By BERNIE CAHILES–MAGKILAT
The Cabinet-level Committee on Tariff and Related Matters (CTRM) has approved the guidelines on Executive Order 375 specifying the basis for the increase on tariffs for hot rolled coils (HRC) and cold rolled coils (CRC) from the present three percent to seven percent.
Trade and Industry Undersecretary Elmer C. Hernandez said the approval of the guidelines of EO 375 followed after the letter of Global Steel Philippines (GSP) to the Board of Investments informing the agency that they are already in commercial operation.
Hernandez said the guideline is still subject to approval by the National Economic and Development Authority Board.
GSP’s letter, however, to the BoI was for purposes of their availment of the income tax holiday incentive.
But Hernandez said the letter also signals that GSP will soon inform the CTRM that they are already in commercial operation for the purpose of tariff adjustments on steel products.
It could be recalled that EO 375, issued on October 22, 2004, provides for a tariff adjustment for HRC and CRC from three percent to seven percent once the GSP plant in Iligan is already in commercial operation.
To establish what would determine the commercial operation of the company, the CTRM requires two factors as basis for such claim under Section 3 of the approved Implementing Rules and Guidelines of EO 375.
Section 3 of the implementing rules and regulations provides that GSP’s hot mill or cold mill plant shall be deemed to be "in commercial operation" when their respective production volume is sustained at least at any of the following levels: 50 percent of the BoI-registered capacity for hot mill or cold mill products or 50 percent of average Philippine importation volume of hot rolled or cold rolled steel products for five years immediately prior to the start of operations.
Hernandez explained that the five-year period is important because prices of steel products are very irregular.
GSP is also required to submit a duly notarized true copy of the daily production report for at least 60 operating days to support the claim that it has satisfied any of the conditions set forth under Section 3 of the guidelines.
Hernandez further explained that once the GSP informs the CTRM that they are already in commercial operation, a CTRM working group composed of representatives from the BoI, NEDA, Department of Finance, Tariff Commission and the Bureau of Customs shall confirm and validate GSP’s claim on the commercial operation of its hot mill and cold mill.
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