Plastic makers seek resumption of tariff concession on resins

The Philippine Plastics Industry Association Inc. (PPIA) is appealing to President Arroyo to immediately issue an Executive Order lifting the suspension of tariff concessions on plastic resins under the ASEAN Free Trade Area-Common Effective Preferential Tariff Scheme (AFTA-CEPT) scheme.

The EO ordering the reduction of the CEPT rates on 11 petrochemical products was forwarded to Malacañang last Nov. 15 for signing by President Arroyo.

The PPIA said the lower duty would be a welcome relief particularly during these difficult economic times made even harder by the 10 percent value-added tax (VAT) on fuel and electricity, increase in corporate income tax to 35 percent and 32 percent and the increase in the VAT rate to 12 percent starting Feb. 1, 2006, all of which increase production cost.

Trade and Industry Secretary Peter B. Favila has signed all documents pertaining to the Cabinet-level Tariff and Related Matters (CTRM) decision to lower the CEPT rates on plastic and petrochemical resins to five percent from the current rate of 10 percent.

The CTRM has recommended the signing of the EO which had been deferred due to a request by the Association of Petrochemical Manufacturers of the Philippines (APMP) and JG Summit Petrochemical Corp. (JGSPC) for a review of an earlier CTRM decision.

The new EO would supersede EO 161, issued by Malacañang in 2003, which suspended the implementation of the tariff reduction schedule for petrochemical products adopted by members of ASEAN under the AFTA.

The new EO would lower the CEPT rates of 11 petrochemical categories excluded from the AFTA scheme.

Petrochemical products whose tariffs would be reduced are polyethylene (PE) with a specific gravity of .94 percent or less and PE with a specific gravity of .94 percent or more.

Tariffs of polypropylene (PP) and PP with co-polymers would also be reduced to five percent.

The tariff of expansible polystyrene (PS) would also be lowered to five percent.

All other types of PS would also be subject to a lower five percent tariff.

Tariffs of polyvinyl chloride (PVC) which is not mixed with any other substances would also be reduced to five percent.

Plasticized and non-plasticized PVC would also be subject to a five percent tariff.

The tariff rate of the 11 petrochemical categories should have been reduced to between zero to five percent in 2003.

However, these products were excluded following the petition of lone petrochemical manufacturer JGSPC to exempt such products from the coverage of the new CEPT rates.

JGSPC, which would be producing some of the covered petrochem products, wanted tariff protection in order to give it time to become competitive.

EO 161 also maintained the rates of finished products from seven percent to 10 percent, while other ASEAN members had already lowered their rates to five percent under the AFTA.

EO 161 was supposed to expire by January 2005.

The APMP had sought an extension of the tariff cover until 2010 to make the local petrochemical products competitive with cheap imports.