesia, the following vehicle parts will now enjoy zero tariff: clamp piping; bracket; compressor with clutch; motor with fan; bus roof top; bus piping, cover, duct air, hose drain cock and cooling unit; evaporator; oil cooler; washer tank and hose; spark plug; horn; panel control; radiator; and radiator component, said.

The executive order also covers bushing, condenser core, bracket, and amplifier for air conditioners; capacitor discharge igniters; and blade assemblies for the Aico agreement with Malaysia, it added.

The Philippines, as signatory to the protocol to amend the basic agreement on Aico, participated in the scheme through Philippine Auto Components.

Under Section 401 of the Tariff and Customs Code of 1978, the president has the power to increase, reduce or remove existing rates of import duties as well as to modify the tariff nomenclature of certain products, the report said.

Earlier, Arroyo granted zero percent preferential tariff rates to certain products of Toyota Motors Philippines and Honda Cars Philippines in keeping with the Aico commitments.

The order covers a wide range of products - from windows, seat covers, spark [plugs] and dash panel, among others designed for Toyota's Camry, Corolla and Innova, and for Honda's Civic and CR-V.