InterviewPhilippine plastics group seeks urgent govt aid to fix tariff

08 March 2010 10:10  [Source: ICIS news]

By Pearl Bantillo

SINGAPORE (ICIS news)--Philippine plastics makers have urged the government to address the tariff distortion created by the zero-duty policy within the ASEAN that currently makes locally produced material more expensive than imports, an industry official said on Monday.

“Our government should really address this as soon as possible,” said Alfonso Siy, Philippine Plastics Industry Association (PPIA) president, as he cited potential job losses if domestic factories were to close shop because of stiff competition from imports.

The Philippines procures more than half of its raw material for plastic production outside ASEAN (Association of Southeast Asian Nations), on which a 15% tariff is charged. The balance is being obtained within ASEAN, where a zero tariff is in place since the start of the year under a free trade agreement (FTA), Siy said.

Tariffs for finished plastics products were also eliminated on intra-ASEAN trade and, based on a separate trade pact, the same were removed on trade between the ASEAN region and China.

“You can’t compete with finished products coming from ASEAN and China because they are coming in on zero tariff [while our] raw materials have a 15% tariff,” Siy said.

PPIA had filed a petition to the Tariff Commission “about a month ago” to bring down the 15% tariff on plastic resins imported from non-ASEAN countries but it has yet to get word from the government, Siy said.

The Philippine government might be currently being sidetracked from issues of national importance because of the forthcoming elections, he said.

“We cannot rule out the possibility [that] because of the elections, people have less concentration on the matter compared to [the attention] it should be [given]. Otherwise, it is a very serious matter,” Siy said.

The Philippines will elect its next president in May 2010.

“We are still hopeful that something can be done even before that. I think no administration would like to see the industry collapse,” Siy said.

According to the PPIA, the Philippine plastics industry has an accumulated investment of around Php50bn ($1.09bn).

PPIA has 178 manufacturing companies as members and has 36 advisors and suppliers of technology.

Apart from the tariff distortion that makes cost of plastics production higher for Philippine plastics makers, the industry also has to contend with high labour cost, Siy said.

"Other than maybe Singapore or Malaysia, cost of labor in these other [ASEAN] countries are much cheaper than the Philippines'," he said.

The Philippine government could also explore the anti-dumping duty (ADD) route but its implementation might not be fast enough to provide an immediate shield to the local plastics industry, Siy said.

“ADD can only be proven after the harm is done. Probably it’s not the best thing to wait for,” he said.

ASEAN countries could help out by raising the viable volume of raw materials available to the Philippines instead of prioritising the big buyers like China, Siy said.

“They should give some consideration to the Philippines; give us more volume, especially during the time of crisis and [supply] shortage,” Siy said.

The Philippines is among the six original members of the ASEAN, including Malaysia, Singapore, Thailand, Indonesia and Brunei.

($1 = Php46.03)

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By: Pearl Bantillo
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