Limits set on local expansion bids

Limits set on local expansion bids
Published: 21 August 2006

The Philippine Board of Investments (BOI) said it has approved a new measure that will inhibit local cement firms from opening or acquiring new plants if their existing plants are running below capacity. The board said the cement companies can now only open a plant if it is a new project with a whole new production line. Existing firms who wish to acquire a new facility can only do so if their existing plant is operating at 85 per cent capacity utilization and produces a minimum of 1Mta of cement annually.

The move is seen as a deterrent against local cement producers who "buy out" new cement players to protect their share of the domestic market. This may include the acquisition of new cement factories and facilities put up by the prospective investor. The investments board said it has also approved new measures that will enable foreign cement firms to open new facilities in the country.

Foreign cement companies can now qualify for "pioneer status" if the board certifies that they are bringing in "new technologies" that will stand to improve the local cement industry, the board said. It added that companies that qualify for the pioneer status on account of new technologies can now be considered foreign-owned, instead of the usual 60/40 local-foreign split. BOI clarified, however, that foreign firms that qualify can only enjoy non-pioneer incentives.