Plastic firms urge government to lower tariff on petrochem products

The Philippine Plastic Industry Association (PPIA) is urging the government to finally lower to one percent the Common Effective Preferential Tariff (CEPT) rate on imported petrochemical products while the naphtha cracker project of JG Summit Petrochemical Corp. (JGSPC) is still not operational.

In a letter to Trade and Industry Secretary Juan B. Santos and Economic Planning Secretary Romulo Neri, the PPIA assured that they would support the tariff increase on resins once the JGSPC naphtha cracker becomes operational in 2008.

The PPIA has repeatedly argued that the 10-percent tariff on petrochemical resins is creating a five-percent tariff distortion since finished plastic products have a lower five- percent tariff rate when imported from ASEAN countries.

Petrochemical resins, which would be the output of JGSPC, are the raw material of the downstream plastics industry.

JGSPC, for the past two years, has been able to convince the government to ask exemption from its ASEAN neighbors from lowering its tariff rate on certain petrochemical products.

The exemption was on the assumption that JGSPC would finally be able to finalize its naphtha cracker project.

Unfortunately, JGSPC has still not been able to start on the naphtha cracker project and has submitted a revised timetable for completion.

Thus, in the meantime that the project is still being built, the PPIA is asking the government to proceed with the CEPT rate reduction.