Philippine polymer end-users continue to seek import tax cut

28 February 2005 08:29  [Source: ICIS news]

SINGAPORE (CNI)--Polymer end-users in the Philippines are hoping for a polymer import tariff cut to 5% from 10% at the end of June after the government extended the tariff for six months in January, industry sources said on Monday.

The government extended the tariff even though it was supposed to cut it to 5% from 1 January 2005 under its commitments to the Asean Free Trade Area (AFTA) agreement.

The 10 Asean members are Indonesia, Brunei, Singapore, Malaysia, the Philippines, Cambodia, Laos, Vietnam, Thailand and Myanmar.

The extension was to give JG Summit Petrochemical more time to firm up its plan to build a 300 000-350 000 tonne/year naphtha cracker at Batangas, said an official from the Ministry of Trade and Industry. The high import tax would help protect local polymer producers.

A member of the Philippine Plastics Industry Association (PPIA) said that end-users wanted to an operational naphtha cracker in place to justify the high import tax.

"We are suggesting to the government to have a cracker in place before imposing the high import taxes. It is not fair to keep the tax high when the plan for the cracker project is not even firmed up," he said. The Philippines has been talking about building a cracker for more than 25 years, but the plan has not materialised because of funding and viability issues.

The new cracker, if built, will cater JG Summit's downstream plants. A source close to JG Summit told CNI last week that the company would issue an engineering, procurement and construction (EPC) contract tender for the cracker project in two weeks' time.

JG Summit is hoping that the government would consider extending the import tariffs until the cracker is built, he said. "However, we understand that the government has its obligations to the Asean nations."

So far, the government has not made any decisions on whether to extend the tariff beyond June, a government official said.

By: Edgar Ang
+65 6780 4359

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