Philippine processors will have to import resins at new tariff rates of 15 percent, a compromise approved by the government's National Economic and Development Authority. The rate will be imposed on polypropylene, polyethylene, PVC and polystyrene until the year 2000.
Some groups had opposed the government's earlier proposal to raise the tariff to 20 percent from the existing 10 percent, complaining that it would boost the cost of plastic products. The Philippine Plastic Industrial Association, the Packaging Institute of the Philippines and the Metro Plastics Recycling Association had lobbied to keep the existing rate.
The Association of Petrochemical Manufacturers of the Philippines had petitioned NEDA for 20 percent, to protect members' huge investments in domestic resin production.
That higher tariff protection was needed to boost the domestic economy, according to a study by the California-based Stanford Research Institute, which was commissioned by the Philippine Board of Investments to come up with a petrochemical master plan. The study said a high tariff rate would result in a higher internal rate of return for the companies.
However, if government cannot provide the tariff protection, it can give the companies grant investment tax credits to establish new plants, or cash, the study said.
The Philippines' 15 percent tariff rate on petrochemicals is low compared with its neighbors': Indonesia's rate is 40 percent, Malaysia's 30 percent and Thailand's 27 percent.