The Department of Trade and Industry (DTI) recently urged the Tariff Commission (TC) to probe the reported surge in the volume of imported resins, particularly high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE).
The Trade department’s request to the commission arose from its own in-depth review based on a safeguard measure petition filed by the JG Summit Olefins Corporation (JGSOC) to protect Philippine petrochemical manufacturers from unfair foreign competition.
HDPE is used in consumer and industrial packaging, while LLDPE is used for laminated films and general-purpose bags. Within the Asean region, both raw materials are charged zero tariffs.
“The duties are being requested to safeguard the local manufacturing industry,” said a spokesperson for the petitioning company, adding, “Historically, HDPE and LLDPE imports tend to undercut the prices of the domestic industry.”
The local petrochemical industry hopes that the government can support and safeguard Philippine manufacturers from unfair foreign competition, similar to what India did recently.
The Indian government is expected to impose anti-dumping duties (ADD) on LLDPE imports from Saudi Arabia, Singapore, Thailand and the United States.
The country’s Ministry of Commerce and Industry said the ADD to be levied are proportional to the estimated damage incurred on sole domestic LDPE producer Reliance Industries Ltd., between the years 2016 and 2017 and 2018 and 2019. The ADD was pegged between $17.05 and $216.76 per ton on various producers and suppliers from said countries.
“While the domestic industry has not suffered an injury in terms of its volume parameters, the imports have adversely impacted the profitability of the domestic industry,” a recent notification from the Indian ministry read. With this, the notification added, “the domestic industry has suffered a material injury.”
Meanwhile, in the Philippines, TC’s investigation began in September 2021 upon the request of DTI, which reviewed documented applications from JGSOC, as well as imports data covering the petitioned products.
The leading petrochemical firm in the Philippines claimed in its filing of the safeguard measures petition, that the volume of HDPE and LLDPE—the key raw materials used in many consumer products—being imported into the country in the recent years were in quantities that are substantial to cause serious injury to the local petrochemical industry.
JGSOC is a member of the Association of Petrochemical Manufacturers of the Philippines, whose member companies have built over $3 billion in state-of-the-art petrochemical plants, and contributes P2.5 billion in annual tax remittances, while directly employing over 5,000 Filipinos.
The leading petrochemical firm in the country, being an industry pioneer and the largest polyethylene (PE) and polypropylene (PP) resin manufacturer in the country, filed the safeguards measure petition with the DTI.
In its initial reports, DTI found that there was a substantial increase in imported HDPE from 2015 to 2019. This is especially true in 2016 with a 181-percent increase, and 2019 posing a 26-percent increase.
LLDPE imports also increased significantly during the same periods especially in 2018 with a 38-percent increase.
Unchecked imports can disable the ability of local petrochemical producers from continuing operations, and even disrupt domestic self-sufficiency.
“If left uncorrected, the backlash will inevitably lead to unemployment and income loss for thousands of Filipinos who make their living directly and indirectly from the industry,” warned the local petrochemical producer.
The damage of these import surges on the Philippine petrochemical industry is estimated to be worse than those sustained by Indian firms.
The DTI’s own report stated the industry suffered a loss of market share, and saw a decline in domestic sales, production, utilization rate, reduction in labor productivity, resulting in incurred losses and an increase in inventory.