Plastic makers slam safeguard duties on HDPE raw materials

MANILA, Philippines — The Philippine Plastics Industry Association Inc. (PPIA) said the imposition of duties for the high-density polyethylene (HDPE) pellets and granules is an additional burden to the local plastic industry, as well as consumers, as it will increase the cost of packaging and plastic products in the country.

In a statement yesterday, the PPIA said the safeguard duty imposed by the Department of Trade and Industry (DTI) would only benefit JG Summit Petrochemical Corp., now JG Summit Olefins Corp. (JGSCO), the country’s sole producer of HDPE pellets and granules.

Based on Department Administrative Order 22-13 issued on Sept. 30, Trade Secretary Alfredo Pascual said a definitive safeguard duty effective for three years shall be imposed on imported HDPE pellets and granules to implement the adjustment plan of the local HDPE industry within that period.

It said a P1,338 per metric ton (MT) safeguard duty will be imposed in the first year.

This will slightly be lowered to P1,271 per MT in the second year, and P1,208 per MT in the third year.

“The safeguard duty favoring JGSPC will also cause more pressure on the local plastic product manufacturers. Imported finished products are being imported at zero percent duty leaving local manufacturers at a price disadvantage,”PPIA said.

It said this would result in an influx of imported finished plastic products. “This will cause more job loss while we are all recovering from the pandemic,” the group said.

“The industry, despite the difficulties brought by the recent pandemic, not to mention the cut-throat competition in our country, will be left with no choice but to adjust its sails in order to survive,”it said.

The PPIA stressed that the plastic industry has been facing numerous adversities, such as the enactment of the Extended Producers Responsibility Act, the pending excise tax bill for single-use plastics, as well as plastic-banning ordinances by local government units.

“With this development, we can expect plastic manufacturers, who are 95 percent small and medium enterprises (SMEs), to stretch their capacity in order to avoid loss of businesses that may result in massive unemployment in the downstream manufacturing labor force, as well as in the allied sector workforce,”PPIA said.

Moreover,the PPIA said Filipino consumers would be on the losing end as they have to contend with the increase in prices and this also contributes to inflationary pressures.

“Their take home pay will be affected. Products such as packaging for basic necessities such as food and beverage, personal care, as well as cosmetics, agriculture and fisheries, pharmaceutical, medical and health institutions, constructions, public utilities, automotive, retail sector, and others will be affected by the additional safeguard duty,”the group said.

DTI earlier explained that the imposition of the safeguard duties was in line with the recommendation of the Tariff Commission in its final report on the imposition of safeguard measures against the importation of HDPE pellets and granules from various countries, where it recommended an ad valorem safeguard duty of two percent on importations of HDPE pellets and granules for a period of three years.

“The commission recommended the application of the appropriate definitive general safeguard measure on importations of HDPE to prevent the imminent occurrence of serious injury to the Philippine HDPE industry,”the DTI said.

It said the rate of duty of two percent would allow the domestic industry to adjust its selling prices to a level that will allow full recovery of its cost of production.

Under the Safeguard Measures Act, the government may impose tariffs on imported commodities if a surge in imports of such products cause serious injury to the domestic industry.