The government of the Philippines is currently conducting a thorough review of the country’s tariff regime in an effort to address existing distortions that are impacting certain sectors. This review aims to rectify the situation where some sectors benefit from low tariffs on their output but face high import duties on raw materials necessary for production.
During a press conference, Secretary Arsenio Balisacan of the National Economic and Development Authority (Neda) highlighted the need to streamline and restructure the tariff system to allow for more balanced growth. The review will include tariffs on agricultural products to alleviate pressures from rising input costs, particularly in the face of high inflation rates.
The new tariff structure resulting from this review is set to be implemented from 2025 to 2028. Balisacan emphasized the importance of addressing the highly distorted tariff structure that is currently affecting many sectors in the country.
Inflation in the Philippines has increased to 3.8 percent in April, driven by elevated food and transport costs. Additionally, a recent survey by S&P Global revealed that production costs for Philippine manufacturers continued to rise in April due to higher prices of raw materials.
Once the review is completed, the restructured tariff regime will be implemented through an executive order (EO) that will be presented for approval to the Neda board, chaired by President Marcos. The board will convene again in June to discuss the details of the new tariff structure.
Aside from agricultural products, Balisacan also intends to include electric vehicles (EVs) in the comprehensive study of the tariff regime. A separate review of an existing EO that lowered the tariff rate for certain types of EVs to zero import duty will be conducted. There are ongoing discussions regarding the potential inclusion of hybrid EVs in this review, with some proposals facing opposition from the trade department.
The government aims to provide guidance on the inclusion of e-vehicles and hybrid vehicles in the tariff review process, emphasizing the importance of promoting and expanding the use of pure EVs.
