JG Summit Holdings Inc. which will triple its cash from selling shares in its airline unit and reserve a record budget for expansion plans as a rebound in the economy is expected to increase consumer spending in Philippines. JG Summit will increase capital expenditure to more than 30 billion pesos (US$658 mln). The government has forecast an increase in economic growth from 2.6-3.6% in 2010 after slowing to 0.9% in 2009, the weakest in over a decade.
The company may revive a plan to build the country’s first naphtha cracker plant to expand its petrochemical venture, which makes polyethylene and polypropylene. The plant may cost over US$500 mln and would take 30 months to complete.
In 1996, a year after JG Summit began its foray into petrochemicals, the plant expansion was drawn up, but shelved in 1999 because the company said it couldn’t compete with cheap imports. JG Summit postponed a plan to revive the project in 2005 so it could focus on building its telephone and airline assets. The company has decided to revive the project as it is currently in a position to put equity into this project at a time when the Philippine economy as well as consumption of resins and plastics is growing.