Vol. XXII, No. 145 [ BusinessWorld Online ]
Tuesday, February 24, 2009 | MANILA, PHILIPPINES
BY JESSICA ANNE D. HERMOSA, Reporter
THE TRADE department has cut the duty on imported ceramic tiles by 7%, in line with rules that require annual reductions on these items.
LOCAL tile makers do not expect growth this year, ‘but it is better than a decrease.’
A group of local tile makers welcomed the move, even as it cuts their price advantage over importers, saying it will give them time to prepare for elimination of the duty by 2011.
Safeguard duty on tiles will now stand at P1.86 per kilogram versus the P2/kg duty last year, the department order stated.
"It was observed that the continuous growth of low-priced imports still poses a threat to the viability of the domestic industry[But] the measure will continue to be liberalized for the remaining years of the final extension period," the document read.
The order, signed by Trade Secretary Peter B. Favila last Feb. 10, was made available yesterday and will take effect 15 days after it is published.
Safeguard duties were first slapped on imported tiles in 2002 at P5.40/kg to address the 65% year-on-year surge in the volume of Chinese imports in 2000, Tariff Commission data show.
Last year, the P2/kg duty had made locally made tiles 7% cheaper than the average landed cost of imports, mostly sourced from China, Indonesia and Thailand, the Trade department document stated.
"Under the law on safeguards and the provisions of the World Trade Organization, we are bound to liberalize regularly. There’s no going around that requirement to bring it down," said Bureau of Import Services Director Luis M. Catibayan in a phone interview yesterday.
"The percentage decrease is determined by looking at the landed cost and comparing it to ex-factory prices. Hopefully, when the safeguard expires, the local industry can be more competitive," Mr. Catibayan said.
Already, local manufacturers are implementing strategies to make themselves competitive against foreign brands such as using biomass to fuel their plants and insulate themselves against fluctuating oil prices, said Mr. Catibayan.
Asked to comment, Ceramic Tile Manufacturers’ Association (CTMA) President Edison Co Seteng said in a separate phone interview yesterday: "We are very happy with [the new safeguard duty]. It will give us time to prepare."
Earlier, CTMA had called on the government to retain the duty at P2/kg levels, claiming that imported tiles were cornering around half of the local market.
Mr. Co Seteng said yesterday, however, that the recent 7% cut on the duty is acceptable.
"For 2009, we are looking at flat [growth in sales]. We have to be conservative, but it is better than a decrease," he said.
The Philippine Ceramic Products Importers Association, Inc. could not be reached to comment, but was quoted in a 2007 Tariff Commission report as saying that safeguard measures are no longer needed since some manufacturers are already able to export tiles and that the duty hurts consumers.