Chemical sector fears 15% sales drop in 2016

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New regulations to slow business – Philexport
THE Philippines’ chemical sector fears sales could decline by up to 15 percent this year with the impending implementation of new government regulations over 41 chemical products.

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“The domestic sale of chemicals will slow down. Export sales of chemicals might also go down, maybe by 10 to 15 percent,” for both the local and export markets, explained Oscar Barrera, trustee for the chemicals sector of the Philippine Exporters Confederation Inc. (Philexport).

Barrera said chemicals exports slumped by 35 percent last year, mostly due to a drop in output of the plastics sector.

The Philippine National Police (PNP) is to start regulating the import, export, and handling procedures of 41 chemical substances, in accordance with Presidential Decree 1866. DILG Secretary Senen Sarmiento issued a moratorium on implementation of the new regulations late last year, however, suspending the implementation of the new scheme from December 9 last year until at least April 30 this year.

The suspension was imposed to allow the PNP time to draft the implementing rules and regulations (IRR) of Republic Act No. 9516, which lists chemicals to be controlled for safety purposes, indicates procedures on regulating such chemicals, and provides guidelines for transferring and handling the 41 chemicals covered by the law.

“Once the IRR is in place, I’m sure there will be effect, there will be a slowdown. Maybe there will be no growth, maybe there will be a decline, especially if it takes a long time to get the permit from the PNP,” Barrera said.

Barrera said the biggest projected impact would be on the handicrafts sector, which has experienced difficulty securing certifications proving that the chemicals used in the manufacturing of products are not cancerous.

Barrera suggested that the strong push to tighten regulation of potentially dangerous chemicals was spurred by the non-disclosure of small-time chemicals suppliers —particularly those located in the provinces—who do not provide sufficient details about the chemicals they sell.

“The foreign buyers now, especially in the developed countries, are asking for certification that the chemicals used in coloring handicrafts like abaca, handbags, and so on are not cancerous,” Barrera said.

He added that the country’s export markets for chemicals are primarily Asian countries including Indonesia and China, Europe and Middle Eastern countries.

Local industries that use chemical products include pulp and paper, soap and detergent manufacturing, and handicrafts.

Barrera said industry stakeholders are continuously lobbying regulators to relax the regulatory control over chemicals.

The IRR on RA 9516 is still in development, falling behind the Board of Investments’ (BOI) earlier projection of a mid-April completion that would permit the new regulatory program to take effect May 7.

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