Petrochem firms welcome cut in tariff on resins

The Association of Petrochemical Manufacturers of the Philippines (APMP) said it will cooperate with and support the government’s decision to reduce tariff on resins by five percent beginning this year, from 15 percent.

The decision was embodied in Executive Order (EO) 161, which was issued last week. It mandated a 10-percent tariff for resins.

Although the EO postponed the reduction of tariff for resins from 15 percent to zero to five percent which should have been effective this year under the Common Effective Preferential Tariff (CEPT) scheme of the Asean Free Trade Area (AFTA) agreement, APMP has been hoping for the retention of the 15 percent tariff. This is because of the comparatively young local resin industry, which is only five years old. The neighboring countries have a 20-year old resin manufacturing activity.

APMP, which is composed of local resin manufacturers, said that they accept the government’s decision and commits to monitor the effects of EO 161 in line with the "win-win" solution as envisioned by the Cabinet Tariff and Related Matters Committee.

APMP said it wants to be sure that consumer prices and plastic-containing products will indeed go down in line with the commitment of passing on the savings to consumers.

It will also examine whether the level of smuggling, as measured by the volume of duty-free imports and technically smuggled products, are indeed minimized, based on the rationale that lower tariffs eliminates the incentive to smuggle.

It also wants to assure that both the midstream and downstream industries will be healthier, as measured by higher capacity utilization in both sectors and that investors are encouraged to invest in a naphtha cracker project in the country.

Initially, the group said, its hopes were buoyed by the President Arroyo’s policy announcement last Jan. 10, 2003 "to slow down the program pace… and to take full advantage of all exemptions windows allowed such as for petrochemical industry," it regretted that the country has not taken full advantage of such window as announced in the policy speech.