Petrochem firms press for 15-15% tariff formula

The midstream petrochemical industry said yesterday it cannot afford tariffs lower than the current 15 percent, and has asked the government to consider the 15-15 percent tariff parity for both resin and finished plastics products imports.

"Having incurred tremendous losses exceeding P8 billion as of 2001 and not having the benefit of the 40 percent tariffs enjoyed by the plastics industry for decades, the midstream can ill-afford a lower rate. Fifteen percent is an absolute minimum level for the survival of the sector," said Wilfredo Paras, chairman of the Association of Petrochemical Manufacturers of the Philippines (APMP).

Paras also announced that the lowering of the AFTA petrochem tariffs to 10 percent is not necessary since the midstream has already agreed that tariffs on non-locally produced resins can be lowered to one percent. "Subject to safeguards against abuse, we have already agreed to reduce tariffs to one percent for eight petrochem products. We are only asking for the maintenance of AFTA tariffs on six petrochemical goods that are locally produced. Six out of 14 resin products is not asking for much but will mean the survival of P50-billion strategic industry," said Paras.

"Many raw materials of plastics products use resins that are not locally available. Water bottles for example use polyethylene terephthalate (PET) which we have agreed could be lowered to one percent," Paras clarified.

"The better solution is to increase plastics tariffs to 15 percent so we can have a parity," said Paras.

The DTI is reportedly considering lowering the current tariffs on petrochemicals from 15 percent to 10 percent, while increasing tariffs for plastics from five to 10 percent, a formula suggested by the Philippine Plastics Industry Association (PPIA). Workers of both the petrochemical and plastics sectors have opposed the formula, saying it will only further weaken both sectors.

APMP also stated that investments of up to $1 billion were poured in by the midstream petrochemical sector because of the government’s commitment to support the sector at 20 percent tariff cover. It also cited the Board of Investments (BOI) Master Plan for the Petrochemical Industry which recommended a tariff structure of 20 percent from polymers and 30 percent for plastics, considering that other ASEAN countries imposed tariffs of from 25 percent to 40 percent for their midstream and downstream sectors for as long as 15 to 20 years.