Current Developments

The Philippine Surfactant Industry has undergone a long history. Its growth has been given a directional push by the passage of Executive Order (EO) No. 259 in 1987. EO 259 mandates the use of indigenous coco-based surfactants, e.g. coconut fatty alcohol sulfates (CFAS). Presently, the soap and detergent industry is formulating its products with a minimum 60% local content primarily using CFAS. The same EO still allows the use of petroleum-based surfactants up to 40% maximum.

We can classify the players of this industry into merchant/commercial group and those which produce in-house for their own use. Stepan Phils., Inc. (SPI) and LMG Chemicals Corp. (LMG) belong to the merchant/commercial group. These companies produce the surfactants as presented above and sell them to the soap and detergent makers.

The other group belongs to the soap/ detergent makers. These companies have their own sulphation and/or sulphonation units to produce the surfactants that they need. Example of such companies, e.g., Unilever (PRC) Phils., Colgate Palmolive Phils., and some other Filipino soap/detergents makers like Peerless Products Manufacturing Corp. and Optimus Industries.

The Philippines' sulphation/sulphonation capacity is estimated to be 104,000 MTPY. The Philippine total surfactants raw material capacity, therefore, including the AB production, is estimated to be about 130,000 MTPY.


Factors Affecting the Industry

In 1995, EO 259 was part of the notification submitted by the Philippine Government to the World Trade Organization (WTO) Council for Trade in Goods pursuant to Article 5.2 of the Trade-Related Investment Measures (TRIMs) Agreement, relating to the requirement for the soap and detergent manufacturers to use at least 60 % locally produced cocochemical surfactant. The Philippines, as a developing country, was allowed five (5) years from 01 January 1995 up to 31 December 1999 within which to eliminate the prohibited TRIM.

Another issue that concerns the sector is the continuing importation of "Blu" bars from Indonesia. The local detergents manufacturers are unduly disadvantaged since these imported detergent bars do not conform with the provisions of EO 259.

As a whole, the industry continues to face increasing competition from imports. Specifically, the polyphosphate industry and the alkylate industry are suffering from cheap imports from China, Taiwan and Korea, despite the 20% import duty imposed on these products.


Future Developments

Despite the lapse of the five (5) years within which the Philippine has to eliminate the prohibited TRIM, there is still in effect, a Philippine law, i.e., EO 259 which is not yet amended, changed or repealed. All attempts must be made to reconcile or harmonize the provisions of EO 259 with our treaty commitment under the Agreement on TRIM, and if irreconcilable, for the Executive, through the Agency concerned to continue working for the amendment or repeal of inconsistent provisions of EO 259.

In view of the trade liberalization and globalization, numerous companies have made actions towards rationalization of their operations. In the Philippines, for example, we have seen several multinationals remove their Philippine operations, transfer the manufacturing facilities in other countries but still maintain their local sales and marketing units. In the case of P&G, however, it has been announced that they will continue their detergents manufacturing in the Philippines. They have also announced that P&G will rationalize their detergent operation by making the Philippines their Detergent Manufacturing Base.

If such move materializes, we expect increases in the manufacture of synthetic detergents, and concomitantly, surfactants usage/consumption. This, of course, augurs well for the Philippine Surfactant Sector.