DTI sets review of import duties to boost competitiveness of local manufacturers

August 29, 2013 at 14:38

The Department of Trade and Industry (DTI) is reviewing the import duties on raw materials and capital equipment in a bid to lift the competitiveness of local manufacturers.

During a forum yesterday, Trade Secretary Gregory L. Domingo said the agency is revisiting Executive Order No. 61 to develop a “calibrated” tariff regime on imported goods that local manufacturers use.

Domingo said the government is amenable to assessing a lower tariff on raw materials so cost-savings would be reflected in downstream products.

“So a review of EO 61 will go through each of those tariff lines and determine what is the proper structure to make our industries more competitive with our neighbors,” he said.

The review goes hand-in-hand with a government move to amend the Cabotage Law to open up the domestic routes of local shipping lines to foreign operators. This would help bring down the cost of inter-island transport of goods and passengers.

“The President actually mentioned the review of the Cabotage Law in the SONA and this will be part of the review of that,” Domingo said, referring to President Benigno S. Aquino III’s State of the Nation Address last month.

The DTI is also crafting a new incentives regime that would have to be in line with proposed roadmaps of various industries.

This review is being done amid moves by the Department of Finance (DOF) to restrict the grant of tax perks.

Last week, Finance Secretary Cesar Purisima told legislators that the agency will push for a bill requiring incentives-giving agencies to program the perks given to businesses. The Tax Incentives Accountability and Transparency Bill will help the government in keeping track of all the fiscal perks handed out to enterprises.

“Basically, when you give incentives right now there is no accounting so there is therefore no transparency,” Purisima told reporters.

With this, the DOF is proposing that incentives-giving bodies such as the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) include these tax perks in their budgets so the government will know how much revenues it is losing to these incentives.

“So we will know what are the target results. So first [we will have] transparency because we will know how much; accountability because they’re held for results given the amount,” Purisima said.

In addition, the DOF is pushing for the automatic appropriation of these perks so there would be predictability. Under its rules, the government does not know the extent of the incentives it gives away each year, and so fails to match them with the results.

“I think just like the budget process, it’s important that we do this,” Purisima said, adding that incentives are after all foregone revenues.

This bill would make monitoring more systematic as the BOI and PEZA would be required to give targets, such as amount of investments, jobs, and businesses to be generated in giving out tax holidays.

When asked if BOI and PEZA are remiss in their duties in monitoring these perks, Purisima said, “I don’t think it is done in a systematic manner.”

 

Source: Likha Cuevas-Miel, InterAksyon.com, August 14, 2013

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