Investors seriously hit by PNP’s chemicals control policy – PEZA

by Bernie Magkilat | January 10, 2016

Investors complained that the expanded controlled list of imported chemicals and new rules imposed by the Philippine National Police, which is intensifying efforts to avert terrorist activities in the country, have caused them huge losses in revenues and exports.

Elmer San Pascual, spokesperson of the Philippine Economic Zone Authority, told reporters that some PEZA locators have even temporarily stopped operations while one big electronics firm has threatened to pull out because the new PNP rules have slowed down their operations and affected their deliveries abroad.

“Those seriously affected are export companies, one almost left as they have to explain to their principals every time they cannot deliver. These are not just ordinary firms but huge companies with thousands of employees,” San Pascual stressed.

Most of companies affected by the new PNP controlled list of chemicals are electronics and semiconductor firms, which require some chemicals in their production processes.

According to San Pascual, at least 35 percent of importations by PEZA-registered companies are accounted for by various chemicals used in their production. PEZA companies have to import the chemicals required in their production to avail of the duty-free importation privilege, which is part of their incentives.

“Electronics firms are hardest hit but the handicrafts sector has also suffered because they need chemicals for dying of their raw materials,” he added.

As of October, 2015, PEZA exports posted negative growth of almost one percent or equivalent to $1.5 billion in value.

“This is partly due to their difficulty to secure the chemicals needed in their production,” San Pascual said.

In June last year, the PNP implemented Republic Act 9516, which contains the expanded list of imported chemicals, initially to 41 and now to 100, as authorities tighten their control on chemicals that are hazardous and can be manufactured into bombs to carry out acts of terrorism  in the country.

A chemicals industry official said there used to be only three controlled chemicals – nitrates, nitric acid and chlorates but under when Republic Act 9516 was passed it has a catch-all provision to include all other chemicals.  The new law took effect in June last year thus affecting exporters’ operation in the second half of the year.

Aside from the catch-all provision of the new law, rules in importing chemicals have become stricter and stringent.

For instance, when these chemicals are transported they will have to be escorted by PNP personnel to their destination.

“It costs P2,500 per trip and their estimates  show the cost could run to millions for one company alone,” said San Pascual.

“Chemicals that used to be purchased over the counter are now subject to the various permits and licenses,” he added.

From what used to be 1 to 2 processing days for permits and licenses, it will now takes weeks to a month to process these permits.

“There is a huge cost involved for the escort, permits and several licenses. With all these regulations, exporters cannot source chemicals easily,” he said.

With mounting complaints particularly from the PEZA investors, the PNP has issued a moratorium on the new rules until February this year.

“We are ready to comply but we are also asking for reasonable requirements,” San Pascual said stressing there is a need to clear the list of chemicals that are used for production by legitimate companies.

An industry official said “These new rules entail additional cost to companies. It came to a point where exporters can no longer source their chemicals so they have to cancel the orders.”

He said the PNP will be meeting soon with other government officials and businesses. The PNP is also open to reviewing its list as well as the rules and procedures by setting some criteria, including the volume and concentration limit of the chemical to be imported. At present, the rule is more general and there is no specification on volume and concentration level.

They have to craft the criteria on what chemicals to include or exclude from the controlled list. The PNP is also looking at streamlining procedures.

Source: www.mb.com.ph