Removal of import tariff on cement opposed, Philippines

Removal of import tariff on cement opposed, Philippines
Published: 27 October 2008

Former senator-turned consumer advocate Wigberto Tañda expressed strong opposition yesterday to the plan of the Philippine Department of Trade and Industry (DTI) to lift the tariff barrier on imported cement.

Tanada said he foresees more difficult times for the domestic cement industry, notably its workforce once the government removes the “lready low”ariff on imported cement.

Business leaders also warned against the backlash of eliminating cement tariff, saying it would send a wrong signal across the global community of investors.

“ don’ understand it,”añda said in an interview, referring to the tariff elimination being espoused by the DTI.

Tañda, convenor of the Fair Trade Alliance (FTA), pointed out that lifting the tariff barrier which serves as a protective mechanism would make the Philippine cement industry, considered as strategic by the government, vulnerable to dumping and smuggling.

He hinted that such worst case scenario would pose undue competition to local cement producers who might be forced to cut down operations, giving rise to mass layoff of workers.

In a related development, an industry observer chided the DTI for saying that the tariff would still be removed even if the price increases of cement were justified.

“n the first place, why did they ask the cement companies to submit documents to prove that the price adjustments were fair? To me, it’ like changing the questions when you already have the answers, or changing the rules in the middle of the game,”he source said.

He scored the DTI for saying the cement tariff would be scrapped if the local producers would not roll back their prices.

The source urged the DTI to “eave fair enough alone,”dding that he is convinced the price hikes were implemented to preserve the viability of the capital-intensive cement industry which is being hit by rising production costs due to price hikes in imported coal and power.

Ian Thackwray, chief operating officer of Holcim Philippines said they were compelled to shut down one of their kilns last July, resulting in a 15-percent production cut, or one million tons.

The move was taken to cushion the impact of low demand as the government slowed down on infrastructure spending while the private sector became overly cautious of the situation.

Speaking at the 34th Philippine Business Conference on Monday, Thackwray said the domestic cement industry is experiencing flat growth rate for the second half of the year, and may likely last until next year.

Philippine tariff rates for cement are already low compared to its Asian neighbors such as Malaysia and Vietnam which have it at 50 percent and 40 percent, respectively, the former solon said.

The Philippines imposes five percent tariff on most preferred nations and three percent to ASEAN members.

Industry sources cited the likelihood of cement price adjustments to cushion the impact of soaring cost of imported coal which has increased by 85 percent over the past year.