FRIDAY, 1.00PM
MALAYSIAN and Indian steel producers who avoid paying import duties by bringing in low-value welded pipe under the guise of specialised seamless pipe are threatening the health of South Africa’s steel industry, officials say. “This is direct customs fraud that could wipe out sectors of the industry,” said Tony Heher, chief director of the Department of Trade and Industry.
Steel pipe and tube are also being dumped on the local market, according to Heher, placing the entire metals industry under extreme pressure. Reclassifying welded pipe as seamless pipe means that Pacific Rim manufacturers evade a 12% imoport duty when bringing these products into SA, losing the government millions in customs revenue. The foreign companies involved in evasion of import duties have not been named.
The imports undermine the business of 14 SA tube and pipe manufacturers, who contribute R1,3-billion to the economy each year, and place the industry’s 3 500 jobs in jeopardy. In another blow, cold-rolled stainless steel and carbon steel coils are being imported at a fraction of the cost of the domestically produced products, and local steel producers have beeen accused of inflating domestic prices to keep their export prices competitive.
Import barriers are to be reduced to 7% within the next five years, in line with international trends, meaning SA’s traditional markets will be under threat from foreign producers. But Heher says that the consequences for the economy will be serious if the steel tube and pipe sector decline any further. Growth in imports has averaged 50% a year since 1991.