Decisive move

The Department of Trade and Industry is moving closer to imposing safeguard measures on imported cement which continues to flood the local market to the detriment of the Philippine cement industry.

Trade Secretary Cristina Roque earlier directed the department to conduct a motu proprio preliminary safeguard investigation following the alarming rise in the volume of cement being imported into the country, most of which is being sold at dumped prices. Vietnam accounts for more than 90 percent of cement imports.

The DTI has already received position papers from five local cement manufacturers on the said motu proprio investigation. Cement makers have indicated their support for the imposition of safeguard measures, which can come in the form of additional duties on imported cement.

According to one report, the Bureau of Customs has admitted that imported cement continues to flood the country during the first three quarters of the year, despite the fact that anti-dumping duties are still being imposed on cement coming from Vietnam.

Data from the BOC revealed that cement imports from January to October 2024 already reached 6.2 million tons, five percent higher than last year, with October alone registering a record-high 870,000 tons. Around 94 percent came from Vietnam, while five percent was sourced from Japan and one percent from Indonesia.

In March of last year, the BOC implemented an order from the DTI for the imposition of anti-dumping duties on cement coming from Vietnam for a period of five years to avoid an imminent threat to the domestic cement industry which last year suffered a loss.

If the DTI decides to impose safeguard duties on imported cement, then that will be on top of the regular import duties and anti-dumping duties.

The Cement Manufacturers Association of the Philippines and Eagle Cement earlier expressed gratitude to Roque for the preliminary safeguard measures investigation. According to CeMAP, this critical step underscores government’s commitment to ensuring fair competition and to protecting the local cement industry from undue harm caused by excessive imports.

Meanwhile, the Federation of Philippine Industries has also recognized the urgent need to safeguard the local cement industry.

According to CeMAP officials, despite the cement industry’s ample capacity of 50 million tons annually which is enough to meet local demand estimated at 34 million tons, the influx of imported cement has caused substantial harm to domestic manufacturers.

They said that the implementation of safeguard measures is vital to mitigating the adverse impact of imports and preserving the competitiveness of local producers.

The Philippine Chamber of Commerce and Industry (PCCI) has also expressed its support, as it emphasized that the government needs to protect cement producers against unfair competition.

PCCI said that the cement industry is a significant contributor to the economy, accounting for at least one percent of gross domestic product, employing around 130,000 Filipinos, with a multiplier effect of three times. It added that the local industry generates more tax revenue for the government than importers of cement and this source of revenue for the country could be jeopardized if the influx of imported cement is allowed without considering the current production capacity of local manufacturers.

The damage to the domestic cement industry has already reached alarming proportions.

The DTI revealed that last year, the local cement sector has already incurred substantial losses amounting to P15 billion.

In absolute terms, cement imports increased by 10 percent in 2020, 17 percent in 2021 and five percent in 2023.

From a 79-percent share in 2019 or around 4.23 million metric tons, Vietnam’s share of Philippine cement imports grew to 91 percent in 2020, 93 percent in 2021, 95 percent in 2022 and 98 percent in 2023 with a volume of 6.88 million tons.

In a report, the DTI said that there are indications that increased imports of cement are the substantial cause of serious injury to the domestic cement industry in terms of declining market share, production, sales, capacity utilization, profitability, price depression, suppression and undercutting.

The implementing rules of Republic Act 8800 or the Safeguard Measures Act provide that in the absence of a petition, the DTI secretary may motu proprio initiate a preliminary safeguard investigation if there is evidence that increased imports of the product under consideration are a substantial cause of, or are threatening to substantially cause, serious injury to the domestic industry.

Operating profits of the local cement industry have suffered, declining by 11 percent in 2020, 12 percent in 2021, 69 percent in 2022 and 137 percent in 2023 to record its first operating loss.

And what is this we have heard that one local company that used to produce cement has now resorted to just importing, accounting for almost half of the country’s cement imports.

The imposition of safeguard and dumping duties on imported cement is far from advocating protectionism. Rather, this is a way of levelling the playing field so that our cement industry, whose product is in fact already world-class, can has a fair chance of keeping its share of the market. Without a viable market, how can the industry justify investing millions if not billions of pesos in modernizing its facilities and in further improving the quality of its output?

For comments, email at [email protected].