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Steel the spotlight

/ 12:29 AM October 01, 2012

Not many of us have heard of Pisi, or the Philippine Institute of Steel and Iron, the official grouping of steel manufacturing companies.

And perhaps hardly anybody in the Aquino (Part II) administration sat up when Pisi recently rang the alarm bells, aimed at the country’s bloating appetite for steel imported from China.

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Pisi experts say the country has to watch out for such importation, not only because it is bound to slaughter the local steel industry, but also because it may put a lot of lives in danger.

It was as if Pisi was talking to a deaf government.

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In the Pisi spotlight in the next two months are some 30,000 tons of steel shipment from China, declared as “square bars” on paper, but they are actually steel billets that local steel companies use to make finished products.

By declaring them “square bars,” the importers can reduce the price of the steel from China, because the Chinese government gives up to 17 percent subsidy for that steel product.

The subsidy, aside from being unfair trade practice, reduces the amount of tax (such as the 12 percent VAT) that the importers must pay to the Philippine government.

From what I gathered, seven local companies already booked the steel shipments from China. Word goes around the local steel industry that Customs officials know the identities of these importers.

Here is a case in point: Only last month, some 3,000 tons of “square bars” breezed through Customs at the Harbour Center, a drop-off point at the Port of Manila.

The local steel industry has been crying foul against the modus operandi of having “billets” passed off as “square bars,” which was illegal because it was pure and simple “misdeclaration”—i.e., technical smuggling.

Perhaps that was the reason why Customs Commissioner Rozzano Rufino Biazon insisted that there was no smuggling in the country. Look, ma, it was not smuggling; it was “technical” smuggling.

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To the guys down here, the more important issue that was raised by Pisi was public safety. Pisi had asked the government to test the steel imports from China to verify conformity with the Philippine National Standards. Up to now nobody is doing anything about it.

Our neighbors like Malaysia and Indonesia are now doing thorough chemical and mechanical tests on Chinese steel shipments, checking for quality and strength.

Reports in the past 12 months showed that more than 10 major structures had collapsed in China, such as the Harbingtan Bridge in Hanbin City, where the ramp actually broke.

Thus, other countries are starting to question the quality of steel they import from China, and they want to make sure that the imported steel does not come from some old steel mills or those with bad reputation.

In the past several years, China was on a frenzy building new steel plants, although it never closed down the old ones. That country thus now has a capacity of 900 million tons a year. The United States only has 60 million tons.

Reports now indicate an economic slowdown in China, which caused a steel glut of some 300 million tons a year. It seems that the Chinese government subsidizes steel exports (such as “square bars”) to get rid of the glut.

Such a subsidy can have the effect of dumping Chinese steel into countries like the Philippines. Our steel companies can now smell their own death from the hands of the Chinese imports.

Their death will mean the loss of jobs to at least 20,000 workers. It also means that the investors lose their shirt, because they have already invested heavily in the steel business.

Our experts figured that we would soon have a voracious appetite for steel. Today we use steel equivalent to 43 kg per capita, way below those of other countries such as Korea (1,126 kg) or Malaysia and Thailand (more than 200 kg).

But official forecast showed a vibrant Philippine economy, increasing the demand for construction steel bars and beams for instance by 15 percent a year. In fact, the BoI identified steel a priority sector for investments.

In steel bar manufacturing, alone, the locals have already increased their capacity by more than 2 million tons a year.

Such is the fledgling industry that steel smuggling is bound to kill in favor of China.

*  *  *

Wait, hold it—do not throw away those old two-way handheld radio systems. They may be old technology now but they may come in handy during calamities such as typhoons and earthquakes, when mobile phone networks are down, according to the NTC, the National Telecommunications Commission.

Just recently, the Aquino (Part II) administration gathered various groups that had anything to do with this growing concern called “disaster preparedness,” hoping to revive interest in the old-tech handheld radio.

The gathering, held at the SMX Convention Center three weeks ago, was called RadShow. It was attended by 12 government agencies, the Red Cross, Rotary Club International and 14 volunteer radio groups that are trying to come up with ways to use handheld radios for disaster response.

The NTC is also launching an “amnesty” campaign, offering to renew expired licenses of amateur radio enthusiasts for P300, as against the P1,500 regular fee, on top of waiving penalties.

Moreover, the NTC has just revived the Class “D” license (basic radio operation) and lowered the minimum age (9 years) to qualify for a license. Why? Well, in a disaster, young children must be able to communicate, especially if their parents are casualties of calamity.

From what I gathered, NTC will assign four channels to the government and volunteer groups, using repeater towers of amateur radio groups, which will be backed up by power generators.

Now, that is disaster preparedness.

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TAGS: China, disaster preparedness, Philippine Institute of Steel and Iron (Pisi), Philippines, steel, two-way handheld radio
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