Government must come back to the iron and steel industry

Government policies are always affected by whose interest is being considered. In the case of the steel industry, the clashing interests are those of the importers and the traders, Roberto Cola said. He cited China, which now offers rebates to steel manufacturers. The Chinese government encourages exporting high value added products. It discourages exports of semi-finished products, like slabs, because it’s energy intensive and producers don’t make much money.

“So that’s the policy of China, which is correct. You see it is their government policy. We can also do that.

But what we’re doing now is export our iron ore, even nickel ore, instead of processing them here,” he said.

Although the government is giving incentives to investors, nobody has come in to put in their money.

According to Cola only big companies have the capability to integrate the industry since it requires multibillion-dollar investments.

“If you don’t have a big company it couldn’t be done. Because investments in this scale right now if you go integration, you would need no less than $1 billion. There is no steel company here that can have that money. Even before, it has always been the government that could raise that money. Even in other countries, like Vietnam, China, the state dictates the prices. Now in the power industry there are a lot of players it has been liberalized. A lot of foreign interests have come in,” he said.

The steel industry has been liberalized but investors are still reluctant to put their money into the industry and until now the steel sector is not in the radar screen of the investors.

This is because, Cola said, the government hasn’t really promoted it.

Effect of globalization

And there’s the effect of the globalization. China has a lot of steel and iron exports so Philippine manufacturers and traders just import although some manufacturers say they fear China will flood the market with cheap iron and steel.

In one of its presentation, PISI predicted that Association of Southeast Asian Nations (Asean) demand for steel products will grow over the years as the region’s growing population, which is approximately 550 million to 600 million, will need increasing amounts of steel for shelter, trade and commerce, transportation and communication, and infrastructure.

Domestic production capability within Asean must and will grow because history shows that steel demand eventually grows among developing nations. But demand growth will vary across the region owing to varying local economic conditions as well as other factors.

“In the face of this reality, the steel industry will play an important role in meeting the national growth and development aspirations of countries within the region,” PISI said.

The steel industry is such a significant industry important to a country like a developing country such as the Philippines. It’s the driving force towards industrialization and growth as its end effect.

But until the government realizes its importance only then will the industry be integrated, advance and support the country’s growth. –ANGELO SAMONTE, Manila Times