CREBA backs restoration of perks for cement production

The Chamber of Real Estate Builders Associations (CREBA) supports the move of the government to restore cement production as a preferred investment area under the 2006 Investment Priorities Plan (IPP).

The move is intended to increase domestic cement production to meet increasing demand which is reportedly not being met by the existing cement industry players.

The construction industry is projecting a cement supply shortage by 2010.

CREBA has been complaining about the rise in cement prices which is now between P150 and P170 per bag.

CREBA has been urging government to look into the matter and determine the country’s true domestic demand for cement.

Cement production was delisted from the IPP three years ago because of a supply glut in the local and global market.

Relisting cement production in the 2006 IPP would allow it to dovetail with the Medium Term Philippine Development Program (MTPDP) which projects a 12-percent annual growth of the construction industry.

Data from the Cement Manufacturers Association of the Philippines (CeMAP) showed that the industry’s total kiln capacity is 462 million bags a year.

Local cement demand in 2005 was 265 million bags.

However, based on a projected 12-percent annual growth of the construction industry, demand is expected to reach 468 million bags by 2010 which would be more than the local cement industry’s capacity of 462 million bags.

Thus, government foresees the need to encourage cement production in the 2006 IPP as cement projects have a long gestation of about three and half years.

A large chunk of the local cement industry has since been acquired by foreign cement firms such as CEMEX of Mexico, Lafarge and Holcim.

The big three foreign firms have reportedly invested up to P1 billion to upgrade their facilities.

The remaining Filipino controlled cement companies are those owned by Eduardo Cojuangco – Northern Cement, and Pacific Cement in Surigao.

The local cement industry has enjoyed government protection against imports with the imposition of safeguard measures a couple of years back.

Among the big three cement players, Lafarge has the biggest capacity with 7.7 million MT from seven plants.

Holcim’s four cement plants have a combined capacity of 7.238 million MT, while Cemex has a capacity of 4.6 million MT.