The Department of Trade and Industry (DTI) has imposed a definitive three-year safeguard duty on imported high-density polyethylene (HDPE) pellets and granules from various countries to allow the domestic industry to implement the adjustment plan within that period amid injury caused by the influx of imports.

Based on the Department Administrative Order (DAO) No. 22-13 of DTI issued September 30, 2022, safeguard duties for imported HDPE resins are imposed for a period of three years. The amount of safeguard duty to be imposed for the first year shall be P1,338/MT, P1,271/MT for the second year and P1,208/MT for the third year. The duty shall be applied to HDPE classified under AHTN 2017 Code 3901.20.00.

The DTI decision followed after the positive recommendation from the Philippine Tariff Commission's (TC) to impose tariff duties on imported high-density polyethylene (HDPE) pellets and granules.

The DTI order, however, excluded other products from the general safeguard duty such as PE wax, ethylene acrylic acid copolymer, LDPE, PP, and PET resin. Imported HDPE grades specially made for use in the manufacture of wire and cable jackets/coatings are also excluded as these are not produced locally.

The DTI noted that while it is mandated to protect consumers, there is also a need to balance this with the other sectors as the investors and industries which provide employment.

“There is a need to moderate imports to balance trade,” said the DTI order signed by Secretary Alfredo S. Pascual.

For local manufacturers to adequately supply domestic requirements, they need to be provided a level playing field to enable them to compete with imports. DTI said this will allow the expansion of the industry’s manufacturing base and sales which will generate more jobs for Filipinos and allow the continuity of employment for the existing employees of the industry.

Thus, DTI said the imposition of safeguard duty is not prejudicial to public interest. Users will have the option to choose between imported and local HDPE pellets and granules.

Locally produced HDPE pellets ad granules are intended for film extrusion process, injection molding, blow molding, pipe extrusion, and monofilament extrusion.

These items are being imported in increased quantities both in absolute terms and relative to domestic production starting in the first semester of 2021. “The increase in volume of imports was recent, sudden, sharp and significant enough,” the DTI said adding this has caused injury to the domestic industry as shown by the deterioration in industry market share, sales, and profitability during the period of import surge,

In a statement, JG Summit Olefins Corporation (JGSOC), which represents the local petrochemical industry, welcomed the government’s decision for proceeding with the imposition of safeguard duties on HDPE imports, saying this will contribute to the new administration's drive of ensuring the country’s long-term economic recovery.

“The DTI supporting the TC’s recommendation to apply safeguard duties on HDPE imports is an important step to protect the local petrochemical industry against the surge of cheap foreign resins entering the country. This decision shows the support of the government for the local manufacturing industries to ensure long-term viability especially in these challenging times,” said Patrick Henry Go, President and CEO of JGSOC.

HDPE is a strong, multipurpose resin, used in consumer and industrial goods, such as tanks, pipes, industrial packaging, containers, bottles, healthcare articles, toys, tapes, films, and fibers.

In its final report last June 27, 2022, the TC recommended the granting of an ad valorem safeguard duty of 2% on HDPE imports for three years. This, after its investigation has established the presence of a causal link between the “imminent threat of serious injury to the local HDPE industry in the near future” and the recent increase in HDPE imports.

In three years, the TC expects the domestic petrochemical industry will be able to complete the implementation of the efficiency measures indicated in its adjustment plans and thus, enhance its international competitiveness. This includes having adjusted its selling prices to absorb production costs and operating expenses and generate reasonable margins.

Further, the TC also expects the temporary safeguard measure will allow HDPE manufacturing plants to be more environmentally-friendly, cost-efficient, and technologically-advanced.

“With improved price competitiveness, the domestic HDPE industry will remain a reliable partner in the national government’s development agenda,” the TC report said.

“The DTI’s affirmation will certainly help the local petrochemicals manufacturing sector work towards becoming globally competitive and achieve business sustainability. Ultimately, the rest of the economy will benefit from this in the long run,” added Homer Maranan, Executive Director of Association of Petrochemical Manufacturers of the Philippines.

JG Summit Olefins Corporation (JGSOC) is the country’s largest petrochemical company in the Philippines. Since its establishment in 1998, it has been a pioneer in the local petrochemical industry through its wholly-owned and fully integrated petrochemical complex located in Batangas City. Its products include polyethylene and polypropylene resins, olefins, butadiene and aromatics products, used both by domestic and international manufacturers.

Since January 1, 2022, the two subsidiaries under the JG Summit Petrochemicals Group - JG Summit Petrochemical Corporation and JG Summit Olefins Corporation – have merged, with the latter as the surviving entity and with all business operations now under JGSOC. JGSOC is 100 percent owned by JG Summit Holdings, Inc.