RP'S BIGGEST SHOEMAKER SEEKS TARIFF HIKE TO 35% TO SAVE INDUSTRY
By: Bernie Cahiles-Magkilat, Manila Bulletin

S.S. Ventures International Inc., the country's biggest shoemaker, has asked the government to raise import tariff on shoes to 35 percent from the present 10 percent to save the domestic industry from a complete demise.

In a position paper submitted to the Tariff Commission, S. S. Ventures president Sung Sik Lee stressed the Philippines has the lowest tariff rates among Asian countries for imported finished shoes.

For instance, China has 45 percent, Thailand has 40 percent, Vietnam has 30 percent and, Indonesia has 25 percent.

"It is not unfair, if not unfortunate that our neighboring competitors have to maintain high tariff rates for imported footwear while the Philippines has lowered its tariff rates," Lee said.

In 1994, the Philippines has six big manufacturing companies including S. S. Ventures, Philips Export Industries Inc., L & L Footwear Inc., Shoe City Inc. Lotus Shoe Corp. and Paramount Footwear Co., Inc. producing athletic shoes for various brands including Reebok, Nike, Skechers, LA Gear and Sergio Tachini.

The six companies employed 18,000 workers more or less at that time. "Unfortunately, there are only two companies existing today with only 3,000 workers more or less remaining," Lee said.

During the economic crisis in Asia, Atheletic Footwear industry in the country was one of the hardest hit amoung the manufacturing industries.

In 1999, big corporation like Nike, Reebok, Skechers, Sergio Tachini and LA Gear have decided to stop placing export orders in the Philippines.

In 2000, when the tariff duty was lowered to 15 percent, Nike Phils., decided to stop placing order to S. S. Ventures even for the local market.

When the import duty on finished atheletic footwear was further lowered in January this year to 10 percent, Adidas Philippines has stopped buying for their local market.

Now, all Nike and Adidas products sold locally are all imported from our neighboring countries such as Thailand, China, Vietnam and Indonesia, Lee said.

According to Lee, the business decision made by these branded companies proved that the low tariff rates imposed on atheletic finished shoes is not in any way beneficial to the shoe industry or to the national economy.

These branded companies do not find it beneficial to invest here as it is cheaper to produce these shoes in the neighboring countries and export to the Philippines.

In May last year, due to the worsening political situation in Indonesia, Adidas Solomon HK intimated the probability of transferring some of its export to other countries.

"Considering that our company was still producing at that time, they considered moving to the Philippines, but after thorough studies and recommendation of the group the decision was made by Adidas to go to Thailand," Lee said. According to Lee, Adidas decision to go to Thailand was largely due to the Thai government's decision to protect the local industry from foreign competition by providing high tariff walls.

While most of the big branded shoe companies in Thailand are producing for the local market, Lee noted that Thailand exports 10 million pairs of shoes a month.

S. S. Ventures is also the country's largest industry employer with 2,300 workers. It was awarded Presidential Citation as Top Exporter for Wearable Products.

Home | About Us | Members | Officers | Newsletter Archive