Reducing tariffs on inputs will allow exporters to recover in the second semester in the face of spiking inflation, the country’s trade chief and top business leaders assured on Tuesday.
In a text message to the BusinessMirror, Trade Secretary Ramon M. Lopez said he is in favor of slashing tariffs on goods needed to manufacture several of the country’s exports. This, after cost of production is seen to become pricey in the days to come, as inflation, or the general increase in commodity prices, ballooned to 5.7 percent in July.
“That is why we are trying to bring down tariffs on inputs. [Also], a depreciated currency helps exports through better peso price,” Lopez said, when asked if exporters can still bounce back from their poor first semester performance.
He cited fish feed, wheat and mechanically deboned meat as units he wants to have reduced tariffs. Lopez is pushing for a uniformed duty of 5 percent on these products.
Sergio R. Ortiz-Luis, president of the Philippine Exporters Confederation Inc., agreed with Lopez, and added the government needs to reduce nontariff measures, such as bureaucratic procedures in ports, to improve trade facilitation. He said it will be a “big thing” if the Philippine Competition Commission acts fast on the Department of Trade and Industry’s request to review shipment cost, which businessmen have been complaining about for alleged exorbitant rates imposed on imports and exports.
“Well, that is true [tariff reduction on inputs can lead to better export performance], plus the government needs to cut red tape on certain products needed by our exporters,” Ortiz-Luis told the BusinessMirror in a mix of English and Filipino.
For his part, George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, said the business community is not concerned about the July increase in inflation. Businessmen are apparently of the view that inflation will decrease in the months to come.
“I think the inflation, as what [Central Bank] Governor [Nestor A.] Espenilla [Jr.] said, it will taper off, and I think that is a fair statement. It will move down to about 4 percent to 4.5 percent,” Barcelon told the BusinessMirror.
In an earlier interview, Senen M. Perlada, director of the DTI’s Export Marketing Bureau, argued inflation could temper exporters’ prospect of rebounding in the holiday season. Exporters are heavily banking on the approaching holidays to bounce them back from their declining performance in the first five months, wherein they were not able to post even a single positive growth.
“On the downside, I have also heard feedback that domestic inflation is already eroding whatever competitiveness the Philippine currency depreciation is offering to our exporters. If creeping inflation persists, that again may dampen second-semester exports,” Perlada said.