Problems the industry faces today

A steady supply of iron ore is not a necessity for the Philippines to develop its steel industry, Roberto Cola said.

“You don’t have to have your own iron ore. For example Japan doesn’t have iron ore. In the Philippines we have a little reserve of iron ore but it’s not a must to have it. You see Korea, Taiwan, Japan they don’t have iron ore. Although right now we are being left behind by our neighbors,” he added.

He said local companies can use the country’s small supply of iron ore perhaps even by using some small technology for steel production. They don’t need massive technology to use this supply.

Currently, since the Global Steel Philippines Inc. isn’t producing slabs, there’s not much production of flat products in the Philippines only long products, according to Cola. Slabs are used to produce welded pipes and tubes, galvanized iron, GI sheets, zinc coated sheets and tin plates.

On the other hand, billets are primary materials for making long products like deformed bars, plain bars, angle bars, etc. It is also used to make GI wires, cyclone wire, chicken wire, and barbed wires. Others products include nails, bolts, nuts.

Smuggling problem

Cola sees smuggling as the major threat to local steel industry.

“It will kill the steel industry, deliver the final blow. The smugglers first of all don’t declare the exact quantity,” he said.

For instance, if the true volume is 1,000 tons, the smugglers will declare it as 200 tons. With the value-added tax (VAT) at 12 percent the government losses a lot, Cola said. It doesn’t end there. They will misdeclare the value of the 200 tons. If it is valued at $200 they will declare it at $100. Besides these manner of cheating there are also rigged tariff declarations.

“If you release these products to the market of course the smugglers have market advantage. VAT is an important thing. With the misdeclaration they gain a lot. But this not happening only in the steel industry.

Its true for other commodities,” he said.

The bad thing is when smuggled steel go directly to the market, which Cola suspects is happening. The government doesn’t have a record on these transactions. If there are records, these are inconsistent and unreliable.

Cola cited a case last year that even the Bureau of Customs couldn’t trace where a 200,000-ton shipment of steel went. Authorities can’t find it in the Bureau of Import Statistics. The record system is so bad that even customs personnel themselves can’t reconcile it, according to Cola.

Even the accreditation of the importers list went missing.

“It only shows that there is a deliberate attempt to hide something so as not to trace imports.

“So that’s the problem in the Philippines. They say we can’t get enough taxes. In the steel industry we are losing P500 million a month, in oil we are losing P3 billion a month. It’s very big and that’s only for two commodities. So smuggling will kill Philippine industry,” Cola said.

The industry and the government must work together to combat smuggling. Eradicating smuggling will ensure government’s revenue generation and allow the local industry to survive and thrive. Eliminating smuggling will level the playing field through fair pricing and fair competition.

The country could also promote stable and gainful employment once smuggling is minimized. Government and industry cooperation will also help bring better infrastructure because inferior imported goods can no longer enter the country.