GSII’s ability to produce quality steel doubted

Suspicion about Global Steelworks International Inc.’s ability to modernize and produce quality steel is growing following the revelation that GSII’s authorized capital is only P11 million.

In a joint press conference, the Tin Can Manufacturers Association of the Philippines, the Philippine Iron and Steel Institute, the Filipino Galvanizers Institute, the Philippine Chamber of Commerce and Industry, the Federation of Philippine Industries and the Consumers Union of the Philippines yesterday expressed suspicion over the seeming haste to grant GSII tariff protection when it has not yet been able to present its rehabilitation plan for the former National Steel Corp. (NSC) plant.

Henry Tanedo of the TCMAPI, Wellington Tong of PISI, Salvio Perez of FGI, Jesus Arranza of FPI, Donald Dee of PCCI and Chino Marquinez of CUP, all questioned GSII’s financial capability especially since records from the Securities and Exchange Commission (SEC) showed that its authorized capital is only P11 million.

With such a small capital base, the downstream industry players pointed out, GSII does not appear to have the necessary financial strength to rehabilitate and modernize the old NSC plant.

As such, they questioned why should government act in haste to grant GSII tariff protection when past experience has shown that tariff protection has not helped an industry survive.

Donald Dee, for instance, cited the case of the textile industry wherein one major textile manufacturer was given tariff protection and yet failed to benefit from the tariff cover.

In fact, the local textile industry, Dee pointed out, is now languishing.

Tanedo, Perez and Tong warned that any form of tariff protection would result in further tariff distortions and should thus be carefully studied before it is granted.

The first public hearing for the tariff petition of GSII appeared to show to the downstream steel players that government is favoring GSII’s request while refusing to give adequate time to the downstream steel industry sector to air their objection to the tariff petition.

The downstream steel industry players clarified that they are not opposed to the operation of GSII, but they would want the now Indian-owned steel firm to prove itself without the benefit of tariff protection.

GSII, Perez said, "should be competitive, not by way of tariff protection, but by way of product quality, service quality and the only way to do is for the new owners to modernize and upgrade its facilities."