Various groups buck zero tariff on cement imports

MANILA, Philippines - Opposition to the government’s extension of the zero tariff for cement has drawn support from industry, civil society, and the academe.

Meneleo Carlos, chairman of the Federation of Philippine Industries (FPI), said that industries in the Philippines’ neighboring exporting countries, with depressed local markets due to the global financial crisis, may be under pressure to sell their excess capacities at marginal costs, which constitutes unfair dumping. He added that the Philippines, with zero cement tariffs, may consequently become a prime target for this dumped cement.

Former senator Wigberto Tanada, lead convenor of the Fair Trade Alliance, underscored the inequity of the recent government’s decision to extend the zero cement tariffs on imports. The local cement industry, at zero tariffs, is placed at a disadvantage vis-à-vis neighboring countries such as Vietnam with cement tariff at 40 percent and Thailand at 10 percent. This may endanger the livelihood of the 120,000 Filipino workers involved in this industry.

Dr. Prospero de Vera, a University of the Philippines (UP) professor, had earlier expressed his strong disapproval over the government’s decision to extend zero cement tariffs, considering that governments all over the world are now exerting massive efforts to minimize the ill effects of the global financial crisis.

He said that some countries even go to the extent of providing funds to companies to continue operations and to be able to retain their employees. The Philippines seems to be doing the opposite.

During the June 18 conference with the Asian Cement Producers Amity Club in Thailand, studies showed low capacity utilization of cement industries. In Thailand, total cement capacity utilization is only at 44 percent, Malaysia at 61 percent, Japan at 64 percent, and Taiwan at 46 percent.

Studies show that from 1998 to 2008, cement demand in the Philippines has not exceeded 60 percent of industry capacity. Profitability of the local industry has also been below the cost of capital. The average return on assets (ROA) in the cement industry has been below four percent from 2003 to 2008.

Given these factors, industry experts urged that the Philippine cement industry should have at least some protection, not zero tariffs, consistent with other countries safeguarding their own strategic cement industries. 

This will allow reinvestments to take place to provide for future needs, thus preventing the Philippines from being overly dependent on cement imports with its consequent risks of even higher prices, substandard quality and uncertain supply availability.