Gov’t stands by decision to cut tariff on 11 petrochem products

JG Summit Petrochemical Corp. (JGSPC) and the Association of Petrochemical Manufacturers of the Philippines (APMP) have failed to present new arguments or evidence to convince the Cabinet-level Tariff and Related Matters (CTRM) Committee to reverse its earlier decision to go ahead with the tariff reduction on 11 petrochemical products.

As such the CTRM will stand by its earlier decision and will let the National Economic Development Authority (NEDA) Board reaffirm its decision.

This was confirmed to The STAR by Budget Secretary Romulo Neri yesterday.

The CTRM had given JGSPC, the APMP and the Philippines Plastics Industry Association (PPIA) last week another opportunity to present new arguments and evidence to support their respective arguments.

JGSPC and APMP and the PPIA were allowed to make their presentations one after another.

Unfortunately, JGSPC and APMP were not able to present any "new or compelling evidence to warrant a reversal of the CTRM decision."

The review of the petrochemical tariff reduction was granted by Trade and Industry Secretary Peter B. Favila and Finance Secretary Margarito Teves upon the request of JGSPC and APMP since Favila and Teves were not members of the CTRM when the first decision was made.

Neri who was already a member of the CTRM when the first decision was made has repeatedly made known his position that there was no need for a review.

Neri said that the CTRM decision would just have to be reaffirmed by the NEDA Board and the government would finally go ahead with the tariff reduction on the 11 petrochemical products earlier requested by the Philippines to be excluded from the mandated reductions under the ASEAN-CEPT scheme.

The APMP and JGSPC had recently warned that if the government goes ahead with the planned reduction on 11 petrochemical products, JGSPC’s planned P26-billion naphtha cracker project might be "endangered."

JGSPC fears that allowing the entry of the plastics resins would undermine the already precarious viability of the midstream petrochemical industry which is trying to embark on a backward integration through the construction of the planned naphtha cracker plant.

Government had assured that the tariffs would be raised anew once the naphtha cracker is operational.

On the other hand, the PPIA argued that the naphtha cracker has remained on the drawing board since the late 1990s with JGSPC enjoying tariff protection at the expense of the downstream plastics industry which need the resins as their raw material input.