The Tariff Commission (TC) has declined the appeal of local cement manufacturers to extend customs duty on imported cement.
Based on its investigation following the request of the Cement Manufacturers Association of the Philippines (CeMAP), the Tariff Commission said there is no imminent threat from the importation of cement to the local manufacturers.
"Despite the existence of price undercutting, price depression, and price suppression during the period under review (2019 to 2021)," the domestic industry has recorded high income from operations as a result of the administrative order. The domestic industry was profitable as its income from operations bounced back in 2021 to pre-pandemic levels of P13 billion,” the commission said in a statement.
“Return on Sales was stable at 13 percent, attributable to successfully executed cost-cutting and productivity-enhancing industry measures,” it added.
Earlier, the CeMAP requested that the tariff imposition on imported cement be extended as the administrative order expires in October.
It also noted that over the time period covered by Administrative Order No. 19-13, the local cement sector was able to stabilize output and expand its capacity to meet the demands of a developing market.
“During the period under review, there was no significant overall impairment in the position of the domestic cement industry that constituted serious injury,” the report stated, pointing out that “there is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future.”
In 2019, the Department of Trade Industry (DTI) issued DTI Administrative Order (DAO) No. 19-13, imposing a three-year safeguard duty on imported cement.
These safeguard measures were intended to provide temporary relief to the domestic cement industry while it worked to improve its competitiveness against imports.
Per TC’s report, here are the following benefits of the non-extension to stakeholders:
• The non-extension of the safeguard measure on cement would prevent price increases in both local and imported cement which, in turn, would lead to positive spillover effects on the growth of the construction industry, which has a high contribution to gross capital formation.
• Stable construction costs, from stabilized/lower cement prices, would encourage capital investments, support an enabling business environment, and ultimately be economically beneficial.
• For government-funded infrastructure projects (“Build Better More”), taxpayers would be spared from the additional burden of more expensive construction costs, considering the hefty burden already posed by government’s historically high debt levels (P13.02 trillion as of August 202223).
• Consumer welfare is best served if protection is kept to a reasonable period and consumers are afforded the benefits of wider product choice, whether local or imported, thereafter.
• With currently elevated inflation levels (i.e., higher food, coal, and fertilizer prices), a further erosion of purchasing power is prevented if the imposition of the safeguard measure is not extended.
The effects of the administrative order on consumers have been raised by a number of consumer advocacy groups. According to one of these groups, Laban Konsyumer, the application of safeguard tax on imports will lead to higher cement costs, which will ultimately harm consumers.
Laban Konsyumer said that three months after the levy on import cements was enacted, the retail prices of cement jumped by P15–40 per 40–kg bag, according to DTI's own price monitoring records.
The rise was substantially greater than the provisional safeguard duty of P8.40 per bag, the advocacy group said.
In the first quarter of 2022, it noted that cement prices could climb by as much as P20 per bag. “Cement prices would increase by as much as P20 per bag in the first quarter of 2022.”