Philippines approves scrapping of tariffs on petroleum products

Crude oil, refined petroleum products and asphalt will soon be able to enter the Philippines free of tax, authorities said on Tuesday.

The Philippines is also preparing the executive orders that will reduce the tariffs on basic commodities like sugar and rice under the Common Effective Preferential Tariffs/Asean Free Trade Agreement, Asean Trade in Goods Agreement (CEPT/AFTA)/ATIGA where the Philippines is a signatory.

The Philippines' National and Economic Development Authority on Tuesday approved the recommendation of the Committee on Tariff Related Matters (CTRM) to scrap the tariffs on crude oil, refined petroleum products and asphalt, Philippines' Finance Secretary Margarito Teves said. The plan is still subject to the Philippine president's approval.

Crude oil, refined petroleum products and asphalt used to be subject to a 3 percent tax. This will cost the government 4 billion pesos (85.8 million U.S. dollars) in foregone revenues annually.

The duty free oil importation "is expected to reduce pump prices of diesel and gasoline, help stabilize prices and help control inflation," Philippine Trade Secretary Jesli Lapus, who chairs the CTRM, said in a separate interview.

The zero tariff on oil is likewise in compliance with the Oil Deregulation Law requiring imported oil from any source to be slapped with the same tariff level. Oil sourced from Asean countries are duty-free while those from other countries are subject to a 3 percent-tariff.

Meanwhile, the executive orders allowing the duty-free importation of hot rolled coils and cold rolled coilsraw materials for GI sheets--are currently being readied for Philippine President Arroyo's signature.

Hot rolled coils and cold rolled coils are currently subject to a 7 percent tariff.

The tariff reduction on raw materials for GI sheets is meant to prevent a price spike in local products following the increase in world iron ore prices, Lapus said.

Other commodities which will be entering the country with lower duties meanwhile are mixed alkylbenzene and mixed alkylnapthalene, and polyamide-6 whose tariffs have been reduced to a percent from 3 percent and to 1 percent from 10 percent, respectively.

Mixed alkylbenzene and mixed alkylnapthalene are the one of the ingredients of detergents and plastics while polyamide-6 is used for nets and toothbrushes.

Reduce tariffs on basic commodities

The Philippine government meanwhile is preparing a draft executive order that will reduce tariffs on rice by five percent to 35 percent by 2015, Teves said.

The implementation of the tariff reduction schedule on rice is based on the CEPT/AFTA/ATIGA.

The agreement also requires the Philippines to reduce tariffs on sugar to 28 percent in 2012 and reduce this further to 18 percent a year after. By 2014, tariffs on sugar will only be at 10 percent and 5 percent in 2015.

Sugar entering the country is currently slapped with a 38 percent tariff.

Source: Xinhua