Citing results of its investigation, the Tariff Commission (TC) denied an appeal by local cement manufacturers to extend the imposition of customs duty on imported cement.
At the same time, the Commission allayed the fears of local cement makers that the impending lifting of a security measure would make them vulnerable against imported cement.
The Cement Manufacturers Association of the Philippines (CeMAP) sought the extension of tariff imposition against imported cement as the Department of Trade and Industry’s (DTI) Administrative Order No. 19-13 expires this month.
The order, issued in 2019, imposes a safeguard duty on imported cement for a period of three years to provide temporary relief for the domestic cement industry while it undertakes measures to become more competitive against imports.
In its report, the TC noted that the domestic industry has recorded high income from operations as a result of the Administrative Order 19-13, “despite the existence of price undercutting, price depression, and price suppression during the period under review (2019 to 2021).”
“The domestic industry was profitable as its income from operations bounced back in 2021 to pre-pandemic levels of PHP 13 billion,” the Commission reported.
“Return on Sales was stable at 13%, attributable to successfully executed cost-cutting and productivity-enhancing industry measures,” it said.
The Tariff Commission added that the local cement industry was able to stabilize production and increased its capacity to supply a growing market during the period covered by Administrative Order No. 19-13.
“During the period under review, there was no significant overall impairment in the position of the domestic cement industry that constituted serious injury,” the report concluded.
“There is no existence of an imminent threat of serious injury and significant overall impairment to the position of the domestic cement industry in the near future,” it stated.
The report cited several benefits to stakeholders, enumerated as follows:
• The non-extension of the safeguard measure on cement would prevent price increases in both local and imported cement which, in turn, would lead to positive spillover effects on the growth of the construction industry, which has a high contribution to gross capital formation.
• Stable construction costs, from stabilized/lower cement prices, would encourage capital investments, support an enabling business environment, and ultimately be economically beneficial.
• For government-funded infrastructure projects (“Build Better More”), taxpayers would be spared from the additional burden of more expensive construction costs, considering the hefty burden already posed by government’s historically high debt levels (PHP 13.02 trillion as of August 202223).
• Consumer welfare is best served if protection is kept to a reasonable period and consumers are afforded the benefits of wider product choice, whether local or imported, thereafter.
• With currently elevated inflation levels (i.e., higher food, coal, and fertilizer prices), a further erosion of purchasing power is prevented if the imposition of the safeguard measure is not extended.
Several consumer advocate groups have warned of the Administrative Order’s impact on consumers. One such group, the Laban Konsyumer, said the imposition of safeguard tariff on imports will result in increased prices of cement and will ultimately hurt the consumers.
Citing DTI’s own price monitoring reports, Laban Konsyumer said that the retail prices of cement increased by P15-40 per 40-kg bag three months after the tariff on import cements was imposed. Laban Konsyumer noted that the increase was much higher than the provisional safeguard duty of P8.40 per bag. Cement prices would increase by as much as P20 per bag in the first quarter of 2022.