Cement imports eyed to keep local prices down, Vietnam

Cement imports eyed to keep local prices down, Vietnam
Published: 23 April 2007

Cement prices in the country are considered more expensive when compared to neighboring countries, prompting Trade and Industry Secretary Peter Favila to encourage cement users to buy overseas given that those are cheaper than the ones produced here.

"I told BOI (Board of Investments) to find out from contractors what’s keeping them from importing. They are complaining about the cost of cement. What we are saying is you can import on your own," he explained.

According to Favila, anybody can import cement although regulations provide for a three percent tariff. However, in spite of the safeguard, Favila said it would be inexpensive to source from abroad because of the relatively low exchange rate. The peso closed at P47.51 to a dollar last Friday.

With barely two months left on the promised moratorium on cement price increases, DTI has promised they will finally determine if cement sold in the country is overpriced.

"There are agencies saying we have the highest cost of cement. They (Holcim, LaFarge and Cemex, the big three companies selling cement) are saying this is not necessarily true so I told them to give details," Favila said in an interview.

Last month, World Bank country director Joachim Von Amsberg said the price of cement in the Philippines is too high.

"We will determine if it is overpriced," Favila noted.

He said the cement companies have already submitted their unbundled cost to DTI. The secretary said his department is just consolidating the data and will make the final determination within the month.

Favila said the World Bank suggested opening up the industry in order to make the prices more competitive because the cement industry is dominated by three major players Holcim, LaFarge and Cemex.

Combined, the three account for 90 percent of installed clinker capacity, while four independent producers share the remaining 10 percent.

The multilateral agency noted that cement prices in the Philippines are among the highest in Asia. As of last year, cement per ton was pegged $72 compared with $35 in China, $50 in Thailand and $65 in Vietnam.

It said the government should allow more imports to have price increases and fast track required clearances for setting up a cement manufacturing plant.

"Given the strategic importance of cement, it could be important to put in place a permanent mechanism to monitor demand and supply, price trends and industry practices with a view to maintaining competitive conditions," Von Amsberg said.