DTI to probe alleged cement overpricing

The Department of Trade and Industry (DTI) will finally determine if cement sold in the country is overpriced, barely two months ahead of the lifting of a moratorium on cement price increases.

"There are agencies saying we have the highest cost of cement. They (Holcim, Lafarge and Cemex, the big three companies selling cement) are saying this is not necessarily true, so I told them to give details," Trade and Industry Secretary Peter B. Favila said in an interview.

Last month, World Bank country director Joachim Von Amsberg said the price of cement in the Philippines is too high.

"We will determine if it is overpriced," Favila noted.

He said the cement companies have already submitted their unbundled cost to the DTI, consolidating the data and will make the final determination within the month.

In the meantime, Favila said construction firms can opt to buy cement overseas if local prices are indeed deemed too high.

"I told the BOI (Board of Investments) to find out from contractors what’s keeping them from importing. They are complaining about the cost of cement. What we are saying is, you can import on your own," he explained.

He said anybody can import cement although regulations provide for a three- percent tariff. However, despite the safeguard, Favila said it would still be inexpensive to source from abroad because of the relatively low foreign exchange rate. The peso closed at 48.05 to a dollar last Wednesday, the last business day before the five-day holiday.

Favila said the World Bank suggested opening up the industry in order to make prices more competitive because the cement industry is dominated by three major players Holcim, Lafarge and Cemex. Combined, the three account for 90 percent of installed clinker capacity, while four independent producers account share the remaining 10 percent.

The multilateral agency noted that cement prices in the Philippines are among the highest in Asia. As of last year, cement per ton pegged at $72 compared with $35 in China, $50 in Thailand and $65 in Vietnam.

It said the government should allow more imports to have price increases and fasttrack required clearances for setting up a cement manufacturing plant.

"Given the strategic importance of cement, it could be important to put in place a permanent mechanism to monitor demand and supply, price trends and industry practices with a view to maintaining competitive conditions," Von Amsberg said.

Earlier,  DTI Undersecretary for consumer welfare Zenaida Cuison –Maglaya said the three major players in the cement industry have already committed not to increase prices until June.

Cement prices continued to go up despite weak demand after 2000. The cement prices ballooned from P100 per 40-kg in 2000 to P165 per bag in 2005. The DTI estimated apparent cement demand of 303 million bags in 2000, decreasing to 248.7 million bags in 2005.