Cement dumping leads to huge losses for RP

The deluge of dumped cement imports from Taiwan and Japan has cost both the private sector and the government P10 billion in losses over the past two years, and industry experts warned yesterday that annual losses would double annually unless officials force importers to acknowledge the legitimate price of the threatening products.

This was admitted yesterday by Department of Trade and Industry (DTI) sources who underscored how dumped cement, or products sold at prices much lower than their normal value, have delayed the recovery of the cement industry.

Reacting to the submission of a formal anti-dumping complaint by the Philippine Cement Manufacturers (Philcemcor), the DTI officials said total industry losses have almost doubled since two global cement giants -- Taiwan Cement Corp. of billionaire Jeffrey Koo and Japan's Southern Cross Cement Corp. -- have been flooding the market with products sold at just a third of the price in their home countries.

"In addition to the P5.7 billion loss last year and the P3.5 billion loss in 1998, you have to factor in government earnings through income taxes, duties of raw materials, and on other industry costs like power and project development," the official said.

He placed the government income loss share at near P3 billion, stressing this was a "conservative estimate." The official warned of greater -- and faster -- losses for every month dumped import are allowed to flood the market.

"Loss, like earnings, tends to replicate itself," the source said. "We're looking at P25 to P30 billion loss if the market movement continues, and double that again in the year after."

Already, he pointed out, three cement manufacturers -- Rizal Cement Co. Inc., Titan Cement Manufacturing Corp. and Mindanao Portland Cement Corp. - have ceased production, posting P442-million in losses.

The grave effect of dumping, the official said, is that losers are not fly-by-night investors, or so-called "hot money," but long-term investors who have already invested billions of dollars into the Philippine economy.

These include those who provided loanss for expansion activities, shipping and freight companies, power firms and suppliers of fuel.

Philippine cement companies have contracted $1.7 billion (P69 billion) to meet the projected doubling of cement demand every five years -- only to find themselves scaling back production because of unfair competition from imports.

The current dumping the official warned, would also delay or totally cancel the country's plan to become a regional power in cement manufacturing.

The very cheap price of imported cement -- sold here at $20 a ton compared to the $60/ton prevailing price in Japan and Taiwan -- have allowed foreign products to hog 10 percent of the local consumer market.

In local terms, he noted, Taiwan Cement has been undercutting Philippine products by P5 to P7 per bag.

"If you consider that it was only one percent at the start of last year, the full effect of destruction becomes clear," said the government executive.