New Philippino capacity needed

New Philippino capacity needed
Published: 20 March 2006

A group of Philippine developers and contractors are pushing for the entry of more cement factories in a bid to bring down prices. Pedro C. Tario, president of the Chamber of Real Estate Builders Associations, said his group was in favour of enticing new players in the cement industry by including it in the list of preferred sectors qualified for incentives under the government’s Investments Priorities Plan.
 
"We are hopeful that such a move would result in more stable prices of cement in the near future," Tario said. He said Creba members have been forced to absorb very steep increases in cement prices over the past three years. The price of 40kg bag cement rose to a range of P150 to P170 from only about P70 in 2002. Creba was reacting to reports that cement manufacturing projects might be able to enjoy incentives again as the government was considering the inclusion of these ventures in the IPP.
 
Cement manufacturing used to be in the IPP but was delisted three years ago because of excess production capacity. The government started considering its inclusion in the list again after data showed the possibility of production falling short of the fast-growing demand for cement.
 
Projections in the Medium-Term Philippine Development Plan for 2004-2010 indicate that the construction industry’s demand for cement would grow at an average of 12 per cent a year, which means demand could reach 468 million bags in 2010, which is higher than the existing production capacity of 462 million bags. But Tario said the shortage situation was already evident despite claims of the Cement Manufacturers Association of the Philippines about current capacity and demand.
 
"How can selling prices be at historic highs when demand is weak and there is alleged overcapacity in the industry?" the Creba chief asked. Tario said the government should look into the matter of the "true domestic supply situation" and not rely on reported numbers from existing manufacturers.