Local battery makers ask government to lower tariff on raw material imports

Local battery manufacturers are asking the government to lower the tariff on imported raw materials ahead of the deadlines set by the World Trade Organization (WTO) and the ASEAN Free Trade Agreement (AFTA).

In a position paper submitted to the Cabinet committee on Tariffs and Related Matters (TRM), the Philippine Association of Battery Manufacturers Inc. (PABMA) asked for the reduction of the tariff on inputs for lead-acid type battery from three precent ad valorem to zero.

The industry is being supported by a separate position paper by Energizer Philippines which is also asking for an across-the-board reduction on the tariff rate of various raw materials for primary battery production from three percent to zero.

PABMA said these mateirals are not locally produced and are not likely to be produced in the near future so that the tariff reduction will help local battery manufacturers without damaging any existing industries.

"The reduction will provide the industry with some relief from the continuing production cost increases due to the depreciation of the peso and the effects of high oil prices," PABMA said.

The articles covered by PABMA’s zero duty petition are arsenic, solid sodium hydroxide, isotopes, epoxy resin and hardener, per, polyester fiber flock and other materials used in primary production.

Under the WTO’s most favored nations (MFN) scheme, raw materials for battery production are covered with three-to seven-percent tariff. Under the AFTA’s Common Effective Preferential Tariff (CEPT) scheme, the duties range from three percent to seven percent.

Since the peso started depreciating, manufacturers have been hard pressed to trim their production cost and have asked government for various tariff relief if only to help bring down the cost of imports.

Beer giant San Miguel Corp. has a pending request for lower tariffs on raw materials for beer manufacturing such as malt and hop pellets from the present three percent ad valorem to zero.

In its request, SMC said malt, hop cones in pellets and its saps and extracts are major inputs of beer. These products are not produced locally since the process is power-intensive and it is cost-effective if they are produced at the source of the raw material.

The reduction of the tariff rates, according to SMC, would address the current cost disadvantages that Philippine brewers face against their foreign counterparts and improve local brewers’ competitive position.

SMC also asked for the reduction of the tariff duties to zero percent on various articles used in the manufacture of metal closures such as crowns and caps, flexible laminates and glass bottles and containers.