Government warned vs lobby to amend iron & ste

A leading steel company has warned the government against a ploy by "vested interests" asking for an amendment of an executive order (EO) which was allegedly discriminatory in favor of one company.

Rolando Jaurigue, senior vice president of Philsteel Holdings, maintained that the questioned executive order issued by former President Joseph Estrada has for its legal basis Republic Act (RA) 7103, also known as the Iron and Steel Industry Act, adding there were actually three EOs issued by the previous administration.

"Any incentives enjoyed by our company as a result of these executive orders can also be enjoyed by our competitors provided they meet the requirements of the law," Jaurigue said.

Jaurigue was referring to EO 237 which gives flesh to RA 7103 and EO 226 which gives substance to the Omnibus Investment Act that reduced the tariff for hot rolled coils (HRCs) from three percent to zero percent.

Under the law, a registered certified enterprise and an intermediate steel producer such as Steelcorp are guaranteed tariff incentives and protection schemes in consideration of the huge capital requirement of the project to ensure its success.

However, member-companies of the Filipino Galvanizers Institute (FGI) which did not qualify as a certified enterprise, sought the reduction of the tariff for imported cold rolled coils (CRCs) from seven percent to three percent through EO 276 issued on July 21, 2000, or three months after EO 237 was signed by Estrada.

The FGI also lobbied for the issuance of EO 334 affirming the reduced CRC tariff rate, permanently resulting in an estimated P200 million in lost revenues for the government.

"How EOs 276 and 334 were issued and enforced to favor galvanized iron producers who are not even eligible to qualify as certified enterprises is for the Arroyo government to know and act on appropriately," the Philsteel executive said.

"If there is anything to be repealed or revoked, it is EOs 276 and 334 which are anomalous ab initio and render meaningless and inutile the incentives and protection guaranteed by the law to registered enterprises. A diminution in the CRC tariff in effect nullifies the legal entitlement to tariff incentives enjoyed by Steelcorp and similarly situated companies," Jaurigue said.

FGI recently threatened to sue the National Economic and Development Authority and its committee on Tax Related Matters over the zero tariff incentives.

Jaurigue argued, however, that while Section 6 of 7103 RA mentioned several raw materials eligible to tariff incentives, these materials were "stipulated only as an example to a clearer understanding of the law."

"It is clear that the FGI has been misleading the public to believe that the law confines tariff incentives to raw materials stated therein without due consideration to other pertinent provisions and requirements of RA 7103," Jaurigue stressed.

Invoking Rule II, Section C-2 of the implementing guideline of RA 7103, Jaurigue said any enterprise applying for a certificate of eligibility as an intermediate steel producer should be able to produce plates, hot or cold rolled flat products for GI sheets.

"The law is very clear. If you are an intermediate steel producer such as Steelcorp which produces cold rolled steel, and a registered enterprise under RA 7103, then you are entitled to tariff incentives," Jaurigue pointed out.

Steelcorp officials said their market dominance was due to fair and legitimate competitive advantages it has established by heeding the government’s call to help in the development of the iron and steel industry, as well as its complete compliance with the objectives and requirements of RA 7103 notwithstanding the huge capitalization needed to set up the project.

These factors allegedly enabled their company to employ the best technology and facilities to produce superior GI products for the local market.