THE strengthening of the peso could cause the value of chemical exports to decline by 15 percent this year, according to an official of the Philippine Exporters’ Confederation Inc. (Philexport).
“Hot money is coming in, making the peso strong and, conversely, bad for exports. Outward shipments is even declining, so best estimate is 15 percent down from last year,” said Oscar Barrera, Philexport trustee for the chemicals sector.
Last year outward shipments of chemicals went down by 35 percent due to the anemic performance of the plastics sector. This was compounded by the difficulties of exporters in complying with the more stringent rules of the Philippine National Police (PNP) for regulated chemicals.
However, the government had expressed confidence that chemical exports would recover this year following the PNP’s release of implementing rules and regulations for Republic Act (RA) 9516, which amended Presidential Decree (PD) 1866.
PD 1866 codified the laws on the illegal sale, manufacture or possession of explosives or instruments used in the making of firearms or explosives.
Last year electronics makers were forced to secure additional permits and procedures and pay more fees, after the PNP tightened its regulations on controlled chemicals.
Also, the PNP added 41 new chemicals to the master list of controlled chemicals in 2015, bringing the total to 101.
Electronics and chemical manufacturers said this caused production delays, as they had to wait for the issuance of permits for imported chemical substances, which they need for their factories.
Smaller companies importing common household chemicals have also been affected by the government’s tighter regulations. With the release of the IRR, the list of PNP-controlled chemicals was reduced to 32, from 101, and procedures for obtaining permits and licenses were streamlined, with the approval period reduced to 10 days, from 20.
Also, the PNP will no longer collect hefty “escort fees” in the transport of chemicals. This would allow the chemicals industry to save some P9 million.
The Samahan sa Pilipinas ng Industriyang Kimika (Chemical Industries Association of the Philippines) or SPIK, had a more sanguine outlook, as it projected the value of outward shipments to more than double to $5 billion this year, from $ 1.9 billion in 2015.
Main buyers of locally made chemical products are China, Indonesia and Europe.
Chemical products are used by other local industries, such as those involved in making pulp and paper, and handicrafts.
According to data from the Philippine Statistics Agency (PSA), chemical exports from January to April amounted to $515.9 million, down by 30 percent from the $736.74 million recorded in the same period last year.
In April the value of chemical exports declined by 9 percent to $145.54 million, from $159.75 million a year ago.
