Philippine plastic processors' expansion plans at a standstill

15-Feb-05

The Philippine government has decided to extend tariff protection on petrochemical products for another six months. The higher tariff cover granted on import tariffs on 11 petrochemical products was supposed to end this year but the government has decided to extend this in consideration of the proposed US$300 million naphtha cracker project of the Gokongwei-owned JG Summit Petrochemical Corp. (JGSPC). The 6 month extension is subject to the milestones to be submitted by JGSPC to the government. If JGSPC can meet its promises to the government within the six-month period, the 7-10% protection will stay. However, the Philippine plastic processors' expansion plans have come to a standstill. The downstream plastics manufacturers had factored in the tariff reduction of their raw materials to 0% to 5% in their next year’s plans from the present 7% to 5%. Already the domestic processors have faced the onslaught of cheap imported plastic products, which carry only a 5% tariff as against the 10% tariff on some of their raw materials.