The Philippine Petroleum Industry

THE PHILIPPINE PETROLEUM INDUSTRY is experiencing positive momentum. The oil exploration sector is characterized by a greater number of active Service Contracts and more impending new investments. The petroleum retailing industry, on the other hand, faces a market shakeup as new players enter the scene and threaten to steal a bigger market share from the oil majors, otherwise called as the “Big Three”. The oil majors consist of Petron, Shell and Caltex, which had long been dominating the downstream oil market. The Deregulation Law in 1998 caused the shrinking of the oil majors’ share from an almost complete monopoly, i.e. 100 percent, to around 85 percent in the first half of 2006. The 15 percent share that was lost went to independent oil players such as Flying V, Total, Seaoil, Unioil, etc. It is likely that this market structure shift will continue in the coming years.

One basic feature of the petroleum industry is that it is heavily import-dependent. About 99.7 percent of the country’s total crude oil supply in 2005 has been accounted for by imports. Retailers likewise largely rely on importation for inputs, either for crude oil (by local refineries) or finished petroleum products. The oil majors, except Shell who recently closed its refinery plant, import crude oil and process them through their own refineries. The new oil players, in contrast, import finished oil products and takes care only of setting up refilling stations and selling the product. Both of these two groups of petroleum resellers are burdened by the persistent rise in world oil prices. Global petroleum pricing is expected to tighten as demand increases, while OPEC cuts production. Local demand for petroleum products are likely to be up given improved economic fundamentals, hence, greater business activity at least until the medium-term. The Biofuel Act of 2006 will hype competition further and mitigate oil price surges. This new development will prove more advantageous strategically to new oil players that are at the height of facility building and expansion, relative to the oil majors who will need to reconfigure their equipments to suit the new technology.» back to top

The Philippine Pharmaceuticals Industry

The local drugs market, which has been traditionally dominated by multinational companies, currently faces a shake-up. The generic drugs sector is on the rise owing to new legislations directed towards reducing local medicine prices. In 2006, the generic drugs segment will likely corner a bigger share of the market, eating up a portion of the branded drugs.

Demand is strong as Filipino consumers gain greater health consciousness and higher spending power. The high population growth rate in the country and the improved health care sector are sure indications of stable and positive growth in the pharmaceuticals industry. Drugs production is likely to grow by 6 to 7 percent in 2006, until the medium term. World pharmaceuticals industry scenario is also positive; albeit China’s fast economic growth is expected to challenge established global industry structures.» back to top

The Philippine Packaging Industry

The Packaging Industry encompasses the array of products and services that are used to prepare goods for preservation and storage, transport and distribution, and retailing and consumption. These packaging materials, besides serving as containers, must also protect goods during storage and delivery, make handling or use of products convenient for consumers, and provide buyers information about the products they contain. Hence, the packaging industry is inherently interlinked with various other industries, such as food and beverages, garments, pharmaceuticals and electronics. Although the demand for packaging products hinges on the performance of these user industries, this link nevertheless provides the packaging industry with potentials and prospects for growth.» back to top

The Philippine Industrial Chemicals Industry

The Philippine industrial chemicals industry is the largest component of the chemical and chemical products industry, which is major subgroup under the manufacturing industry. Industrial chemicals manufacturing covers the production of all types of basic industrial chemicals, explosives, ammunitions, synthetic resins, synthetic rubber, fertilizers, petrochemicals, sucro-chemicals, and coke and coal chemicals.

Industry leaders consist of bigwig chemical companies such as JG Summit Petrochemical Corp., PHILPHOS, COCOCHEM, and AFC Fertilizer and Chemicals Corp., among others. These companies posted the highest firm revenues in 2004 and continue to hold vital shares in the market. Aside from supplying for the local demand, these major industry players also service the export market.» back to top

The Philippine Handicrafts Industry

Philippine handicraft products fall mainly under the classification of “Gifts, Toys and Houseware”, although the handicrafts industry does not really have a separate product classification. The United Nations Development Program defines handicrafts as articles produced with or without the use of tools, simple instruments or implements operated directly by hand or feet including improved upon machine-made materials with a novel finished product (UNDP, 1981), including improved products depicting native designs.

The sector is comprised mainly of cottage industries with a small number of employees, and where the artistry of the craftsmen is of utmost importance. In the handicrafts sector, one of the most crucial factors in formulating market success is product design and innovation. This prompts handicraft manufacturers to invest in skills training for its workers. They also ensure that they are abreast with the latest developments in furniture and handicraft designs in the world market.» back to top

The Philippine Furniture Industry

The Philippines now ranks as one of the world’s best producers of fine furniture – from the traditional to the casual contemporary to the highly experimental. The furniture industry manufactures affordable products of exquisite craftsmanship that is the successful result of modern technology combined with human creativity and love of beauty.

From its prime position as the major source of creatively designed wicker and rattan furniture, the industry has successfully diversified into wood, metal, stone, bamboo, leather and mixed media furniture collections. Wrought iron and aluminum are principally used for metal furniture. Other inputs include fittings and finishing materials.

The industry utilizes wood, rattan, bamboo and other materials such as buri, metal, stone/marble and plastic, which are creatively and finely handcrafted into various products including: leg items for chairs, tables, beds, setters case goods such as cabinets, desks, chests of drawers, kitchen storage units, combinations for building/home fittings, shelves and ornaments. Furniture exports are divided into the following sub-groups: rattan, wood, bamboo, furniture parts, metal, plastic, other materials and furnishings.» back to top

The Philippine Mining Industry

Under the 1994 Philippine Industrial Classification Code (PSIC), the mining and quarrying industry is classified under the manufacturing sector. The mining and quarrying industry is comprised of a wide array of activities encompassing the extraction of minerals occurring naturally as solids, such as coal and ores; liquids, such as crude petroleum; or gases, such as natural gas.

Activities in the industry include underground or surface mining, well operation, and all supplemental activities aimed at preparing the crude materials, done generally near or at the mine site, such as milling, dressing, and beneficiating. Also included in the industry are all preparatory works needed in order to make the material marketable. » back to top