Petrochemicals

The Philippine petrochemicals industry aims, In the short- to medium-term, to secure and provide the vital resin requirements of the entire country in a competitive, efficient and timely manner so as to catalyze sustainable and dynamic manufacturing activities fueling growth across all user-industries. In the medium- to long-term, it seeks to harness the tremendous potential of the entire petrochemical streams (over 2,000 industrial/chemical products), which should provide a formidable backbone for Philippine industrialization.

The industry's objective is to achieve self-sufficiency in strategic resin supply and increase the petrochemical sector’s contribution to total Philippine GDP from Php 44 B in 2010 to Php 113 B in 2018 and Php 215 B by 2025 through the progressive integration of upstream, midstream and downstream components of the sector. Such progressive integration will involve the entry into various other petrochemical branches that will provide exponential value addition in different industries, spurring domestic and export growth and potentially contributing up to 5-10% of GDP by 2025.

Towards this, the industry recommends the enforcement of anti-smuggling measures to eradicate substandard and illegal petrochemical products in the local market, implementation of reforms to ease doing business, and update the industry masterplan to rationalize location and and logistical network of upstream-midstream-downstream facilities in a closely-linked value chain.

01

About Petrochemicals

Petrochemicals is a strategic sector of the economy that could anchor the country’s industrial development. Because of its strong linkages upstream, midstream and downstream, the sector provides robust multiplier effects on other main sectors of the economy such as construction, electronics and computer, medical services, transportation and automotive, packaging, education, telecommunications, electrical and water distribution, agriculture and fishery, and furniture, among others.

The petrochemicals industry centers around the production of plastic resins, which is used as inputs to the downstream plastics industry to form different products. The total petrochemical investment in the country is estimated to exceed US$ 2 Billion pesos with 895,000 metric tons per year total capacity in polymer production. Total domestic capacity for resins presently exceed local demand but remain unutilized due to intense competition from imports, the absence of domestic monomer production, and intermittent supply constraints for feedstock or monomer.

There are currently seven operating firms in the industry, employing more than 1,200 employees directly and around 1,800 workers indirectly. With the addition of upstream projects under construction and expansion plans, direct and indirect employment is estimated to reach more than 5,000 by 2014.

The establishment of the Philippine’s first naphtha cracker facility by JG Summit Olefins Corp. (JGSOC) is expected to provide the first step for upstream integration of the petrochemicals industry.  It provides a powerful means to actualize the potential of developing various downstream operations that would broaden the petrochemicals industry product range and deepen its primary product offerings in the country. With the growing demand for resins from both the domestic and international markets, the promising outlook for the domestic economy, and the government initiatives to boost the manufacturing sector, investments in the petrochemicals industry can be expected to expand further.

The main industry association in the petrochemicals sector is the Association of Petrochemical Manufacturers of the Philippines, Inc. (APMP). It is a member of the Federation of Philippine Industries (FPI) and the Philippine Chamber of Commerce and Industry (PCCI).

02

Facts and Figures

Petrochemicals Industry Performance (in MT)

  2007 2008 2009 2010e 2011e
Local Production* 288,649 269,481 320,222 299,137 272,346
Resin Imports** 442,605 376,843 387,039 436,747 404,098
Total Available 731,254 645,824 707,261 735,884 676,444
Less: Resin Exports 10,032 49,157 99,391 117,819 58,529
Net Compounded Local Sales 721,222 596,667 607,870 618,065 617,915
Average Price/MT in US $ 1,329 1,470 1,060 1,433 1,426
Average Forex Price Php:US$ 46.15 44.47 47.64 45.08 43.31
Est. Local Sales Value, in billion Php 44.23 39.00 30.70 39.93 38.16
* Local production is used using monomer inputs. Monomer import data is based on figures reported by RP.
** Resin import data based on figures reported by exporting countries
e estimates

03

Policies

IPP 2014-2016

The manufacture of chemicals is among the preferred activities in the IPP. This includes the production of petrochemicals and its derivatives, including, but are not limited to, the manufacture of derivatives from ethylene such as ethylene dichloride (EDC) and vinyl chloride monomer (VCM); olefins and polyolefins [Polyethylene (PE), Polypropylene (PP), Polystyrene (PS), and Polyvinyl Chloride (PVC)], derivatives from propylene, derivatives from mixed C4, and aromatic derivatives.

BPS Product Certification Scheme

The DTI’s Bureau of Product Standards lists certain petrochemicals products as among the products for mandatory certification under mechanical/building and construction materials.

The certification of petrochemicals products is guided by the Philippine Standard (PS) Quality and/or Safety Certification Mark Scheme.

04

Programs

Industry Development Program

The Technical Working Group (TWG) for the Chemicals Industry Cluster – which includes petrochemicals – serves as the coordinating mechanism through which industry concerns are addressed. The TWG is organized into four action tasks, namely:

  • FOR TRADE & INVESTMENT MATTERS – covering issues regarding industry clustering, tariff concerns, smuggling, and trade and investment promotions;
  • FOR TALENT DEVELOPMENT & INNOVATION – covering issues on skills development and introduction of innovation and process;
  • FOR EASE OF DOING BUSINESS – covering issues on assistance that the government could provide the industry as regards streamlining the permit and documentary requirements which overlaps among various agencies; and
  • FOR ENVIRONMENTAL PRACTICES – covering issues on plastic banning, life cycle assessment (LCA) and the use of the same as basis of scientific and technological studies in crafting laws that would affect the industries.

Among the TWGs activities are the following:

  • Ease of Doing Business. With the release by the DENR of EMB MC 2014-003 (or the Supplemental Guidelines for DENR AO 2007-23, prescribing additional requirements for the issuance of the priority chemical list (PCL)), the TWG was able to obtain a PCL exemption for the industry. In addition, a series of workshops for Ease of Doing Business from January to February 2015 was conducted to come up with a roadmap to streamline the processes of issuance of permits and licenses by various regulatory agencies for the chemicals industry.
  • Human Resource Development. TESDA and SPIK conducted a workshop in consultation with the various chemicals industry associations in October 2014 to come up with Training Regulations for a) plant process operators and b) QA/QC laboratory technicians. These training regulations are currently being reviewed by TESDA. After finalizing the training regulations, TESDA and SPIK shall proceed to work on the Assessment Tools for the skills identified.
  • Life Cycle Analysis (LCA) for Plastic Packaging. In view of the increasing number of LGU’s banning the use of plastics, the conduct of LCA on plastics has become a priority. This is also pursuant to R.A. 9003’s mandate for DTI to come up with a non-environmentally acceptable products (NEAP) list. In December 2014, the initial results of the LCA Study were presented by the Chairman of the Plastics Industry TWG. The LCA Consultant from DLSU presented to the group his simulation results.
  • JGSOC Naphtha Cracker. The JG Summit Olefins Corporation (JGSOC) confirmed that the first Naphtha Cracker Plant in the Philippines started its commercial operations on November 1, 2014. Currently, the downstream polymer plants of JG Summit Petrochemical Corporation (JGSPC) are already using polymer-grade ethylene and propylene manufactured from the JGSOC Naphtha Cracker Plant to produce polyethylene (PE) and polypropylene (PP) resins, for sale to both domestic and export markets. JGSOC also started to export pyrolysis gasoline (pygas).
  • Greening the Industry Roadmaps. In the 2nd Scoping Mission for Greening the Industry Roadmaps project conducted by GIZ, the Plastics Industry was identified as one of the priority sectors. Following this, BOI and PPIA collaborated in conducting a workshop on ISO 14000-Environmental Management and ISO 50001-Energy Management System Standard for PPIA-member companies in February 2015.
  • Reverse Trade Agreement. Pacific Paint (Boysen) Philippines, Inc. has entered into an MOU with SHDA on September 26, 2014. BOYSEN would be supplying SHDA with white latex paint for their housing projects. There have been similar negotiations between SHDA and two (2) other paint companies (Davies Paints Philippines, Inc. and Campbridge Paint, Inc.).
  • Product Standards for Paints. In 2014, the BPS-TC on Paints re-convened and agreed that the priority products would include Semi-gloss Latex, Gloss Enamel, and Alkyd Metal Primer Products. The product standard for Semi-gloss latex topcoat for white and light tints was finalized.
  • Comprehensive Tariff Review. A Comprehensive Tariff Review (Line-by-line tariff review) for the chemicals industry was conducted, in preparation for ongoing and future FTA negotiations. The Chapters reviewed include Chapters 28, 29, 31, 32, 33, 34, 35, 36, 37, and 38. Chapter 39 remains under review, with the PPIA and APMP finalizing their position papers.
  • ASEAN-Japan Chemical Safety Database (AJCSD) Seminar. The AJCSD’s objective is to come up with a database of all regulated chemicals in ASEAN and Japan, as well as share chemical regulatory information among ASEAN countries. A mini-seminar on the AJCSD Project was facilitated by experts from the Japan Ministry of Economy, Trade, and Industry (METI) and the National Institute of Technology and Evaluation (NITE). The TWG, regulatory government agencies, and the private sector have also agreed to establish a national database containing the regulations for Philippine chemical products. BOI is currently coordinating with PEZA to assess the feasibility of using their Chemical Importation Tool (CIT) database facility for this purpose.

05

Champions

Association of Petrochemical Manufacturers of the Philippines (APMP)

Mr. Homer Maranan
Executive Director

Unit 1405 Cityland 10 Tower 1,

156 H.V. dela Costa St., 1227 Makati

Tel. No.: (632) 753-4189

Email: apmp010@globelines.com.ph

Board of Investments (BOI)

Dir. Evariste M. Cagatan
Sectoral Champion

Industry and Investments Building,

385 Senator Gil Puyat Ave,

Makati City Philippines

Tel. No.: (632) 890-9329

Email: EMCagatan@boi.gov.ph