Plastic makers seek lower petrochem tariffs for next 3 years in Philippines

01-Apr-05

Domestic plastic makers in Philippines are asking the government to lower the common effective preferential tariff rates (CEPT- on goods imported from other member-countries of the Association of Southeast Asian Nation) on petrochemical resins until end 2008. By such time, the planned naphtha cracker project of JG Summit Petrochemical Corp. should be operational. The 350,000-tpa cracker facility is estimated to have an investment outlay of P26 billion and is expected to start commercial operation by 2008. CEPT rates on resins must be lowered in the meantime to revive the downstream industry, which has been losing money due to the price distortion. An immediate reduction of the CEPT rates on resins to 5% in accordance with the provisions set under the Asean Free-Trade Agreement (AFTA) has been sought. Under the AFTA, tariffs should have been brought down between 0% and 5% by 2003, but an Executive Order 161 excluded the local petrochemical industry from this region-wide tariff reduction schedule. The executive order also brought down the rates on resins to 10% from 15%. The local petrochemical sector, represented by the Association of Petrochemical Manufacturers of the Philippines, is pushing for the maintenance of the CEPT rates on resins at 10% as a form of tariff protection against cheap imports that would jeopardize the naphtha cracker to be constructed by JG Summit Petrochemical Corp. (JGSPC)