Gov’t mulls subsidy to $3.5-billion planned Chinese steel plant project

The government is preparing a special subsidy in the form of lower land lease and power rate to Panhua Group, China’s leading integrated steel producer and exporter to the US, which is seriously considering of investing $3.5 billion for an integrated steel manufacturing plant in Mindanao.

Trade and Industry Secretary Ramon M. Lopez said that Panhua Group’s chairman paid a courtesy call on him recently to express the seriousness of their proposed project. Lopez also stressed the need to help the project proponent.

“We will discuss with other agencies even the Office of the President on what we can help on top of the usual incentives we give out under PEZA,” said Lopez. Incentives being offered by the Philippine Economic Zone Authority (PEZA) includes a maximum of 8-year income tax holiday and 5 percent tax on gross income earned after the ITH.

There has been no commitment yet, but he said the special incentives they are looking at would be better land lease and lower power rates.

“We will just make it easy for them to locate, it’s really making this (investment) happen,” he said stressing of the seriousness of the Chinese investor to locate in the country. The company has already decided to locate in the Phividec Industrial Estate in Tagoloan, Misamis Oriental.

Lopez said they are just trying to follow through that Panhua’s earlier plans sometime in 2004 to locate in the country but which it did not pursue. This time they are taking advantage of the close relationship between China and President Duterte.

PEZA Director-General Charito B. Plaza and the Panhua group signed a memorandum of agreement for the investment in June this year during Philippine investment mission to Chongqing and Zhangjiagang, China.

Panhua has proposed a modern steel manufacturing facility capable of producing 10 different product lines of various applications, complete with a modern port and a 300-hectare industrial park.

Some Guanzho China Construction Materials Manufacturing Association visited PEZA to discuss plans of developing their own ecozone in the country, possibly in the Visayas or Mindanao.

Both projects have no investment costs yet, but PEZA said these involved huge amount of capital.

Development and production of construction of construction materials, particularly steel, dovetailed with the PEZA plan to establish mineral processing industry in the country.

PEZA noted that 90 percent of the Philippines needs of construc- tion materials are imported despite the abundance of minerals iron ore, chromite and nickel locally. These materials have been allowed to be exported instead of being processed locally.

“Hence, PEZA is inviting mineral processing industries to manufacture different steel products to minimize the country’s importation of construction materials where 70 percent comes from China,” said Plaza.

Based on its website, Panhua Group Co., Ltd. was established in 2004. It is headquartered in Zhangiiagang Free Trade Zone, 200 kilometers away from Shanghai.

Panhua owns about 10 square kilometers of land and employs 3,400 workers. By turnover, Panhua Group is ranked among Top500 Chinese Companies. (BCM)