Government plan to import cement bucked

A public administration expert and political analyst at the University of the Philippines cast doubt yesterday on the sustainability of a government plan to import Japanese cement, then sell it in the Philippines at an extremely low price.

“To be candid about it, I personally believe this could not be done on a long-term basis because selling your goods at a loss is no way to run your business,” Dr. Prospero de Vera said.

De Vera was reacting to news reports quoting Trade Undersecretary Elmer Hernandez as saying the government would buy cement from Japan through the Philippine International Trading Corp. (PITC), and then sell it in the domestic market at P145 to P150 per 40-kilo bag.

He cited an official report by the Japan Cement Association in the Asia Cement Forum last Oct. 16 in Nanjing, China saying the equivalent of a 40-kg. bag of cement is sold at P303 in Japan. This is more than double the price at which the government intends to sell the same cement here.

De Vera said that taking into account the freight cost from Japan to Manila, as well as unloading cost, which amount to P40 per bag, this means that the cement will be bought in Japan at P105 a bag, only 1/3 of the retail price there. This does not even include increased transportation and marketing costs. 

“Definitely, this is a clear case of dumping. Worse, it is not the traditional smuggler, but the government itself that will buy the dumped cement. Will the government now charge itself with technical smuggling and dumping? This will also force our workers to lose their jobs,” he said.

“At best, this will hurt the local cement manufacturers who vehemently opposed the removal of cement tariff for fear that it would lead to dumping. It is declared government policy, and the law itself, that dumping should be penalized. It is ironic that, now, the government itself will be involved in dumping!” De Vera said.

He said dumping would inflict “irretrievable damage” to the Philippine cement producers who would continue to suffer losses even if the prices of imported of imported cement eventually go up in the local market. Locally made cement sells at an average of P200 per bag in Metro Manila.

“Under this worst case scenario, it is the Filipino consumers who would ultimately bear the brunt of a bad trade policy as they would be at the mercy of dumped cement,” De Vera added.

He stressed that the country’s rice industry faced a crisis due to flawed state policies of import dependence, resulting in acute supply shortage and skyrocketing prices. “As a palliative measure, we were constrained to procure rice from abroad lest our people might die hungry,” he noted.

He said the country’s sad experience with rice might be replicated in the cement industry. The government should rethink its position on EO 766 which is due to take effect shortly.