Govt urged to stop ‘bad’ tariff policy

DOMESTIC manufacturers are asking the government to stop the practice of giving tariff protection only to products that are being made locally.

Bobby Batungbacal, director of the Federation of Philippine Industries (FPI), said this practice is driving away potential investors to manufacturing ventures that would allow the country to diversify its products.

This, he added, also dissuades companies from producing raw and intermediate materials that will support critical industries.

“Right now, it seems that our policy is just to reduce or remove the tariffs for products that are not produced locally. But what if those products are also important in broadening our support industries and for product diversification? We need to balance our tariff-liberalization policy with our industrialization program,” Batungbacal told the BusinessMirror.

He said that while keeping the tariff low for products that are not made locally would appear to be a good policy for the consumers, it also restricts the inflow of investments and growth in the manufacturing sector.

A case in point is ethanol, he said. The Ethanol Producers Association of the Philippines had asked for an increase in ethanol tariff to 20 percent from 1 percent as a form of support to investors that have already committed over P50 billion in investments.

However, the government junked the request of the local industry players, saying the country needed to import ethanol since current local production is not enough to supply the requirement of the market.

Batungbacal said the government should discern well, with the help of the local industries, how it would pick the products that would be up for tariff reduction.

“In the selection, our recommendation is for the government to always consider supporting diversified manufacturing. This will allow us to create something new,” he said.

In doing this, Batungbacal said the government would be able to create new businesses and, at the same time, save a lot of existing manufacturing industries that are finding it hard to compete with the cheaper imported products.

source: businessmirror