Distressed petrochem sector reels from effects of rampant smuggling

The local petrochemical industry joins a growing list of distressed local industries reeling from the adverse effects of unabated smuggling, it was learned yesterday.

The Association of Petrochemical Manufacturers of the Philippines (APMP), a grouping of companies producing plastic resins such as polyethylene, polypropylene, polyvinyl chloride, and polystyrene, stressed the need for government to clamp down hard on technical smuggling, in particular those done using Customs bounded warehouses (CBWs).

Wilfredo Paras, APMP chairman, said these CBWs are allowed by law to import raw and semi-processed materials duty and tax-free to benefit legitimate manufacturers engaged in exporting at least 70 percent of their output.

However, he pointed out some unscrupulous CBW operators have been importing plastic resins tax and duty free, but instead of being processed into plastic goods for export, are sold as is in the local market.

Imports through these CBWs have increased dramatically this year despite the overall decline of the country’s exports, accounting for a 41-percent increase over the previous year, he pointed out.

Among the measures proposed by the APMP are the pre-shipment inspections of resins to be brought in at 0-3 percent duty and a "no-objection" letter from the Board of Investments to be secured for items being brought in at 0-3 percent tariff.

The APMP said the industry has invested almost P50 billion over the last four years, and generates about P250 million in annual taxes for the local and national governments.

With its significant linkages to almost all other Philippine industries, the petrochemical industry is seeking urgent action from the government to curb smuggling, which threatens its very survival and puts at risk the thousands of Filipinos that the industry employs.