Petrochemicals industry in Philippines attracts investors

Petrochemicals industry in Philippines at the moment is at a start-up stage. This industry is a critical contributor to the overall economic growth of this island nation. To this date, the petrochemical industry greatly leans towards imported raw products due to numerous failed projects and debts. This is in spite of the fact that the market for petrochemicals is likely to remain in good business with an anticipated growth rate of just over five percent in 2011. Credit for this can be given to a rise in domestic demand as well as exports.

Growth in the domestic resins market is prompting oil and petrochemical producers in the Philippines to consider investment in downstream industries. Plans revealed recently include Petron's indication that it would resurrect plans for a PP plant at Mariveles, in Bataan, with a capacity of 160,000tpa PP, expandable to 225,000tpa. The industry is also attracting investors such as JG Summit Holdings planning a US $700 million naphtha cracker at the Batangas complex. However, until a domestic olefins source is developed, the main weakness in the Philippines' petrochemical industry will remain its dependence on imported ethylene and propylene, as well as aromatics and their derivatives.

At least three downstream plants are now underway: polypropylene, polyethylene, and the polyvinyl chloride. A factor seen to affect the viability of the industry is the subject of incentives, fiscal and non-fiscal, which will be made available to these plants. The ultimate objective is for naphtha to have a zero tariff, being the primary raw material of the cracker. Capital incentives and tax holidays are also expected to boost the otherwise marginal returns of the cracker plant. With Philippines finally getting together its petrochemical industry, it can look forward to having its requirements fulfilled and also have the stability it had been aspiring for so long in this sector.