P2T lost to smuggled, substandard products

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    The Federation of Philippine Industries (FPI) yesterday said trillions of pesos are lost by local manufacturers to smuggled and substandard products.

    Jesus Arranza, who heads FPI, said a P2.08-trillion share of the market is taken from local manufacturers by smugglers, including technical smugglers who mis-declare and undervalue products and traders of illegal substandard products.

    He said both smugglers and illicit traders are able to sell their products at lower prices to the detriment of local manufacturers.

    “And yet we still see rampant smuggling in our midst,” he told the 2019 Manufacturing Summit.

    “Bugbug na bugbug ang manufacturing sector,” said Trade Secretary Ramon Lopez in a keynote address.

    Still, he said, there are “bright spots.”

    Lopez mentioned significant increases in approved manufacturing investments that are expected to expand production capacities, address supply chains gaps and improve global value chain participation.

    Investments promotion agencies approved P730 billion in 2018, 57.3 percent higher than the 2013-2015 period.

    The Board of Investments (BOI) registered 76 percent of the total approved manufacturing investments from 2016 to 2018.

    Growth in BOI-approved manufacturing investments increased eight-fold, from 82 percent in 2016 to 95 percent in 2017 to 327 percent in 2018.

    BOI-approved investments in manufacturing hit P409 billion in 2018, or double total investments registered in the last five years.

    BOI registered investments to address supply chain gaps reduce import dependence, Lopez said.

    He mentioned the Huili Investment Fund, HBIS Group and Steel Asia projects on hot rolled coils with annual capacity of 4.5 million metric tons and slabs with annual capacity of 600,000 metric tons.

    Steel Asia will invest P65.8 billion to produce nails, staple wires, paperclips and construction-grade steel products such as wire rod, wire mesh, medium and steel sections – all currently imported, Lopez said.

    Florida Blanca Steel Industries Corp. will put in P250 million to produce steel pipes. Wistron, the manufacturing arm of Acer, and Ever Win will transfer operations from China to the Philippines.

    Among the strong points, Lopez said, are electrical components, the outsourcing industry, information technology, transport logistics, creatives, auto and auto parts, tool and die, shipbuilding, aerospace parts, furniture, garments, e-commerce, metal products, aerospace maintenance, rehab and overhaul industries “Our presumption is that there is greater confidence in the current administration and industry sees support from the government,” Lopez said.

    However, domestic capacity to support the growing demands of the economy must increase, he said. “Otherwise manufacturing won’t grow. Those are the basic issues.”
    Lopez noted “big declines” in furniture, petroleum, paper and paper products and communication equipment.

    He said aside from the logistics gaps, growth constraints include unfair trade practices to local manufacturers of cement, ceramic, clear and tinted glass; and smuggled substandard and counterfeit products.

    “We are now strengthening compliance and mandatory product certification for electrical products, mechanical building and construction materials, chemical and other consumer products,” Lopez said. “We are now trying to build basic industries that we lack.”