Philippine processors seek lower tariffs on resins until 2008

05-Apr-05

Plastics processors have sought a lowering of the common effective preferential tariff (CEPT) rates on petrochemical resins until 2008. The end of the three years will see the country's first planned naphtha cracker project of JG Summit Petrochemical Corp. in operation. CEPT rates are applicable on goods imported from other member countries of the Association of Southeast Asian Nation. A representation by the Philippine Plastics Industry Association (PPIA) has asked for an instant reduction of the CEPT rates on resins to 5% in accordance with provisions under the Asean Free-Trade Agreement (AFTA). Under the AFTA, tariffs must be brought down to a range of between 0% and 5% by 2003, but Malacañang issued Executive Order 161 excluding the local petrochemical industry from this region-wide tariff reduction schedule. The executive order also brought down the rates on midstream products such as resins to 10% from 15% and at the same time raised the rates on finished products of downstream industries to 10% from 7%, causing price distortions. Although JG Summit is committed to building a naphtha cracker, CEPT rates on resins must be lowered in the meantime to revive the downstream industry, which has been losing money due to the price distortion.