JG Summit’s long delayed naphtha cracker subject to government inspections amid a review of tariff protection

09-Feb-10

JG Summit Petrochemical Corp.’s long delayed naphtha cracker will be subject to government inspections amid a review of the company's tariff protection. JG Summit, represented by the Association of Petrochemical Manufacturers of the Philippines, is opposing the downstream plastic industry's petition to eliminate tariffs on imported resin, which competes with JG Summit Petrochemical's output- claiming that the protection is necessary to make the proposed naphtha cracker. The group is blocking the Philippine Plastic Industry Association's request to eliminate the 15% tariff on resin imported outside Southeast Asia. Negotiations with the Korean Export Import credit agency, which is funding the proposed P34.38-billion plant in Batangas, are ongoing while other financing options are being explored. Tariffs on competing resin imports should remain at 15% even as the plant is yet to begin local production to guarantee JG Summit Petrochemical's investment. Converters have, however, reiterated their arguments for lowering resin tariffs, saying their industry will need cheaper imported resin to compete with finished plastic goods from abroad while local production remains paltry without a naphtha cracker.