| Home / Foreign Market Access Report 2006 / The Philippines | Tools: Save | Print | E-mail | Most Read |
| 2. Introduction to trade and investment regime |
| Adjust font size: |
2.1 Legislation on trade and investment Foreign trade and investment are subject mainly to such legislations as Tariff and Customs Code, Export Development Act, Omnibus Investment Code, Foreign Investment Act, and Retail Trade Liberalization Act. Other foreign trade and investment laws include Transaction Value Act, Tax Code, Food, Drug, and Cosmetic Act, Price Act, Anti-Dumping Act, Countervailing Act, Safeguard Measures Act, Intellectual Property Code, Tobacco Regulation Act, Electronic Commerce Act, Consumer Act of the Philippines, the Special Economic Zone Act, Iron and Steel Act, Mining Act, Build-Operate-Transfer Act, and Investment and Lease Act, etc. 2.2 Trade administration 2.2.1 Tariff system The Philippine authorities impose ad valorem duties on most imports with rates ranging from 0 percent to 65 percent while imposing specific duties on alcoholic drinks, fireworks and firecrackers, tobacco products, watches, mineral fuel, cartoons, saccharin, and playing cards. According to the Tax Code, the Customs levies excise duties on imports of non-necessities such as automobiles, tobacco, gasoline and alcohol. In line with the value-added tax regime of the Philippines, 12 percent value added tax is levied on imported goods. The base for VAT is customs valuation plus tariffs and excise duties levied. The Philippines also imposes document stamp tax on imported goods covering bill of lading, bill of receiving, bill of exchange, other transaction documents, insurance policy, bill as security, letter of authorization and other documents. Imported goods with an invoice value of over 5,000 pesos will be charged 250 pesos of import procedure fees. 2.2.2 Import administration Import products are divided into 3 categories, namely products free to import, products restricted from import and products banned from import. Most products are free to import. Products banned from import are mainly related to national security, including military weapons and ammunitions, products containing gold, silver or other precious metals or products made of the alloys thereof, toy guns, worn-out clothes, fake and shoddy pharmaceuticals and other goods and components banned from import according to the relevant Philippine laws. Import licenses must be obtained for products restricted from import from the Philippine government bodies such as the Ministry of Agriculture and the Bureau of Food and Drugs. More than 130 products including automobiles, tractors, cars, diesel engines, gasoline engines, motorcycles, durable consumer goods, equipment for news printing and publication, cement and products related to health and public safety fall within the category of restricted import. The system of tariff quota still applies in the Philippines. Normal in-quota tariff rates range from 30 percent to 50 percent. Out-of-quota tariff rates are between 35 percent and 65 percent. At the end of June 2005, absolute quotas were replaced by tariff quotas for importing rice in the Philippines with the in-quota tariff rate at 40 percent and out-of-quota tariff rate at 50 percent. 2.2.3 Export administration The Philippine government encourages export trade by simplifying export procedures and adopting various incentive measures such as the exemption of additional taxes on export, rebate of VAT for the re-export of the imported goods and foreign exchange assistance. Some products are restricted for export or prohibited from export from the Philippines. Permission should be gained from the Philippine competent authorities such as the Ministry of Agriculture and the Ministry of Environment and Natural Resources for exporting products in the restricted category including cement, petroleum and petroleum products, ammunitions and some raw materials of plant origin. Goods prohibited from export mainly include ramie seeds and seedlings, some wild animals and live fish. 2.2.4 Other related systems The Philippine Customs adopts different inspection procedures for customs clearance of imported goods in view of different levels of risk. The Philippine government specifies that all importers or their agents should file import declarations to the Philippine Customs, which then processes these entries through its selectivity system to classify shipments. A low-risk shipment goes through the "green lane" and is generally subject to no documentary review or physical inspection but is covered by "post-audit review". A moderate-risk shipment goes through the "yellow lane" and is 2.3 Investment administration The investment sectors have been divided into three categories by the Philippine authorities, namely encouraged investment sectors, restricted investment sectors and prohibited investment sectors. The Investment Priorities Program (IPP) published annually by the Philippine authorities lists the encouraged investment sectors and preferential policies to guide domestic and foreign investment towards state-designated industries, in which 100 percent ownership is granted to foreign investors. For highly-prioritized projects, more preferential terms are offered including financial policies such exemption of income tax, exemption of import duties when importing equipment, parts and components, exemption of dock dues for imported goods, and exemption of export fees and charges, as well as non-financial policies such as unlimited use of consignment facilities, simplified import and export customs clearance procedures and so forth. Generally, the National Economic Development Authority (NEDA) of the Philippines renews and publishes Foreign Investment Negative List (FINL) every two years which clarifies the prohibited foreign investment sectors and defines the maximum ownership of foreign investment in restricted sectors. 2.4 Competent authorities The Department of Trade and Industry (DTI) is the competent authorities responsible for implementing and coordinating trade and investment policies as well as promoting trade and investment facilitation. The Board of Investment (BOI) under DTI is in charge of the implementation and administration of foreign investment policies; the Bureau of Product Standards (BPS) shoulders the responsibility of administering and implementing technical standards and regulations on products; the Bureau of Import Services (BIS) is mainly in charge of the administration of regulations on the import of specific products as well as initiating and guiding the primary investigation with regard to anti-dumping, countervailing and safeguard measures. The Tariff Commission of the Philippines is mainly responsible for making tariff policies, including the concession, modification and rebate of tariffs, the public hearing and consultation of anti-dumping and countervailing cases and the investigation involving safeguard measures. Bureau of Customs, an affiliation to the Ministry of Finance, is responsible for levying import and export duties, VAT on import commodities and other additional taxes. |
| Tools: Save | Print | E-mail | Most Read |
 |
| Related Stories |
| ? |
