Cement import dependence fails

In lifting the safeguards on the local cement industry, the Tariff Commission heavily leaned on what it termed as the positive adjustment to import competition which in the real world does not exist.

In a 5 October report, the TC recommended not extending the protective tariff on imported cement.

Local cement makers under the Cement Manufacturers Association of the Philippines are now weighing their options “after the safeguards’ non-extension.”

The TC issued its report after the holding of public hearings on the complaints of the domestic industry against imported cement being sold at dumping prices mostly from Vietnam.

A positive adjustment was supposedly achieved through more than P60 billion worth of recent projects to upgrade the efficiency of key cement plants.

The actual situation is far simpler than how the TC appreciates the market since cheap imports themselves constitute an “unfair playing field” for local cement manufacturers.

On 6 December 2021, DTI imposed an anti-dumping duty on imports from Vietnam.

DTI estimated that the provisional duties will roughly add P2.01 to P25.08 per 40-kilo bag of cement to the import cost but it miserably failed to deter the dumping incidents.

On 9 December of that year, the TC began an investigation at the request of DTI. Its findings indicate that dumped cement imports from Vietnam accounted for 91 percent of total Philippine imports.

The Cement Makers Association of the Philippines said the influx of Vietnamese products did not let up despite the tariff.

In its review, the DTI found local cement makers have enough capacity to meet local requirements.

Even with the infrastructure buildup, the capacity expansions ensure that the demand is met even for the medium term.

Frustrating the market targets of local factories as a result of the flood of imports puts the expansion programs at great risk.

Some form of government assistance to the local industry is, therefore, needed since it is fighting a lopsided battle.

Importers do not have to deal with the challenges faced by manufacturers such as higher energy prices and employing people thus contributing far less to the economy than those who have set up local factories.

With less overhead to worry about, Vietnam imports cost up to 40 percent less than local products despite the tariff.

“The cement industry is labor intensive and many are in remote locations that greatly contribute to the economy of poor regions,” an industry official said.

“If the industry suffers and plants close, it can have a severe knock-on effect on poor communities,” he added.

Removing the safeguards when these are most needed when most businesses are recovering fails to serve national interest as it benefits importers and the foreign countries where the imports are sourced.

The fragile global situation proves the folly of import dependence.

The Tariff Commission needs to do a lot of introspection to determine which public it serves — those of foreign countries or our own.

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