By Bernie Cahiles-Magkilat
The Department of Trade and Industry (DTI) slapped an P8.40 per bag provisional punitive duty on imported cement stressing the surge in imports has injured this strategic domestic industry.
“With the elements of surge and injury clearly established, DTI is mandated to impose a safeguard duty,” said DTI Secretary Ramon M. Lopez saying the P8.40 is the level that will still ensure price and supply stability. It is also 4 percent of average retail price of P220 per 40 kilogram bag of cement.
The provisional duty, which is effective for 200 days after publication or around February 8, will be implemented in the form of cash bond on imported cement, while the Tariff Commission undertakes and concludes its formal investigation.
The Philippine Cement Importers Association, who met Lopez a day before releasing the order, warned that it is no longer viable for them to continue importing cement at P8 per bag safeguard measure.
In determining the amount of duty, Lopez said the DTI balances the interests of all stakeholders—and has given particular attention to ensuring that supply remains steady and that prices will not increase.
In issuing the order, Lopez said, “We will closely monitor the selling price of cement manufacturers and ensure that they will not implement increases.”
The order also requires the cement manufacturers to maintain their current retail price levels.
According to Lopez, imports will still be allowed and will continue, ensuring strong competition. The provisional import duty was also imposed on the ground that there is enough domestic capacity of 35 million metric tons to meet demand estimated at 25 million MT, but which capacity must still be encouraged to increase, given continuous growth in demand.
Lopez also believes the “imposition of the safeguard measure will encourage existing and new players to build additional facilities to attain a healthy level of domestic capacity that will address our perennial trade deficits, and ensure long-run supply of cement needed for public infrastructure projects and for building homes for Filipinos; and more importantly generate more jobs here in the country, instead of helping job generation in other countries everytime we import.”
He cited cement is a strategic industry in the Philippines because it is a critical input to infrastructure (Build, Build, Build) and to providing decent homes to Filipinos.
“As such, we have to ensure its availability (right price, top quality, right place, sufficient volume) in both the short- and long-term. Having a vibrant domestic industry, under a contestable market where legitimate imports can freely enter, is important in ensuring this,” he said.
He explained that relying solely on imports and being at the mercy of global supply and demand situation is risky and irresponsible considering changes in global demand and supply conditions, and will only lead to too much dependence on imports, leading to perennial trade deficit.
“Even if the cement industry is considered as strategic, it receives no tariff protection whatsoever as imports currently enter at zero duty. However, Safeguard duties are legitimate tools in trade remedies (i.e. allowed under our international commitments such as in the WTO) to assist industries which have experienced a surge in importation and a decline in sales and profitability,” he said.
He further cited the surging imports of cement which increased from only 3,558 metric tons in 2013 to more than 3million metric tons in 2017; and the share of imports (from non-manufacturer or “pure” traders) increased from only 0.02 percent to 15 percent during the same period. Equally important, the Industry experienced a sharp decline in income (earnings before interest and taxes) of 49 percent in 2017.