News article from by Bernie Cahiles-Magkilat

The news is about the appeal of the Philippine Petrochemical Industry (PPI) to the government to prioritize the protection of revenue collection instead of pushing for more tariff liberalization. In accordance with PPI’s strategic roadmap, this will promote more productivity and investments in the industry besides the current $1.4-billion worth of projects.

Tariff and revenue collection are key factors that affect the development of the petrochemical industry in the Philippines. Since 2011, Executive Order 61 implements the tariff structure on petrochemicals and currently maintains a 10 percent tariff rate on polymers. Higher tariff rates will be beneficial to major players of the PPI such as JG Summit since this will limit the imports on petrochemicals which mean competition for the company. However, higher tariff could endanger the local plastic manufacturers (downstream players) since they heavily depend on imports. Applying this to PPI’s petition, lowering the tariff will be beneficial for the local plastic manufacturers and the industry as a whole but remarkably, the petrochemical industry favors revenue collection protection over tariff liberalization. This implies that the tax that the government collects produce higher costs for the industry than the tariff on petrochemicals. This means that the PPI would profit more if they would be protected from revenue collection of their businesses. Given the protection from tax collections, it will encourage more local investments in the industry and further result to productivity. The PPI’s appeal suggests that the tax that the government collects from it has more negative effects than the tariff and it would be more favorable and beneficial for the players of the petrochemical industry to be protected from such revenue collection.

Through this article, the group learned more about the industry players of the PPI and how much these contribute to the industry through investments. Considering this, the government should study and consider the appeal of the Philippine Petrochemical Industry to ultimately aid its development. 

Cunanan, Danielle
Liscano, Elaine
Garcia,  Kenneth Irvin 

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