I. The Philippine Chemicals Industry

II. Directory of Members

III. Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH)

• Information for exporters to the European Union leaflet - gives an overview of the REACH regulation in relation to non-EU companies.
• Pre-registration leaflet - gives an overview of the pre-registration process.
• Pre-registration Q&A - answers to frequently asked questions on pre-registration.
• Practical Steps for Pre-registration - a hands-on guide for companies preparing for pre-registration.

For additional information, you may also visit the following websites:

1. REACH Navigator - an automated self-assesment tool to figure out your obligations under REACH: http://reach.jrc.it/navigator_en.htm
2. European Chemicals Agency website: http://echa.europa.eu/home_en.html (includes REACH guidance documents, software tools, FAQs, Helpdesks, legislation, and more)
3. REACH workshop presentations and videos: http://ec.europa.eu/enterprise/reach/events_en.htm
4. REACH on Europa: http://ec.europa.eu/environment/chemicals/reach/reach_intro.htm

A History

The origins of the chemical industry in the Philippines can be traced back during the 19th century. This mainly involved the small-scale and rudimentary production involving some chemical processes.

As early as the 1950s, leather for slippers, harness, and soles were already being produced in Meycauayan, Bulacan, with the leather being tanned through the use of vegetable oil tannin extract from guamachili tree, or 'kamachile'.

Shortly after, around 1875, soap making as a trade -- involving the mixing of coconut oil with alkali (lye) obtained from leaching wood ashes in small iron pots -- started in the country.

It was not until the early 20th century that more significant and advanced chemical activities began to take place. In 1911, the first modern soap factory was built, followed quickly by others. Intensive sales and advertising drives developed the Philippines market for soap. By the time World War II broke out, there were already 135 soap establishments in the country, with only three processors using modern methods.
 
THE PHILIPPINE CHEMICAL INDUSTRY TODAY
Investment Opportunities
 
Under a liberalized economy with investments open up to 100% foreign equity, the Philippines has been primed for globalization.

In recent years, the Philippine chemical industry has been one of the most heavily invested. Investments in chemical industries registered with the BoI and the Philippine Economic Zone Authority (PEZA) have so far amounted to more than US$1 billion since 1997 with the petrochemical sector claiming the bulk with investments of over US$935 million.

Since the chemical industry is considered a net importer, the BoI's objective is to make it a net exporter with emphasis on special chemicals and natural-based products, particularly targeting oleochemicals as a growth sector. With many downstream industries relying on chemicals, the enhancement of natural-based products is expected to lift the industry's position in the global trade.
Through import substitution, the industry is able to supply various crucial downstream industries like paints, pharmaceuticals, soaps, detergents, plastics, adhesives and foundry resins.
This oleochemical industry presents clear opportunities for investments because of strong possibilities for export. Although the players in the country are not as big as the producers in Malaysia and Indonesia, investment opportunities and growth potential are worth considering. Plus, cocochemicals have been favorably accepted in export markets due to their environment-friendly properties.

Moreover, there is increasing interest in the production of cocodiesel due to its potential as a good alternative to diesel.

Globalization, liberalization and tariff rationalization
 
The country's chemical firms have responded to the challenges brought by globalization to utilize new technologies and adopt environment-friendly processes.

It has been argued however that the Philippine chemical industry at this point has not been competitive enough due to economies of scale of products. To optimize growth, the country needs to improve basic industries and minimize imports. The government answered this call to some extent through its policy of pursuing greater market access while nurturing local industries which need time to adjust to become internationally competitive.

In 2003, the country's bilateral agreements under the ASEAN Free Trade Area-Common Effective Preferential Tariff (AFTA-CEPT) went underway. The agreements call for the tariff reduction of 60% of each member country's tariff lines from their present rate to zero. Several industries have petitioned either for a freeze or increased protection for their respective industries.

A case with respect to this petition is exemplified by the petrochemical manufacturers and downstream plastic processors. Plastic resins currently have a tariff of 15% while tariff of finished plastic products stands at 10%. The plastic processors have petitioned a lower tariff for plastic resins in an effort to compete against cheap imported products. On the other hand, plastic resin producers also petitioned for at least a 15% duty for the purpose of nurturing a strategic petrochemical industry. To date, government policy-makers have yet to resolve this problem.

Petrochemical manufacturers have also complained that aside from the high volatility of international process and the low demand for polymers, the market share of imported resins has increased from 43% in 1999 to 50% in 2001.

Overcoming Challenges
 
Economic, political, and security problems in both local and international fronts continue to affect the chemical industry's development. The worldwide economic slowdown also greatly influenced the industry's export performance. The specific factors identified by the key players of the chemical industry are as follows:

• Unfair trade practices and tariff distortions;
• Weak foreign exchange rate resulting in higher consumer prices;
• Conservative position of banks towards lending due in part to high Non-Performing Loans (NPL) ratios;
• Increasing cost of doing business in the form of high cost of electricity and labor;
• Fragmented domestic economy brought about by the archipelagic nature of the country; and
• Unofficial trade - outright, technical and through Customs Bonded warehouses that cause the government to lose an estimated PhP 575 million a year.

Chemical firms have adapted to the challenge of a fragmented economy by practicing effective logistics for reaching, delivering, and providing products and services nationwide. Unofficial trade continues to be one of the major problems as it directly hurts the chemical industries. This result to industry-wide price distortions. Capacity utilization of new plants dropped from 56% in 1999 to 38% in 2001.
 
THE INDUSTRY OUTLOOK

The National Economic and Development Authority (NEDA) set a full year GDP growth target of 4.2% to 5.2% for 2003. It further forecasted that growth would pick up to between 5.2% and 6.0% for 2004.

The Samahan sa Pilipinas ng mga Industriyang Kimika (SPIK) remains confident that these forecasts together with a stable demand for goods and services will provide a healthy scenario for the continuing survival of the Philippine chemical industry.

EXPORT STATISTICS

Please refer to www.tradelinephil.dti.gov.ph/betp for the current export performance.
 
WHAT IS RESPONSIBLE CARE

Responsible Care® (RC or RCARE) is an initiative of the global chemical industry to work together for continuously improving the health, safety and environmental performance of chemical products and processes. Improvement in performance is done by identifying and spreading good management practices and extending support between companies and other stakeholders through experience sharing and peer pressure.

While it is dedicated to improve the industry's performance, Responsible Care also focuses on communication and accountability.

Communication refers to properly informing the stakeholders on what the industry does, performance data analyses, challenges faced, and the achievements so far delivered. With respect to accountability, Responsible Care ensures that the industry's requirements to develop credible processes are verified and the Responsible Care expectations are met by all industry players.

The Responsible Care program was introduced in the Philippines in 1996, a decade after it was organized in Canada. Today, 46 countries, where about 85% of the world's chemicals are manufactured, are into the Responsible Care discipline.
 
RESPONSIBLE CARE PHILIPPINES

SPIK subscribes to the Responsible Care doctrine and commits the whole organization in promoting, monitoring, and supporting its members in the implementation of the program's initiatives.

SPIK officially launched Responsible Care in 1996. Since then, it has been promoting the discipline through a series of advocacy campaigns. Seminars, workshops and meetings, held quarterly, are open to SPIK members, allied associations, government, academe, and services providers.

Responsible Care practitioners in the region are regularly invited to illustrate how the fundamental features of the program are implemented. The sharing of experiences and success stories from across the region has brought about growing consciousness on the program's features. Starting with 19 companies that committed to the program in 1996, the number of RCare subscriber companies has grown to 41, representing more that half of SPIK's total membership.

The RCare advocacy led to strengthened ties between SPIK and the government's Environmental Management Bureau (EMB). Programs on environmental education and promotion of health and safety are held as joint projects.

In defining the guidelines in regulatory flexibility in the management of chemicals, an Administrative Order recognized Responsible Care along with the ISO 14000 series as a government attested program. This recognition gave Responsible Care the regulatory support needed to boost its membership.

In the academe, the RCare outreach program has so far benefited two educational institutions where students taking up technical courses were introduced to RCare. This gave deserving students the opportunity to conduct on-the-job training in a chemical firm.

Responsible Care's Six Codes of Management Practices

The codes do not dictate how a company operates, rather they are performance objectives that encourage commitment, innovation, and continuous improvement.

RCARE PHILIPPINES SITUATION AND FUTURE

In late 2002, SRCC drafted the Responsible Care manual aimed to standardize the program's implementation procedure. The manual serves as easy reference for both the practicing Responsible Care company and SRCC, and as a guide to rate the level of implementation.

The first self-assessment exercise focused primarily on the implementation of the six codes of management practices. The results determined the level of implementation and served as a benchmark for measuring the progress of their implementation. The assessment revealed that the level of implementation was still at the development stage. Moreover, there was a low level of activity in the area of process safety.

First, SRCC granted the use of the RCare logo provided that the subscribing company followed the criteria, as follows:

(1) commitment to RCare by signing its guiding principle and presenting this to the SPIK Board for acknowledgement;
(2) Establishment of a fully functioning HSE committee supported by top management;
(3) A self-audit of its HSE program with a clear course of action; and
(4) Availability and willingness to entertain verification visits upon request by the SRCC.

Second, SRCC maintains open communication and consultation with both subscribers and interested groups. In effect, this forms part of the over-all encouragement drive including the regular seminars and workshops.

In July 2003, the results of the second-assessment exercise indicated notable improvements. There were significant developments in process safety and the improvements were being communicated to the eternal stakeholders, as evidenced by increased activity.

RCare Codes are not implemented simultaneously but on a priority basis with respect to the codes most relevant to the company's operation. The reason for this is that not all subscriber companies are manufacturing firms. Chemical traders and service providers only implement codes that are significant to their type of operation.

FUTURE

SRCC plans to have an active partnership with the Department of Health and the Department of Labor and Employment to enhance activities in the area of health and safety. Corollary to this is the strengthening of networking activities with other external stakeholders through open communication and joint activities. For international stakeholders, the SRCC verification team will be institutionalized to keep track of improvements in the programs. There is a strong urgency to build its organizational structure in terms of additional manpower and personnel training. This will boost its capacity to support increasing demand for assisting both external and internal stakeholders. Limited operational funding is a persistent problem and SRCC relies on its resourcefulness to financially support existing and future activities.

The SRCC believes that by enhancing the ability of the industry to handle chemicals safely and by finding new ways to engage the stakeholders in Responsible Care, the groundwork for sustainable development will have a solid foundation.

Source: Samahan sa Pilipinas ng mga Industriyang Kimika (SPIK)