This was announced by President Arroyo during the inauguration of the newly-reopened NSC plant.
President Arroyo welcomed the reopening of the mothballed steel plant which will revitalize the economy, not only of Davao, but of the whole country as well.
Arroyo, speaking in Visayan, welcomed the investment made by the Ispat Group which had, way back in 1994, already expressed interest in NSC and which proved its confidence in the Philippine economy by continuing to bid for the steel firm.
Arroyo praised former Trade and Industry Secretary Manuel Roxas II for his effort in settling the dispute among the creditor-banks and brokering the entry of new investors in NSC.
Roxas, for his part, highlighted the role of President Arroyo in convincing Malaysian Prime Minister Mohamad Mahathir to convince the Malaysian state-owned asset firm, Pengurusan Danaharta, not to insist on liquidating the steel firm and instead agree to a write-down of its exposure and allow for a possible investors and rehabilitation of NSC.
Apparently responding to the appeal of the Ispat Group for some form of government assistance to NSC to get back on its feet, Arroyo announced that government would study the possibility of declaring the NSC plant as a special economic zone.
If the NSC plant is declared as a special economic zone, it would enjoy duty-free importation of capital equipment as well as income tax holiday.
However, the Philippine Export Zone Authority (PEZA) requires that as a special economic zone, at least 70 percent of the production should be for export.
The 70 percent export requirement is for foreign-owned firms while a lower export requirement of 50 percent is allowed for Filipino firms. Pramod Mittal, concurrent chairman of the Ispat Group and its local subsidiary Global Infrastructure Holdings Ltd. (GIHL), expressed confidence that they would be able to bring up NSC’s production of hot and cold rolled steel to 1.5 metric tons this year and hit NSC’s rated capacity of two million metric tons by next year.
Thus, by 2005, Mittal is projecting an optimistic turnover of $850 million.
Mittal pointed out that demand for steel continues to rise and supply remains far below the demand.
GIHL, Mittal said, would initially invest $90 million in NSC this year for operating expenses, working capital, start-up and takeover cost.
Next year, Mittal said, GIHL would put in another $100 million.
GIHL is also working on a business plan for NSC and how to make it a fully integrated steel complex.
The study, Mittal said, is expected to be completed by the end of this year.