Steel sector laments non-inclusive industry development priorities

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Steel sector laments non-inclusive industry development priorities



March 2, 2015

The steel sector is pushing for the amendment of the Iron and Steel Act (RA 7103) stressing the steel sector is one of the country’s basic strategic industries that can promote real inclusive growth even as the industry laments over government’s penchant to craft an incentive scheme for non-inclusive automotive sector.

Rolando Narciso, who represents the voice of the steel sector being the former president of the mothballed National Steel Corp. (NSC), told Business Bulletin in an interview that industry players are meeting to work on the proposed amendments to the old law, which was passed in 2003 and which incentive provision already expired.

“The government is crafting a CARS Program, it is not even dump trucks, jeepneys or agricultural vehicles but cars and yet we are talking about inclusive growth,” lamented Narciso.

The Board of Investments (BOI) has spearheaded the crafting of the Comprehensive Automotive Resurgence Strategy (CARS) Program. Already, Malacañang and the BOI are planning for a $600-million incentive package for the automotive sector under the planned CARS Program.

Instead, Narciso said, inclusive growth can be addressed easily by developing first the country domestic industries such as steel and agriculture. Steel manufacturing has a wide economic linkage from iron making, steel making, steel processing that could employ thousands of raw manpower from the countryside.

While the BOI is all for the revival of the CARS Program, there is not even a steel manufacturing industry to produce the steel components of a car.

Narciso pointed out that the country’s flat steel supplies are all imported because there is no hot and cold-rolled plants as the National Steel Corp. (NSC) plant, which directly employed over 4,000 people at the height of its operations, in Iligan City had long been mothballed.

And yet demand for steel in the country has been robustly growing at 20 percent annually. Demand grew to 6 million tons in 2014 and is expected to hit 7 million tons this year. Under the industry roadmap, demand is expected to hit 20 MMT in 2030.

“We are already growing at this pace even if infrastructure spending has not even reached the 5 percent share of GDP, no FDI and not even considering the booming housing sector. How much more if all these growth factors come in. Imagine the huge growth the local industry should have benefited from,” Narciso pointed out.

At 4 MMT annual consumption, Narciso said, “the country should be at a take-off stage for industrialization.” There is a huge demand for ship plates because the Philippines is now the third or fourth largest shipbuilding hub globally with the presence of Hanjin and Tsuneishi shipbuilding operations in the country.

But Narciso said that the country’s strong demand for steel cannot survive by rehabilitating the mothballed NSC stressing, “What we’ve left to the private sector in 1995 was a state of the art steel plant, but it is not anymore to today’s standards.”

“The steel sector has already its roadmap, but it is not enough. A roadmap is a continuing tool of where we are, where we want to be and how to get there,” he said.

The steel industry roadmap showed that the Philippines is the lone country among five ASEAN countries — Malaysia, Indonesia, Vietnam, Thailand — with no domestic steel industry to speak of.

Thus, various industry associations under the Philippine and Iron Steel Institute (PISI) and Philippine Iron and Steel Council (PISC) and others are going to be convened to plan their push for the updating of the old, which set of incentives already expired.

Initially, Narciso said the industry will not be pushing for the regular incentives but rather a front-ended or a one-time government assistance to the industry.

This incentive scheme should be made available to steel expansion projects, upgrading/modernization, and integration ventures.

“It is not necessarily NSC although it is a good sight because it has ready infrastructure, pier and utilities,” he added.(BCM)

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