Gov't reviews petrochem tariffs

Government is conducting a comprehensive review on the tariffs for all petrochemical products, covering upstream, midstream and downstream raw material inputs that are imported for use in the manufacture of plastics.

The Cabinet committee on Tariffs and Related Matters (TRM) said it wanted to isolate the discrepancies being complained about by the petrochemical industry and to rationalize tariffs if such discrepancies do exist.

Trade and Industry Secretary Manuel Roxas II told reporters over the weekend that the TRM has not decided on the pending petitions for tariff revisions on petrochemical tariffs and has deferred its decision until the review has been completed.

"The end view is to harmonize the tariffs for upstream, midstream and downstream petrochemical imports and structure it for maximum benefit to a maximum number of people," Roxas said.

Upstream products include naphtha , a by-product in oil refining. Naphtha is then broken down to produce midstream products such as polyethylene, polypropylene and polyvinyl chloride which are then used in the manufacture of various plastic products.

According to Roxas, downstream products are covered by tariff duties of seven percent and 10 percent while midstream petrochemicals are covered by duties of 15 percent and 30 percent.

"We will see if there will be revisions and what these revisions will be," Roxas said.

Last year, the TRM approved the removal of petrochemical products from the temporary exclusion list phasing them into the list of products scheduled for liberalization.

The phase-in scheme was accepted by local downstream plastic producers represented by the Philippine Plastic Industrial Association composed mainly of plastic fabricators and converters.

At present, different petrochemical products are imposed tariffs based on a multi-tiered scheme ranging from 15 percent to as low as zero tariff.

Based on the scheme approved by the TRM, products currently enjoying a 15-percent tariff protection would continue to enjoy the cover until the year 2002 before the tariff is drastically reduced to five percent in 2003.

Petrochemical products now covered by a 10 percent tariff will also not see the tariff reduced down to five percent until 2003. The same with products now covered by a seven percent tariff. Those products covered by a five and three percent tariff will stay at the same rates until 2003.

The DTI, however, warned that government would have difficulties bringing the tariffs to below three percent since this already represents processing costs of imported petrochemicals.