The country’s largest maker of reinforcing steel bars, or rebars, has asked the government to reduce to zero percent the tariff on imported semi-processed billets bought from non-Asean countries to level the playing field with other producers in Southeast Asia.
SteelAsia Manufacturing Corp., in a position paper submitted to the Tariff Commission, said a zero tariff on imported billets would increase the competitiveness of the local rebar steel manufacturing industry against imported finished products.
SteelAsia vice president Rafael Hidalgo said the tariff differential between the raw material and the finished product had made local rebar manufacturers less competitive than its counterparts in the region.
The Philippines imposes a most favored nation tariff of 3 percent on imported billets compared with the zero tariff on finished rebars.
Other Asean countries have already reduced their MFN tariff on billets to zero. Billets are used to manufacture rebars.
Majority of billets are imported from non-Asean countries like Russia, Ukraine and Australia, making it expensive to export locally-produced rebars to other Asean countries.
SteelAsia, which has been concentrating in the manufacture of rebars, is the largest importer of billets.
It imports 70 percent of billets due to the inadequate supply of local steel scraps that can be procured for rebar manufacturing.
Steel Asia said in its paper that the Philippines could only supply 400,000 tons of billets, roughly 10 percent of company’s yearly requirement.
It said about 700,000 MT of locally-produced billets could supply 20 percent of local demand.
“This means 70 percent of billets requirement for rebar production need to be imported,” Steel Asia said.
SteelAsia has embarked on a $250-million modernization program to expand the capacity of its two plants in Plaridel, Bulacan and Carcar, Cebu.
The company has allocated as much as $140 million for the Plaridel plant for completion by 2015 and $100 million to $110 million for the Cebu factory, which is expected to be operational by early 2016.
The expansion plants will double plant capacity to 4 million MT from 2 million MT.