New cement plant registration eased, Philippines

New cement plant registration eased, Philippines
Published: 22 August 2006

The Board of Investments (BoI) has relaxed the rules on the registration of cement projects to enable foreigners to wholly-own cement projects in the country but tightened the rules on the registration of expansion projects by existing cement companies.  

The BoI has approved this policy as the agency is opening up the cement industry to new players, foreign and locals alike, with the ultimate goal that the competition the new cement capacity could bring to the domestic market would result in lower prices of domestic cement. 
Under the new policy, foreigners may wholly-own a cement project and qualify for pioneer status with non-pioneer incentives if the proposed plant has a minimum production capacity of 1Mt, clinker-based. This new requirement for pioneer status applies to both Filipino-owned or foreign owned new cement project. 
The two existing requirements to qualify for pioneer status are: introduction of a new technology for cement production and 75 per cent of production is geared for the exports market. 
These two existing requirements are difficult to comply because there is new technology in cement production and exports are difficult to meet, the BoI said that new cement projects with a minimum production capacity of 1Mt are classified under pioneer status but with non-pioneer incentivees only. 
The BoI has imposed the minimum production capacity to ease the requirement to prospective foreign-owned new cement projects, which are eager to come in as long as they are allowed full ownership instead of what is allowed at present of a maximum of 40 percent equity ownership. 
But while such relaxed requirement also applies to the expansion projects of existing cement firms, the BoI said that expanding local cement firms must meet an 85 percent capacity utilization to be able to avail of BoI perks.