By Bernie Cahiles-Magkilat
Cement traders said that member firms of the Cement Manufacturers Association of the Philippines (CeMAP) should not blame imports as the only reason for their failure to reinvest and increase their capacities despite rising demand.
This was stressed by PhilCement Corp., a cement importer owned by the Phinma Group, in a submission to the Tariff Commission (TC), which is currently investigating whether or not to impose a permanent safeguard measure on imported cement.
PhilCement President and CEO Eduardo A. Sahagun said that CeMAP member firms blame imports as if these are the only reasons for their decline but other local cement firms, however, have not actively sought protection from the government.
“The failure to reinvest profits despite rising demand is the mistake of the management teams of these multinational firms – this mistake is not something the consumers and the general public should pay for,” said the PhilCement position paper.
In earlier public hearings conducted by the TC, CeMAP member firms said that without the safeguard duty, they cannot invest to improve their capacities. The Department of Trade and Industry (DTI) has already imposed a safeguard duty of P8.40 per bag of imported cement in February this year saying the import surge has caused serious injury to local cement producers.
The TC is now trying to determine whether or not there is indeed import surge and this has caused serious injury to the domestic industry. Once the Commission has ruled in the positive, the provisional import duty becomes permanent.
PhilCement said that the surge in imports over the period of investigation and up to 2018 was due to a significant increase in demand, which the local manufacturers were not fully able to supply. “From 2015 to 2018 – domestic production has not kept up with demand. This becomes more pronounced in 2017 and 2018 as the supply gap continues to widen,” PhilCement said.
Imported cement in 2017 reached 3.079 million metric tons and 4.658 MMT in 2018, representing 12.38 percent share of production of 24.875 MMT in 2017 and 17.16 percent of total production of 27.148 MMT in 2018.
“These multinational cement firms are so arrogant to threaten us by withholding their expansion investment,” PhilCement said.
“These CeMAP member firms have continued to promise integrated manufacturing expansions even during 2013 to 2017, but have yet to deliver on any. Grinding mills as proposed by Republic in its adjustment plan will just be a stop gap, as they will continue to import clinker rather than cement.”
Cement importers also raised the issue as to the protection on these four giant multinational cement firms when smaller industries do not get the same treatment.
“The government handily made the decision to stop protecting local farmers estimated around 2 million with the importation of rice to the country for the good of the 100 million consumers. We did not hear DTI fight as much for the protection of the domestic rice industry as it does for this CeMAP lobby,” PhilCement noted.
PhilCement further questioned CeMAP’s representation of the local cement industry. Sahagun noted that the four multinational firms are not 80 percent of the industry, as there are four local non-member companies who did not participate with CeMAP or represent themselves during the public hearings.
Sahagun said that while their claim may have been true ten years ago, two of the four cement companies, Eagle Cement and Northern Cement under the leadership of businessman Ramon S. Ang is now estimated to hold a formidable 25-28 percent of the total domestic market.
Ang, through San Miguel Corp., recently won the bid to acquire Holcim Philippines for $2.15 billion.
“This development will further reinforce that CeMAP cannot represent themselves as the Philippine cement industry,” Sahagun added.
Meantime, Nap Co, chairman of cement trader Cohaco Merchandizing & Development Corp. said that local cement manufacturers themselves have been importing cement to augment supply. Co said these cement producers imported 1.181 MMT of cement or a total of 4.442 MMT from 2013-2018.
Co further said that importers only supply to areas where local cement is not available.