News article from Bworldonline.com by ENJD

The article is about the petition of JG Summit Holdings Inc. to increase the tariff on imported polyethylene and polypropylene from 10 to 15 percent. This tariff increase is crucial for the success of its naphtha cracker plant which will operate in 2014. The government is still deliberating whether to approve JG Summit’s petition or not since it means changing the tariff structure of Executive Order 61 which has been applied since 2011 and there is no assurance that the plant could meet the local demand for plastic raw materials.

Polyethylene and polypropylene are polymers produced by refining crude petroleum through distillation, fractionation, and cracking. The Philippines imports these materials since it does not have the technology to transform naphtha into polymers. By producing 300,000 tons of polyethylene and 200,000 tons of polypropylene, JG Summit’s plant is expected to meet the local demand for the said products. However, increasing the tariff could endanger the local plastic manufacturers since they greatly depend on imports. Even if the increase will only be imposed on non-ASEAN countries, the supply for petrochemicals is not enough to meet the demand in the ASEAN. JG Summit’s petition can be seen as is its way to increase its sales since the local manufacturers would be given no choice but to depend on the company. Moreover, the supply of petrochemicals in ASEAN countries is not sufficient and this would mean a larger market and higher profitability for JG Summit. 

Through the article, the group learned that economic policies such as tariffs are essential in the sustainability and development of the Philippine petrochemical industry which is primarily dependent on imports. Indeed, the government has to make rational and fair decisions so that it will not only cater to the interests of JG Summit but also to the needs of the other players in the Philippine petrochemical industry.


Authors:
Cunanan, Danielle
Garcia, Kenneth
Elaine, Liscano




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