Philippines: cement makers lament lifting of import tariff

Philippines: cement makers lament lifting of import tariff
Published: 24 November 2008

Representatives of the Philippine cement industry has criticised the government for removing the tariff on imported cement, warning that the industry may suffer losses of up to P20bn once sub standard cement is dumped into the country.

“If dumping comes in, the industry will lose billions not to mention the 120,000 jobs,” Cement Manufacturers Association of the Philippines (CEMAP) president Ernesto Ordoñz said yesterday.

On Nov. 7, President Arroyo signed Executive Order 766 which temporarily modified the rates of import duty on cement.

“his is an unfortunate decision. All other countries are protecting their own industries while we are doing the opposite,”Holcim Philippines Inc Chief Financial Officer Ed Sahagun said in an interview.

Zero tariff will be implemented for six months after which the government will evaluate if the protection should be scrapped permanently.

Sahagun said other countries are looking for alternative markets given the weakness in cement demand as a result of the slowdown in the global economy.

Sahagun said the zero percent tariff does not guarantee a reduction in the price of local cement. “We are already suffering,”ahagun said referring to the 77-per cent reduction in revenues recorded by Holcim last quarter.

On the average, cement price is at P200 per bag. The current price is 14 per cent higher than cement prices last January.

Cement firms said there is no need to remove the tariff because local production can meet the demand.

Sahagun said he cannot understand the move of the government because most of their clients do not have any problem with their prices.

“They understand because the price of coal has gone up,” Sahagun said. Coal is the major tool for cement manufacture.

Likewise, Sahagun pointed out that the 14 per cent increase implemented months ago is small when compared to the almost 50 per cent price hike by other countries.

For Holcim, Sahagun said they will try to cut costs as a means to cope with the impending dumping of substandard Chinese cement.

“For as long as we can afford it we will not lay off our workers,” he said. The cement industry employs over 120,000 workers.

“We are appealing to the government to reconsider its decision because removing tariff goes against reason. We should be protecting our own industry and not allowing others to freely dump their goods here,” he noted.