Plastics firms warn of closure if tariffs imposed on suppliers

PLASTICS MANUFACTURERS said they may be forced to close down factories if their supply of raw materials is hindered by safeguard tariffs.

The Philippine Plastics Industry Association, Inc. (PPIA) issued the warning in the process of contesting the safeguard measures proposed by the country’s sole domestic supplier of such materials, JG Summit Petrochemical Corp. (JGSPC).

JGSPC applied for a safeguard measures investigation into some imported resins used in plastic products, the Department of Trade and Industry (DTI) said in September. The company said that a surge in resin imports has caused it substantial injury.

The Safeguard Measures Act, or Republic Act No. 8800, allows domestic producers to ask the government to conduct an investigation into their import competitors if they claim to have been injured by excessive imports. The government can then impose temporary safeguard tariffs if it comes to a determination that domestic companies suffered injury.

High-Density Polyethylene (HDPE) and Linear Low-Density Polyethylene (LLDPE) resins are used in manufacturing consumer and industrial packaging.

The PPIA said safeguards would hinder plastics production by domestic firms.

“Philippine plastic manufacturers are at severe threat of factory closure (due to) lack of raw material supplies. The plastic industry is of significant national interest, with multiple industries now utilizing and depending on plastic materials for their products,” PPIA President Danny Ngo said in a statement Tuesday.

PPIA said that JG Summit Petrochemical Corp. has not fulfilled its October and November supply commitments.

“With JSGPC being the sole domestic supplier, there will not be enough time for the local manufacturers to import their raw material needs to keep the factories running and we will have no choice but to shut down,” Mr. Ngo said.

He said that buffer stocks for raw and finished materials are at an “all time low” as their finances deteriorate.

The industry group added that safeguards could lead to the Philippine market being flooded with imported plastic goods from countries with low production costs.

The DTI, after reviewing JGSPC’s application, said there is evidence to justify a preliminary investigation into safeguard measures.

The department’s initial findings indicate a significant increase in imported HDPE and LLDPE between 2015 and 2019, which preceded JGSPC’s loss of market share.

BusinessWorld asked JG Summit Holdings, Inc. to comment but it had not replied at deadline time. — Jenina P. Ibañez