Source: Manila Standard
The government imposed a provisional safeguard duty of P8.40 per 40-kilogram bag of imported cement to protect the local industry amid the surge of imports.
The safeguard duty represents about 4 percent of the average retail price of cement and would be implemented for 200 days while the Tariff Commission is conducting a formal investigation.
The Trade Department earlier initiated a motu proprio or a preliminary investigation to determine whether increased imports of cement were causing or threatening to cause serious injury to the domestic industry.
Trade Secretary Ramon Lopez said the provisional safeguard duty is at “a level that will ensure price and supply.”
He said safeguard duties were legitimate tools in trade remedies allowed by the World Trade Organization to assist industries that have experienced a surge in imports and a decline in sales and profit.
Data supplied by cement manufacturers to the Trade Department showed that from 3,558 metric tons in 2013, imports rose to more than 3 million MT in 2017 while the share of imports by traders went up from only 0.02 percent to 15 percent during the same period.
Data also showed that the industry experienced a sharp decline of 49 percent in income in 2017.
The department said despite the safeguard tariff, it expected imports to continue coming into the country. It said that contrary to importers data, there would be enough supply to support demand.
It estimated the domestic capacity at 35 million metric tons versus the estimated demand 25 million MT.
The Philippine Cement Importers Association Inc. earlier asked the Trade Department to explain its motive for initiating an investigation on imported cement which it said could exacerbate the cement shortage in the country as the government undertakes the ‘Build, Build’ Build’ infrastructure program.
PCIA president Napoleon Co said it was a bit perplexing why a motu proprio investigation was necessary when the country was following open trade.
Lopez assured that prices of domestic cement would remain stable despite the higher tariff on imports.
“We are requiring the cement manufacturers to maintain their current retail price levels. We will closely monitor the selling price of cement manufacturers and ensure that they will not implement increases,” Lopez said.
“At the same time, it 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 every time we import,” he said.
The provisional authority is good for 200 days in the form of cash bond on imported cement, while the Tariff Commission undertakes and concludes its formal investigation.
Lopez said the Trade Department was balancing the interests of all stakeholders and giving particular attention to ensuring that cement supply remained steady and that prices would not increase.
He said the country should not solely rely on imports as global supply and demand situation would be risky. He said too much dependence on imports would also lead to perennial trade deficit.
Co said, however, there was no need for the department to protect the robust domestic cement industry, given its massive earnings.
Cement manufacturers continued to rake in huge profits, posting industry sales of P109 billion and industry earnings of P14.7 billion in 2017, he said.