The Tire Manufacturers Association of the Philippines (TMAP) is urging the Arroyo government to restore the duty rates on new pneumatic tires to the 1998 level of 25 percent and maintain it up to the year 2004.
The TMAP is also asking the government to remove the tariff on raw materials.
In a recent position paper submitted to the government, the TMAP said restoring the 25 percent tariff on tires will bring the Philippines’ duty rate closer to those of other countries, particularly China, Taiwan, Thailand and Malaysia whose tariff on tires is at 30 percent.
The TMAP said the increase in tariff would temper the pricing advantage enjoyed by imported tires that are coming in at prices below the material cost of local tires.
The increase in tariff rates would enhance the competitiveness of the local tire industry and allow it to regain its market foothold.
The upward tariff adjustment, the TMAP said, would preserve the livelihood of 2,500 tire workers and 60,200 rubber farmers whose jobs are at risk because of the local tire industry’s poor profitability.
The TMAP added that a zero tariff on raw materials not locally produced would help improve the financial condition of the local tire manufacturers who have not been posting any profits since 1997.
Based on TMAP data for last year, imported brands now control 52 percent of the market compared to 40 percent in 1998 and 50 percent in 1999.
According to the TMAP, it is Indonesia that poses the biggest threat to the local tire industry with Thailand a far second.
The TMAP added that outside ASEAN, Japan and China, whose combined tire exports to the Philippines constitutes 65 percent of the country’s total tire imports, contribute substantially to the diminishing market share of the local tire manufacturers.
The TMAP said tires coming from India and Korea are also providing tough competition to the local tire producers.