Local players back DTI move to establish cement import safeguards

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Manila, Philippines–Local cement manufacturers are backing the Department of Trade and Industry in establishing safeguards against the rising volume of imported cement.

The Cement Manufacturers’ Association of the Philippines’ (CeMAP) says that rampant importation of cheap, low-quality cement from neighboring countries can stunt the local industry before it is given a chance to modernize and become competitive. This is in view of competition against state-owned and heavily-subsidized producers from countries like Vietnam.

In the past five years, the volume of cement imports entering the Philippines increased from 3,558 metric tons in 2013, to as much as 3.4 million metric tons for the first three quarters of 2018.

“The safeguards simply give CeMAP the opportunity to level the playing field. CeMAP thinks that locally-made cement can effectively serve as a pillar of the country’s infrastructure agenda. Both Build, Build, Build and private sector projects have spurred demand and many of our local manufacturers have taken steps to increase production capacity to make sure that this demand is met,” says Cirilo Pestano, Executive Director of CeMAP.

Domestic cement effective capacity at present is estimated at 34.5 million tons, as against projected demand of 32.5 million tons.

He adds, “Based on our studies, local production is able to keep up with demand, but we are also taking steps to future-proof. Building cement plants, however, usually take about three years. During such time, we rely on safeguards established by DTI to ensure that cheap and low-quality imports are not dumped on the country.”

Left unchecked, importation can cause volatility in supply and prices.

CeMAP says that there are pipeline capacity expansion projects by several cement companies, some of which are scheduled for commission by 2019.

Local cement producers generate an estimated P21-billion in tax revenues and directly employ 42,000 people, a further 125,000 jobs throughout its value chain. In 2016 it contributed an estimated P 155 Billion to the national economy or close to 1% of the total gross domestic product. CeMAP projects that it can double its GDP contribution by 2030.

“Up to 6,500 jobs can be created for an additional one million tons of cement to be manufactured in a year. To add, up to P10-billion in direct investments can flow through the country for every one million tons of additional capacity–this is money that will stay in the Philippines,” says Pestano.

CeMAP is further dispelling fears of the safeguard measures’ effect on cement prices.

According to the Philippine Statistics Authority (PSA), cement prices index in NCR declined from December 2016 to December 2017 by 2.7%, while prices have been flat despite an increase in production cost from October 2017 to October 2018. In the said periods, however, construction commodity prices have overall increased by 7.6%.

“Local manufacturers are themselves subject to the DTI safeguards and this creates a level playing field. Creating an ideal environment for local businesses to thrive is a dream for most Philippine enterprises. On a level playing field the Philippine Cement industry can compete with anybody. We support and thank DTI for the measures is sets in place for us to grow into competitiveness,” concludes Pestano.