In general, the Philippines has no regulations
that would inhibit exports. Exports are highly encouraged by the
government. Exporters may avail themselves of a US dollar-based working
capital credit facility for their peso requirements from the Foreign
Currency Deposit Units (FCDUs) of local commercial banks, without prior
Central Bank approval, subject to certain conditions.
Import Controls
The government has steadily deregulated import
controls and implemented an import liberalization programme to encourage
long-term growth and stability of local industries. The Central Bank has
issued Circular No. 1192 to implement this round of trade liberalization.
An additional 90 items have been approved for liberalization under the
Memorandum on Economic Policy submitted to the International Monetary
Fund.
Included for liberalization without tariff
adjustment are machinery, equipment and spare parts for industries like
iron and steel, cement, textiles and coconut. Also included in this
category are radiation-emitting devices, automotive spare parts and
cigarette paper. Approved for liberalization with tariff adjustments are
vessels and their appurtenances, cement and newsprint.
The Central Bank (CB) is continuously
deregulating imports. The recent CB Circular 1279 lifts import
restrictions on several goods in addition to those previously deregulated
under CB Circular 1391 and others. CB Circular No. 1219 amended Sec. 8 of
Circular No.1029 and MAAB No. 43, series of 1984, which required prior
approval of concerned regulatory agencies for imports of certain
commodities.
The regulatory agencies affected are the
Inter-Agency Committee and the National Coal Authority. Clearances/permits
now required from these agencies will continue to be, in accordance with
existing laws, presidential decrees, letters of instruction and similar
issuances. Authorities also abolished a requirement that had forced
companies to obtain foreign credit financing for imports of machinery and
equipment, aircraft and vessels exceeding US$50,000 in value.
The government also lifted the requirement for
Central Bank's approval to import machinery and equipment for agriculture
and export-oriented enterprises registered with the Central Bank, Board of
Investments and the IEEPZA. The Central Bank approval is no longer needed
for imports of spare parts in excess of $50,000 per month per
importer.
The Comprehensive Import Supervision Scheme was
re-implemented under Joint Order 1-87 and was expanded to cover all goods
imported into the Philippines.
The following are exempted from the import
inspection requirement:
- Crude oil and petroleum products in bulk,
but not including chemicals and their products, petroleum additives
and lubricating oils.
- Fresh or frozen fish; meat; eggs; fresh,
chilled or frozen fruits; works of art; current newspapers and
periodicals; individually owned motor vehicles and parcel post.
- Explosives, ammunition, arms and
equipment, and other strategic materials certified as such by the
Department of National Defence.
- Raw materials and supplies imported by
semiconductor companies (except capital equipment and spare
parts).
- Imports to the Philippines when the
consignee is either the government itself or any of its corporations
or agencies.
- Goods imported under Section (105) of the
Tariff and Customs Code.
The government reduced the rate of additional
duty on all exports under Executive Order No. 443 from 9 percent to 5
percent ad valorem. Crude petroleum oil, lubricating oil, kerosene and
similar items remain subject to 9 percent ad valorem. The reduced rate is
expected to generate more economic activity and minimize the negative
effects of the original rate (9 percent).
Duty-free imports of capital equipment have
been extended for five years. To cope with power shortages, the Department
of Trade and Industry has ruled that power generators can be imported tax
and duty-free until December 31, 1993.
In an attempt to offset the budget deficit,
revenue generating measures are expected to be approved, including
increased taxes on luxury goods such as cigarettes, spirits, beer and
cellular telephones.
Control of Consumer Imports
The import of non-essential and unclassified
consumer goods and those imported on a consignment basis require prior
Central Bank approval. Quantitative restrictions are imposed on the import
of staple grains such as rice and corn, which require prior clearance and
permits from the National Food Authority. Importation of wheat is allowed
only if financed under special official credit arrangements.
Tariffs
The tariff system has been simplified and rates
are to be reduced further. The coverage of quantitative import
restrictions has been narrowed to 135 items. The government has decided to
liberalize approximately half of these over time. The remaining 69 items
would be restricted for health, safety and national security
reasons.
Tariff rates generally depend on whether the
goods are already manufactured locally in sufficient quantity. Goods not
produced in the Philippines have rates between 10 percent and 20 percent
while goods already made in the Philippines have rates between 30 percent
and 50 percent. However, an ongoing tariff restructuring program will
substantially reduce most tariff protection by 1995.
Raw cane or beet sugar, molasses and
confectionery sugar have a 50 percent duty rate. The average tariff on
most woven fabrics is 40 percent and that for finished garments is 50
percent. Most clothing accessories (such as shawls, handkerchiefs and
gloves) and footwear face a duty rate of 50 per cent as do blankets, linen
and carpets. Common appliances such as toasters, microwave ovens, coffee
makers and home electronics have a 45 percent tariff rate.
A tariff rate of 50 percent applies to finished
cars and motorcycles for personal use, but trucks, buses and light
commercial vehicles such as vans and pick-ups have a lower rate of 10
percent. Almost all tobacco products have a 50 percent duty rate. The
reduction in import duties will help to nurture investment in the textile,
transport equipment and electrical industries.
Common Effective Preferential Tariff (CEPT)
Of the ASEAN member countries, the Philippines
offers the smallest percentage of its export products to the Common
Effective Preferential Tariff (CEPT) scheme, a set-up designed to pave the
way for the formation of the ASEAN Free-trade Area by 2008. The
Philippines offers 74 percent of its products, while Indonesia offers 80
percent, Malaysia 86 percent and Thailand 90 percent.
Copyright 1997 by ABISNET (S) Pte Ltd.
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