The national newsprint industry has implemented its committed adjustment plans, but inadequate safeguarding rights protection, declining demand due to digitization and the pandemic have dealt the final blow to the local industry .
The Tariff Board came to this conclusion in its final assessment report on “the effectiveness of measures taken by the Philippine newsprint industry in facilitating its positive adjustment to import competition” that the industry has undertaken. to be implemented in order to be competitive with regard to imports after the imposition of the three-year period. safeguard measure on imported newsprint for the period 2015-2018.
Based on its findings, the TC noted the position of the industry represented by Trust International Paper Corp. (TIPCO) partly blaming the former heads of the Department of Trade and Industry (DTI) for the current state of the domestic industry, as it only granted small protect tariff protection that this which was recommended.
The TC recommended a specific duty of P2.470 per tonne as a form of safeguard measure, but the DTI ignored the Commission recommendation and published its own calculations of only P980 / MT for the first year , P800 / MT for the second year, and P 640 / MT for the third year.
Despite the lower tariff protection, TC said TIPCO has implemented almost all of its adjustment measures, except for the pulper upgrade, which has been put on hold. TIPCO stated that the project could have been carried out if the safeguard duty recommended by the Commission had been implemented. “The lower final safeguard duty imposed by DTI forced the company to delay the implementation of this project,” he said.
The safeguard duty on newsprint implemented from mid-2015 to mid-2018 has helped to regulate the importation of newsprint. During this period, the volume of imports increased from 59,801 MT to 23,198 MT. The domestic industry’s market share also increased from 33% to 62%.
The measures implemented also enabled the industry in 2017 and 2018 to become the dominant player in the market, increase production and sales, improve capacity utilization, manage manufacturing costs, ” increase labor productivity and improve its price competitiveness vis-à-vis imports. If no safeguard measures had been imposed, the domestic industry would not have been able to invest more easily in the implementation of efficiency measures and would not have reaped the benefits of efficiency. actions taken.
But when tariff protection was lifted in May 2018, imports increased and reduced the domestic industry’s market share; production, sales and labor productivity declined, and the gap between domestic selling prices and the landed costs of imported newsprint widened.
In addition, the global drastic shift in consumer preference from print media to digital media has eliminated newsprint as a major segment of the paper industry. With this, TC said the domestic industry will find it difficult to produce at levels that will allow it to achieve economies of scale and increase its ability to compete with imports.
TC said the industry would also have requested an extension of the safeguard measure if the duty recommended by the Commission had been respected. “However, the estimated P500 / MT for Year 4 would be too small to deter foreign factories from exporting their excess production to the Philippines,” TC said.
The latest blow to the industry has been the COVID-19 pandemic. The industry has forecasted very weak market demand for its products for the foreseeable future and continued operations will no longer be viable.
Therefore, TIPCO made the very difficult decision to stop and shut down all manufacturing operations on June 30, 2020. “The death of the industry could have been delayed or avoided if other government agencies upheld the recommendation of the Commission, ”notes the TC report.
Of 5 local newsprint manufacturers in 2013, there were only two left in 2021. One newspaper mill closed while three others chose to focus on manufacturing their main paper products (no newsprint). . But TC said there was a new player implying growth prospects for the industry. Most importantly, there is a guarantee of continued local availability of newsprint.
In conclusion, the TC stated that while the industry has taken measures to improve production efficiency and increase production and has been effective in terms of strengthening its competitive position during the period of imposition of the safeguard measures , “Market developments offset the newsprint industry’s gains and made its future growth as largely unsustainable. The economic consequences of the 2020 pandemic have also taken their toll. “
Nonetheless, TC said that the existence of factories with the capacity to produce newsprint can be seen as auspicious in terms of ensuring continued local supply and protecting the country from total dependence on it. imports. A domestic paper industry would continue to thrive, but with less newsprint production as the market demands, he added.
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