Government urged to review tax perks given to Global Steel

The Filipino Galvanizers Institute Inc. (FGII) and the Federation of Philippine Industries (FPI) yesterday urged President Arroyo to review the tax perks and incentives given to Global Steelworks International Inc. following violations uncovered by the Bureau of Customs on GSII’s import activities.

In a joint press conference yesterday, Salvio Perez, president of FGII, and Jesus Arranza, president of FPI, "the blatant violations of GSII could put the President in an embarassing situation considering that the Arroyo administration has already extended several concessions to GSII in order to boost its viability."

The concessions given to GSII include income tax holidays, designation of GSII’s Iligan plant as a special economic zone, and tariff protection on hot and cold rolled coils which are supposed to be produced by GSII.

According to Perez and Arranza, the Bureau of Customs (BOC) had uncovered some anomalies regarding the raw material imports of GSII.

The BOC recently made an inspection of GSII’s import activities in the Port of Cagayan following increasing complaints from local downstream steel industry players that GSII is selling its supposed raw materials imports to the domestic market to show a semblance of commercial operation.

The BOI has granted GSII authority to sell no more than 30 percent of their finished products in the local market, while the bulk or 70 percent must be exported.

Unfortunately, the BOC had discovered that GSII has not been properly reporting its imports and its sale of so-called "wastage" or scrap raw materials.

Because of the lack of proper records and the BOC’s inability to check and verify GSII’s imports, it would be very difficult to determine if GSII has not exceeded the allowable maximum limit of 30 percent sale to the local market.

Perez and Arranza warned that "if nothing is done, this would give a wrong signal to industries that violators of the law are being rewarded instead of being punished. "

Perez and Arranza clarified that they are not against the reopening of GSII (formerly National Steel Corp.).

However, Perez specifically argued, GSII’s commercial operation should also be conditioned on the GSII producing not only adequate quantities needed by the local downstream steel industry, but that the HRC and CRC also meet the quality of the downstream players.

For instance, for the galvanizers, Perez explained, GSII must be able to meet ISO standards as most local galvanizers are already ISO-certified.

FGII, however, doubts that GSII has really upgraded its facilities and is producing the steel products needed by the downstream players.

These suspicion, Perez said, is based on GSII’s request for zero tariff on HRC which it is suppose to be producing.

The raw material of GSII is supposed to be slabs which already has zero tariff. Slabs are used to produce HRC and CRC.