MANILA, Philippines - The government should remove the seven percent duty on hot and cold rolled steel coils (CRC and HRC) imported by the local galvanizing industry.
In a statement, the Filipino Galvanizers Institute (FGI) headed by Salvio D. Perez said that the continued imposition of this tariff on HRC and CRC maintains a distorted tariff structure where local manufacturers are slapped a seven-percent duty on raw material imports while competing foreign manufacturers are given free entry to the Philippine market.
“Common sense dictates that raw materials should have lower import duty than finished goods,” Perez said. CRCs are used for the production of galvanized steel roofings the import duty for which have already been removed. HRCs on the other hand are used to produce CRCs.
“Without the needed favorable action on our petition, which have long been pending with the Technical Committee of the Cabinet Tariff Reform and Related Matters (TRM) office, we will have no option but to shutdown and stop operations since continuing operations under this tariff environment will lead to financial losses,” Perez noted.
The free trade agreements signed by the Philippine government with various countries have distorted the tariff rates and made local galvanized steel products uncompetitive against similar imported products, Perez explained.
The government’s implementation of multilateral free trade agreements with countries such as Korea, China and Japan have altered and distorted the tariff rates such that raw materials now have higher duty than finished goods when this should be the other way around.
This distortion in the tariff structure has caused large scale repercussions on the viability and competitiveness of local industries.
In the ASEAN-China Free Trade Act, tariff on raw materials CRC and HRC are at seven percent while finished products such as galvanized and prepainted steel roofings are at zero tariff. This situation is aggravated by China granting 13-percent tax rebate on their export of GI and prepainted GI sheets to the Philippines. This 13-percent tax rebate gives Chinese exporters undue advantage over local manufacturers.
Perez noted that local galvanizers are already experiencing the impact of the distorted tariff structure for raw materials and finished goods in the form a surge in the importation of finished roofing sheets.
There are 10 steel galvanizing companies in the country directly employing nearly 5,000 laborers and indirectly employing more than 10,000 individuals. This sector contributes some P6 billion to government coffers annually in the form of import duties, taxes, permits, licenses and other fees.