CALL FOR REFORMS The Pulp and Paper Manufacturers Association of the Philippines (Pulpapel) is alarmed by the 125-percent spike in the importation of paper products since early last year. Photo shows the inside of a Makati City-based printing plant. —INQUIRER FILE PHOTO
A local trade association of paper manufacturers has formally asked the government to draw up measures to regulate the influx of imported paper, lamenting that it was hurting local producers to the point that it has led to the temporary shutdown of nearly two dozen factories.
The Pulp and Paper Manufacturers Association of the Philippines (Pulpapel) said that it had a dialogue with officials from the Department of Trade and Industry (DTI) recently, and requested safeguard and antidumping measures on imported recycled packaging papers used in making corrugated carton boxes.
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“The industry association requested for more consistent and stronger enforcement of laws and regulations pertaining to the operations of customs bonded warehouses (CBW), which are unscrupulously used to avoid tax regulations and make illegal imports for domestic consumption,” Pulpapel said in a statement.
Shutdowns and layoffs
“The import procedures need to be reformed to control technical smuggling, such as misclassification and undervaluation,” the group added.
Pulpapel estimated that local paper production slumped by 11 percent from January to June this year, imports of recycled container boards surged by more than 100 percent, while that of printing and writing paper jumped by 22 percent.
This phenomenon has reduced the industry utilization rate—or the capacity of factories being used—from 72 percent in 2022 to 63 percent during the first half of this year, it pointed out.
The trade group said that local paper mills have a total production capacity of 1.65 million tons a year and produced about 1.2 million tons in 2022.
The spike in the importation of paper products was seen as early as last year by Pulpapel, noting that it soared by 125 percent.
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The organization said that recycled packaging paper imports came mostly from Japan, Australia, Vietnam, Indonesia and the United Arab Emirates, countries that have large paper production capacities and were experiencing low domestic demand due to the economic slump in the world market.
“Dumping and underregulated importation of paper have adversely affected the viability of the country’s 22 paper mills, especially the major producers who recently invested in large expansion projects, forcing them to resort to unscheduled shutdowns since the second half of 2022,” Pulpapel said.
The group added that these shutdowns in production led to forced leaves or layoff of personnel in the paper manufacturing sector and reduced paper recycling activities in the country, but did not give figures on the number of workers displaced.
Pulpapel executive director Ray Geganto said that the local paper industry employs 5,000 direct workers and personnel, indirectly supporting the livelihood of about a million families collecting wastepaper and selling these to junk shops.
“Should imports continue to be unabated, this will lead to the demise of the local paper industry and loss of livelihood for more than one million members in the paper recycling industry and serious environmental problems,” warned the group of paper manufacturers.
Lack of gov’t support
During the hearing on the proposed 2024 budget of the DTI last August, House Deputy Majority Leader Jose Teves Jr. of the party list Talino at Galing ng Pinoy noted that the government was losing $108 million annually in uncollected taxes from the two million metric tons of various paper product imported every year.
“Because of technical smuggling, these import products are undervalued,” he said.
Teves said that imports of recycled container boards went up by 35 percent while that of writing and printing paper increased by 5 percent from January to June this year.
He added that imports of tissue and sanitary paper products increased by 30 percent during the same period.
The lawmaker said the issue of unfair competition was compounded by the continuing shutdowns of paper plants over the past few years because of the lack of government support for the industry.
According to the lawmaker, there are at least 22 local paper manufacturing companies in the Philippines, a sector estimated to be valued at P55 billion.
Responding to Teves during the hearing, Trade Undersecretary Ceferino Rodolfo said they were aware of the “dumping” of paper products in the country.
“In fact, this is an issue that is not just limited to the paper industry, but most [producers] of industrial products [are] really subjected to some form of unfair competition,” he said.
To address this, Rodolfo said the government imposed safeguard duties on paper products in the past, but the prescribed period ended in 2018.