Gov’t cuts cement import duty

Gov’t cuts cement import duty
Published: 09 March 2006

Importers will be allowed to bring cement into Jamaica between now and the end of August, at the reduced duty of 15 per cent, a decision made by Cabinet on Monday in response to complaints of a shortage of the product on the local market. In November 2004, the import duty on cement was increased from 15 per cent to 41 per cent to protect the local cement manufacturer, Carib Cement, which is investing billions of dollars to improve its plant. The effect of the increased duty was that the importing of cement became uneconomical, thus creating a monopoly market for the local producer.

Yesterday, Phillip Paulwell, the minister of commerce, science and technology, made the announcement of the reduction in duty for imported brands. "Cabinet considered the matter at its meeting on Monday and agreed to... a common external tariff rate of 15 per cent for imports of cement," he said. "In other words, the additional duty will be waived." The reduced duty will be in effect for six months . Paulwell said the decision followed consultation beginning in January, with Carib Cement and the construction industry, "through the Incorporated Master Builders Association of Jamaica (IMBAJ)".

Under the new regime, Carib Cement will not be allowed to import the product, except for two shipments already on its way to the island. Those imports will add to the 29,953t of cement brought into the island by the local manufacturer since December 2005, as part of the 40,000t it had committed to import. The import became necessary, according to Carib Cement, because of production shortfall caused by torrential rains and flooding in October.

The imports by Carib Cement, and its recent 12.5 per cent price increase drew a hailstorm of criticism from the construction industry, with some in the sector pressing the government to relax the duty on imports by other players. In another development last week, Carib Cement faced a public relations nightmare after revelations that it had to recall 500t of its own cement that exhibited low hardening quality.

But to import under the reduced duty, applicants will have to go through an extensive process involving the Trade Board, and the Ministry of Finance. They also have to reapply for each shipment. Paulwell claimed each application could be completed within 24 hours. They will be required to show: . evidence of firm order and suppliers’ commitment to supply; plus a certificate of quality from the appropriate body in the exporting country and certification from the Jamaica Bureau of Standards;

In a reaction to the latest development, the general manager of Carib Cement, Anthony Haynes, said importers could land cement into Jamaica at a fairly competitive price, but that his firm would defend its market. "I don’t think that you will find that you can get cement at the spot prices that you could before," said Haynes. "However, at the 15 per cent tariff there is cement out there that will be competitive in this market, but when it gets into the market, market forces will take over and we are prepared to defend our market." Haynes also acknowledged that Jamaica was not now a low cost producer, but argued that this "is why we are expanding and modernising".