The Department of Trade and Industry (DTI) has given in again to the demand of domestic cement manufacturers as it hiked the second year safeguard duty to P9.80 on 40-kilogram bag imported cement, almost at the same level as last year’s P10 duty and higher than the original P9 duty it ordered last year.

Under Department Administrative Order No. 20-08 series of 2020, DTI Secretary Ramon M. Lopez ordered that for the second year of the three-year implementation period of the safeguard measure against imported cement, a P9.80 duty shall be imposed on every 40-kg bag of imported cement or P245 per metric ton.

The second-year duty imposition covers cement imports from various countries under AHTN Codes 2523.39.90 and 2523.90.00 from October 22, 2020 to October 21, 2021.

It could be recalled that on August 27, 2019, DTI issued DAO No. 19-13 imposing a definitive general safeguard duty on imported cement for an initial three year period to stop the surge of imported cement to the country after final determination that the surge in importation has caused serious injury to the domestic industry.

The DAO provided for a staggered reduction of the punitive duty. On the first year, the DTI imposed a duty of P250 per MT or P10 per 40 kg bag, for the second year P225 per MT or P9 per bag, and for the third year P200 per MT or P8 per 40 kg bag. The DTI DAO also provided for a regular review of the safeguard measure allowing the DTI to modify the rate as necessary.

This paved the way for the issuance by the Bureau of Customs of Memorandum Circular No. 239-2019 on October 22, 2019 for the implementation of the first year of the safeguard measure until October 22, 2020.

Notably, the P9.80 per bag safeguard measure for the second year was higher than original DAO’s P9, and only 20 centavos shy of the P10 duty for the first year.

In imposing a higher safeguard duty, the DTI cited the petition by the Cement Manufacturers Association of the Philippines (CeMAP), which pleaded to maintain the P10 duty for the second year if not raise it by P2 or P12 per 40-kilogram bag. It said that the P12 per bag is equivalent to the provisional

safeguards duty and within the recommendation of the Tariff Commission.

In its petition, CeMAP stated that while the first year implementation of the safeguard measure had slowed down cement arrivals and has helped the industry to level the playing field during the second half of 2019, the group of cement manufacturers also observed that cement imports seemed to be bouncing back in the first half of 2020.

CeMAP blamed the resurgence of cement importation to the higher surplus from countries such as Vietnam, 15 percent reduction in prices of cement and clinker exports per MT in the second half of 2020, lower freight cost because of lower demand of maritime transport, and Vietnam’s non-imposition of hard lockdown during the height of the pandemic enabling their companies to operate at full capacity.

Vietnam, Philippines’ number one source of cement imports, continued their operation even during the height of the pandemic, unlike the Philippines where Luzon and Davao cement plants ceased to operate during the Enhanced Community Quarantine period.

Following the CeMAP petition, the DTI conducted further review. DTI said that imports in the January-August period this year already accounted for 79 percent of 2019 import level despite the pandemic. If annualized, DTI said the cement importation this year is expected to rise by 9 percent.

“There are indications that the significant increase in the volume of imports affected the performance of the local industry. The condition of competition shows that the market share of locally produced cement was displaced even with the imposition of the definitive safeguard duty of P250 per MT or P10 per 40 kg bag as the shares of imports in the Philippine market significantly increased resulting in domestic industry’s increased inventory, reduced capacity utilization and incurred decline in profitability,” he said.

The DTI also said that the pandemic also aggravated the overall operation of the cement industry for the first half of 2020 which resulted in the closure and slowdown of operations due to the quarantine measures and low market demand.

As a result, the scheduled adjustment plan by the cement industry in 2020 has been delayed as the cement industry was unable to quickly resume and complete the necessary investments due to the business disruptions resulting from the quarantine measures implemented to fight the pandemic.