GMA signs EOs removing tariff on 4 imported items

MANILA, Philippines - The government has removed the tariff on imported steel, asphalt, crude oil and petroleum products.

President Arroyo issued Executive Order 890 on June 10, setting a uniform zero tariff on imported crude oil and refined petroleum products from member-states of the Association of Southeast Asian Nations (ASEAN) and outside ASEAN.

“The elimination of three percent rates of duty on said products imported from non-ASEAN countries will address the tariff distortion,” the EO said.

The decision to remove the tariff on the said products was reached during the May 25 meeting of the National Economic Development Authority Board.

Mrs. Arroyo also signed the executive order that will effectively reduce the price of steel products by removing the tariff on imported hot rolled coils (HRC) and cold rolled coils (CRC).

Despite the efforts of Global Steel Philippines Inc. (GSPI) to defer it, the law was signed last June 22 as Executive Order 898, a Tariff and Related Matters (TRM) Committee source said in an interview with reporters.

The law removing the tariff on HRC and CRC was supposed to be signed together with the law that removed the tariff on petroleum products last May.

However, a visit by the top official from India of local operator Global Steel has delayed the removal of the seven percent tariff on HRC and CRC. The TRM source said one of the executives from the head office of Global Steel met with a high ranking Malacañang official. The meeting has stalled the implementation of the law.

Per the contract agreement between the government and Global Steel, the government will impose a seven percent tariff on imported steel as long as the Indian firm can supply 50 percent of the domestic demand. Unfortunately, Global Steel has not been producing for some time.

Earlier, Global Steel admitted they have been having problems with their operations for years and the lifting of the seven percent tariff on steel has endangered their already precarious operations.

“Our existence is in danger,” Global Steel managing director Lalit K. Sehgal said. However, he said they have not recommended the closing of the Philippine operations to the head office.

Sehgal said they have power problems after the firm failed to pay its electricity bills some years back. He said their debt is now being restructured because they are questioning the interest rates that were imposed on the overdue account.

Sehgal said they are operating at a loss ever since the global financial crisis reduced the demand for steel. He noted that the domestic demand is currently at 7,000 to 8,000 tons per month only. In order to break even or to not incur losses, Sehgal said they should sell 60,000 to 70,000 tons per month.

The last time they were able to break even was at 2007. “We have already incurred huge losses from 2008 till the present,” Sehgal said.

The government will conduct a full audit on Global Steel before the re-imposition of the seven percent steel tariff. Trade Undersecretary Zenaida C. Maglaya said that a full audit on the financials and operations of Global Steel must be made before the safeguards against imported steel will be returned.