MANILA, JUNE 2, 2011 (MALAYA) BY MADELAINE D. CABRERA  - Local wood producers are knocking on the Department of Trade and Industry (DTI) doors for relief from a perennial scourge – illegal importation of plywood from China.

Industry losses from smuggling are placed at up to P500 million monthly.

Maila R. Vasquez, deputy director of the Philippine Wood Processors Association, said that in May, from 400 to 500 containers of plywood illegally entered the country.

"One container is equivalent to a million pesos. Imagine how much the loss is," said Vasquez.

"It is common knowledge that container vans of plywood are being withdrawn from the international ports for a fixed fee. Import duties as well as value-added tax of P190,000 per container are not paid," she said.

The plywood industry said the DTI should undertake a more active market monitoring with the participation of industry technical representatives.

Plywood makers said strict enforcement of mandatory standards will slow down, if not stop, the flood of sub-standard Chinese plywood.

Local manufacturers are subject to Bureau of Product Standard (BPS) monitoring, with local plywood panels required to be marked with the Product Standard (PS) label.

Importers are required to obtain Import Commodity Clearance (ICC) from the DTI.

Industry verification with the BPS, however, showed that importers do not declare their products as such, thus evading ICC rules.

Vasquez said plywood manufactured locally is easy to identify and differentiate from cheap but substandard imported ones.

"Chinese plywood is five-ply and 4.5 mm thick but usually misrepresented and sold as 5 mm. It is undersized and usually shrinks or ripples because it is not dried properly. Drying, after all, is expensive," she said.

She added that smuggled plywood has external veneers that are unacceptably thin, usually no thicker than 0.25 mm.

Vasquez said the panels, thus, have a rough surface because sanding grinds away the thin veneers.

Glue used in the illegal imports has high formaldehyde emission, posing a health hazard to builders, construction workers and building or home occupants.

There are over 30 plywood mills in the country, directly employing more than 30,000 workers.

The survival of these mills, upon which 150,000 people depend for their livelihood, is now threatened, Vasquez said.

Most of these mills are located in Mindanao.

The building industry accounts for around 80 percent of plywood use. Plywood is used as sidings, floorings, ceilings, partitions, and concrete forms.

About 10 percent is used by the woodcraft industry for the manufacture of cabinets, furniture, toys, and musical instruments, among other items.

NY think tank warns of headwinds ahead BY ANGELA LORRAINE CELIS

New York-based Global Source is sticking to its projection of a 4.8 percent GDP growth this year even as it warns of "stronger headwinds" ahead.

First-quarter GDP data was released early this week, with a rebased growth of 4.9 percent from the 8.4 percent in the first quarter of 2010.

"This is the lowest GDP growth since the fourth quarter of 2009 and continues a trend of declining growth since the first quarter of 2010," the market brief written by Romeo Bernardo and Geoffrey Ducanes said.

"As we predicted, a slowdown in government spending compared with the pre-national election quarter last year, as well as lackluster trade due to rising oil prices stemming from the political turmoil in the MENA (Middle East and North Africa), were cited as the main culprits for the lower growth," it added.

For the second quarter, the think tank took note of the National Statistical and Coordination Board’s (NSCB) latest Leading Economic Indicator (LEI) data, which suggests "increased lethargy" in the economy during the period.

The NSCB data showed that the LEI for the second quarter slid to 0.103 percent from 0.115 percent in the first quarter.

"Additionally, the woes in MENA combined with the continued sluggishness in Europe, point to remittances remaining relatively flat in the short term, indicating it may just be a matter of time before it starts dragging down personal consumption," Global Source said.

In the first quarter, Gross National Income (previously Gross National Product) slowed to 3.6 percent from 11.5 percent, as Net Primary Income (formerly Factor Income from Abroad) suffered zero growth.

"This was the fourth straight quarter of unbroken decline in NFIA growth and raises new concerns about the sustainability of personal consumption growth, a significant part of which is believed to be financed by remittances," Global Source said.

"The inflation results for the month of May and succeeding months will be of great interest as the BSP is said to be open to further raising interest rates or tweaking reserve requirements should inflation continue to accelerate," it also said.

Inflation for the month of April increased to 4.5 percent, from the 4.3 percent in March. The BSP has a 4.5 percent to 5.5 percent forecast range for May, with the official data set to be released on June 7.

The BSP has raised policy rates to 4.5 percent and 6.5 percent for overnight borrowing and lending rates, respectively.

Global Source expects to see a surge in government spending after expenditures were recorded to be below program in the first four months of the year.

"The rest of the year may see a bump in government spending as the government is said to be looking at expediting the utilization of government budgets, according to National Economic and Development Authority Secretary Cayetano Paderanga," it said.

Global Source added that the continued strong performance of the BPO sector is encouraging.

"Recent reports cite the Board of Investments as saying several US BPO firms will be setting up new investments in the country in the coming months and years," Global Source said.

"Conditional on commodities prices stabilizing (oil especially), which they appear to be undergoing relative to their March and April levels, net exports might also experience a slight pickup the rest of the year, though this will be tempered by economically sluggish export markets, especially Japan, which was reported to be in recession as of the first quarter," it added.

Net exports recorded a contraction of 2.6 percent in the first quarter of 2011.

Chief News Editor: Sol Jose Vanzi

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