By IRMA ISIP

The Philippine footwear industry is being flattened by uncontrolled liberalization, smuggling, swarming of "ukay-ukay" (imported used clothes and shoes) and the proliferation of fakes.

Joel Gaudia, public relations officer of the Samahan ng mga Magsasapatos sa Pilipinas, said its membership has dwindled to 125 from 4,000 in 1994 before tariff walls were dismantled.

Tariffs are now at 15 percent from non-Asean countries and 7 to 10 percent from Asean from 45 percent in 1994.

Gaudia said the Philippines used to produce millions of pairs of shoes enough to shod the country, about 10 million pairs in 1994.

Today, he said the industry produces less than 5 million pairs of shoes which serves just 10 percent of the national requirement.

About 80 percent is served by imports from China, which accounts for 40 percent of total imports.

Gaudia said an indication of just how little we produce is that SM Group alone sells 21 million pairs a year.

He said the number of employes in footwear, including those employed by the 21 allied sectors - from tannery to molding to adhesive producers - has dropped drastically to 5,000 from 300,000 in the 1980s to the 1990s.

Prior to liberalization, Gaudia said, local footwear makers subcontracting for multinationals were into exports. In 1997, these companies shipped 21 million pairs worth $193 million.

"There was a huge potential for the industry," Gaudia said.

He said today, exports have diminished, limited only to those, which invested here for export like Tretorn in Bataan catering to  the European market.

The likes of Puma, Rubberworld, which was the manufacturer for Adidas, and Kaypee, have long ceased operations, Gaudia said.

Gaudia said aside from lower tariffs, the shift in the valuation of imports has also encouraged a lot of technical smuggling with the market instantly flooded by imports from China where production is subsidized and energy costs are cheaper.

According to Gaudia, 70 percent of the regular members folded up and those, which remained, downsized their operations and retrenched workers.

A lot of them are tolling for big department stores and retailers for their in-house brands.

Gaudia said the sprouting of ukay-ukay stores in many cities also dampened demand for locally made shoes that even the players in Binan, Nueva Ecija, Bicol and Cebu are being squeezed.

"It is difficult to compete when technical smuggling is prevalent and when we have ukay ukay stores and tiangge selling fake products," he said.

Gaudia cited, as example is the undervaluation of military boots coming from China. These are valued at just $5 or about P230 per pair but are sold at over a P1, 000 in the local market.