Local cement manufacturers said safeguard duties are crucial in maintaining their competitiveness at a time when major investments in their adjustment plans have been delayed by the new coronavirus disease 2019 (COVID-19) pandemic.
A source privy to a hearing of the Tariff Commission (TC) on Dec. 18, 2020 said the Cement Manufacturers Association of the Philippines (Cemap) represented by Republic Cement and Building Materials Inc., Cemex Holdings, Holcim Philippines and Taiheyo Corp. has stressed that without the additional duties on imports, they will not be able to pursue their expansion and adjustment plans.
At the hearing, the source said TC has questioned an order of the Department of Trade and Industry (DTI) imposing a duty of P9.80 per 40-kilogram bag of cement, higher than the P9 both agencies have previously approved for the second year of the definitive safeguard.
The source quoted a commissioner as saying the DTI cannot increase the rates because the schedule has been set and that by law, the rates should go down every year as the industry adjusts.
The source said Republic Cement reported its capacity expansion project has been completed, specifically the Iligan new cement mill which has been fully commissioned but the Bulacan new cement mill is delayed.
Republic also completed all kiln de-bottlenecking in Bulacan and Teresa, Rizal but the Iligan new kiln and the Luzon integrated line, both registered with the Board of Investments, are delayed.
The delays were caused by the travel restrictions when the quarantines were imposed at the start of the pandemic in March.
Holcim for its part has seven projects in its adjustment plans, some partially completed.
The source said Holcim noted the projects with the most impact on production to make operations more efficient are largely delayed.
The source said Cemex reported some its projects were either delayed or are replaced with other projects.
The source added executives of the cement firms brushed aside a comment of an importer-firm that some of the projects such as the construction of warehouses and the replacement of cement vessels to much bigger ones are operational in nature and not strategic, which means these will bee pursued even without safeguard duties.
The industry said all the projects are part of their strategic plans to achieve long-term competitiveness.
“Without safeguard duties, it is difficult to complete these investments regardless of the definition of strategic or operational (investments). At the end of the day, these are investments in the industry,” the source quoted a Cemex executive as saying.
The source meanwhile quoted a Republic official as saying “Cement is capital intensive; we are certain safeguard measures will help improve the confidence of our shareholders in investing to these projects.”
The industry also said players cannot tap the full benefits of their expansion projects due to the soft demand caused by the pandemic.
Cement firms also incurred additional costs to meet health protocols related to COVID-19.