Traders urge government to delay import tax cut

MANILA, Philippines - Businessmen are asking the government to delay a plan of opening up the local market by reducing taxes on imported goods.

In a statement, the Federation of Philippine Industries (FPI) said the government must help local businessmen in the midst of the economic slowdown. 

“In light of the incipient severe global recession and the growing tendency of countries to preserve jobs and enterprises in the domestic front, we urge government to revisit commitments on tariff reduction to zero percent in 2010 for all goods under the ASEAN Free Trade Agreement (AFTA),” FPI said in a statement.

FPI said the government must defer any further market opening especially for the Philippines whose tariffs walls are already much lower than neighboring economies in similar or more advanced stages of development. 

They said this deferment is also even more critical for the Philippines since it is unable to immediately implement tariff and non-tariff measures which the neighbors are able to impose swiftly. 

Some of these measures already in place in nearby countries are increases in MFN rates, new licensing and registration rules for importers requiring the submission of planned import volumes, restricting release of some types of imports to a few selected ports, focused protection and subsidies for specific sectors, hiring prohibition of foreign workers and larger operative stimulus plans that contain preferential treatment for domestic producers, among others.

 The Buy American provision of the $787-billion US stimulus package even provides a competitive margin of 25 percent for US iron and steel and other manufactured goods for expenditures under the plan.

The World Bank also recently reported that 17 countries of the G-20 have implemented 47 measures to restrict trade despite earlier pledges that they will avoid protectionist measures.

The group added that the need for additional breathing space is aggravated by the state of logistical and tangible infrastructure which has been a perennial inadequacy lamented by domestic businessmen as well as prospective foreign investors. 

“Except for our relatively more developed telecommunications backbone that spurred the BPO sector, the infrastructure support for manufacturing, both large and SMEs, remain in need of more substantial development,” FPI said.