Builders, importers join clamor vs DTI’s probe vs imported cement

Clamor against the motu propio investigation of the Department of Trade and Industry (DTI) on imported cement is gaining ground as constructors and cement importers joined in opposing the government move to control cement importation through the imposition of additional tariffs.

The Philippine Constructors Association, Inc. (PCA) issued its position paper while the Philippine Cement Importers Association, Inc. issued a statement, strongly opposing the DTI’s Notice Motu Propio Initiation of a Preliminary Safeguard Measures Investigation on the Importation of Cement from Various Countries docketed under SG Case No. 01-2018. On Tuesday, consumer advocacy group Laban Konsyumer, Inc. also issued its statement against the DTI initiation of a motu propio investigation.

“The PCA, an association of construction contractors with membership nationwide, is strongly opposing any intended imposition of safeguard measures on imported cement. While safeguard measures on imported cement will favor local cement manufacturers, it will cause serious injury on the consumers and the contractors all over the Philippines,” the PCA said its position paper.

PCA also corrected DTI’s figures on the increased cement importation, noting that importation went up in 2015 by 4,391 percent in 2015 due to a spike in prices of local cement following supply shortage, but importation had been steadily decreased posting a 72 percent drop in volume in 2017.

“Truly, there was a continuous downtrend in the last years, contrary to the allegation of an increasing volume of importation,” PCA stated.

PCA has warned that the imposition of safeguard measure, which means a punitive duty on imported cement, would harm constructors and consumers who will suffer higher prices as local cement producers will increase their prices the prices of the imported cement.

“Construction contractors are locked in to their prices upon submission of their bids in government construction projects especially so because of the removal of the escalation clause in RA 9184. The same is true in private construction projects where bidding is likewise being widely resorted to by private project owners and where the trend now is lump sum contract. Also for housing projects where price is fixed. Clearly, the construction contractors suffer. It would not hurt the contractor much if cement is agreed to be an “Owner Supplied Material (OSM), but in which case, the project owner suffers the consequences of the increase in price, thus impacting negatively on their budget. How about the numerous end-users who buy on retail basis for their consumption in building and repairing their homes? They too suffer,” the PCA explained.

The constructors further stressed that in these times of increased activities in the construction of residential houses, residential and commercial condominiums, office buildings, industrial plants, roads and bridges and other structures where cement (be it local or imported) is a major component, the imposition of safeguard measures will surely tilt the balance and adversely affect the buying public.

The PCA also questioned DTI’s acceptance as “Gospel truth” the domestic cement industry’s claim of serious injury caused by increased imports saying the alleged decline in local cement firms’ earnings.

The group said that the real financial standing of local cement firms should come to light once the Tariff Commission order these companies to open their financial records to show the basis of the alleged “serious injury” and what is/ are truly causing the alleged “decline in their earnings.”

Napoleon Co, president of Philippine Cement Importers Association, Inc., said that cement manufacturers continue to maintain their huge profits by posting industry sales of 1109 billion and industry earnings of 114.7 billion in 2017.

Co questioned the DTI’s move towards additional safeguard duty on cement importation, despite the worsening cement shortage.

He said that the government’s massive “Build, Build, Build” program faces delays due to severe cement shortage. Sale of cement is now being rationed or allocated in several parts of the country as cement production and importation cannot cope with the strong demand.

“The country experienced unprecedented growth in construction after President Duterte’s election in 2016. Cement demand jumped to 28.5 million tons in 2017 and is forecast to increase to near 30 million tons in 2018.

“The government encouraged importation of cement to fill in the shortage of 2.5 million tons in 2016 and almost 3.0 million tons in 2017,” said Co.