InterviewPhilippine PPIA seeks fair deal on ASEAN zero tariff

02 December 2009 05:12  [Source: ICIS news]

By Chow Bee Lin

SINGAPORE (ICIS news)--Plastics processors in the Philippines want assurance of a level playing field before supporting calls for deferring the zero-tariff policy on polymers, a senior official of the Philippine Plastics Industry Association (PPIA) said on Wednesday.

Philippines is among the six members of the Association of South East Asian Nations (ASEAN) that had agreed under a free trade pact to rescind import duty for a wide range of products, including polymers, from 1 January next year.

Local industries were generally hoping that the zero import duty policy would be pushed back to 2015, but the local plastics processing industry would not take a stand on the issue until they were sure they too could benefit from the deferment, said PPIA’s president Alfonso Siy.

Philippines plastics processors are currently at a disadvantage because polymer imports from southeast Asia are subject to 10% duty, but the import duty for plastic finished goods is at a lower rate of 5%, he said.

Local manufacturers could have a fair playing field only if the 5% import duty applies to both plastic resins and finished goods from southeast Asia, he added.

The Philippines government’s decision in 2008 to raise the duty on plastic resin imports from southeast Asia by five percentage points to 10% had distorted the tariff structure, creating an unfair playing field for local plastic fnished goods makers, he said.

The 10% duty on resin imports from southeast Asia was imposed after local resin producer JG Summit obtained a court order to temporarily suspend the 5% import duty on plastic resins from the region, he said.

Local plastics processors were concerned that the Philippines government would remove the import duty on plastic finished goods from southeast Asia next year, but retain the 10% duty on plastic resins under the court order, said Siy.

“It would create a much deeper hole in our existing problem,” he said.

JG Summit had claimed that the 10% import duty on raw materials served as an incentive for it to invest in a naphtha cracker, but the proposed cracker project appeared to be at a standstill or was still stuck in negotiations, Siy said.

The 10% import duty on plastic resins poses major problems for local processors because it applies to the entire spectrum of plastic resins such as polyethylene (PE) and polypropylene (PP), including products that were not made locally such as polystyrene (PS) and polyvinyl chloride (PVC), he added.

The Philippines has more than 278 plastics processors, mainly small and medium-sized companies, which employ more than 50,000 workers, producing a wide range of finished and semi-finished goods such as films, bags, woven sacks and bottles, according to Siy.

The other ASEAN members due to implement zero duty for a range of imports include Brunei, Malaysia, Indonesia, Singapore and Thailand.

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By: Chow Bee Lin
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