Business World
BY JESSICA ANNE D. HERMOSA, Senior Reporter
INCENTIVES have been approved for a JG Summit Holdings, Inc. unit’s revived plans to put up a P33-billion naphtha cracker facility, the Board of Investments (BoI) chief said late on Monday.
"We approved the naphtha cracker [incentive application] last week," BoI Managing Head Cristino L. Panlilio said in a telephone interview.
Gokongwei-led subsidiary JG Summit Olefins Corp. is behind the P32.883-billion investment, which will annually produce 925,537 tons of polymer-grade ethylene and propylene, pyrolysis gas and other by-products by January 2014, BoI project assessment group executive director Lucita P. Reyes said in a text message.
The project proposal has been revised three times since it was first been docked with the BoI in 2005. The petrochemical firm has blamed the delay on the global financial crisis which made credit scarce.
"They were hit by the financial crisis and then they got busy with their other businesses in the airline, real estate and telecommunications industries," Mr. Panlilio echoed.
The BoI recognized the planned investment as a "pioneer project", he said, making it eligible for a six-year income tax holiday and other incentives such as the duty-free importation of equipment.
Construction is scheduled start next year in Barangay Simlong, Batangas City, he said. The project is expected to directly employ 500 workers and support services should bloat that number to 2,000.
"This is, in effect, a big import substitution project. It will be saving us our foreign currency, Mr. Panlilio claimed.
Ms. Reyes added: "The petrochemical industry is regarded as a strategic industry that provides raw materials for virtually all other industries."
Company officials were not immediately available for comment.
The Philippine Plastic Industry Association (PPIA), for its part, reiterated its plea that tariff protection afforded the planned investment be withdrawn.
"We welcome the news of the naphtha cracker finally coming on stream with limited skepticism...," PPIA President Crispian N. Lao yesterday.
While local production of the raw materials is not expected to lower domestic prices since these will likely track world market rates, it will at least ensure competitive pricing and delivery, Mr. Lao said.
The long-promised investment, however, should not "come at the expense of downstream industries," he claimed.
The government, Mr. Lao said, should still nix a 15% tariff on ethylene and propylene imported outside Southeast Asia as the naphtha cracker facility still hasn’t materialized.
Otherwise, plastic producers will continue to be hurt by competing finished products coming in duty-free from Southeast Asia, he said.
The PPIA formally filed a petition with the Tariff Commission in late 2009 and has yet to receive a decision.
The Association of Petrochemical Manufacturers of the Philippines (APMP), which counts JG Summit as a member, again countered the PPIA petition.
"The tariff structure needs to be preserved," APMP Executive Director Mario Jose E. Sereno said in a text message.
"The investment will definitely be positive for the sector because the full integration will benefit the industry... [It] will ensure consistent availability of resins at competitive prices and therefore enhance the collective value chain," he claimed.
JG Summit Holdings share prices were down 0.73% to P20.75 apiece yesterday.
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