Safeguard measures, Tatak Pinoy seen curbing cement imports

SAFEGUARD measures as well as the Tatak Pinoy Act, could address the persistent influx of foreign cement, the Cement Manufacturers Association of the Philippines (CeMAP) said.

According to CeMAP, cement imports continue to flood the market even with domestic producers experiencing overcapacity.

The Department of Trade and Industry (DTI) launched a preliminary safeguard measures investigation on the increasing imports of cement classified under AHTN Codes 2523.29.90 and 2523,90.00.

“It is our prayer that this investigation regarding the influx of imported cement by the DTI would lead to recognizing the negative impact to the local industry (as) safeguard measures can definitely relieve the injury,” Renato A. Baja, executive director of CeMAP, said via Viber.

“We are in the same with DTI as far as acknowledging and recognizing that the influx of imported cement, particularly from Vietnam, has caused injury to the domestic industry,” he added.

He said the Philippine cement industry can produce up to 50 million tons annually, exceeding estimated demand of around 35 million tons.

“However, imported cement, particularly from countries like Vietnam, where domestic demand is declining and surplus production is exported, continues to exert pressure on Philippine manufacturers,” he added.

Last week, the DTI said cement imports are projected to increase 4.96% year on year to 7.36 million metric tons (MT) this year.

Cement imports grew 10.34% in 2020 and 17.2% in 2021, then dropped 2.89% in 2022. They rose 4.74% in 2023.

“Based on the initial findings, there is substantial evidence indicating that increased imports of cement have caused serious injury to the domestic industry,” the DTI said.

“This injury is manifested in declining market share, reduced production and sales, decreased capacity utilization, diminished profitability, price depression, undercutting, and suppression,” it added.

It said that the surge in imports has led imported cement to displace domestic products.

“Relative to domestic production, the volume of imports of cement increased from approximately 30% in 2019 to 35% in 2020 and from 36% in 2021 to 41% in 2022,” the DTI said.

“In 2023, the share of imports to domestic production increased further to 47% and 51% in January to June 2024 as domestic production declined,” it added.

In terms of country of origin, DTI’s report showed that 93%, or 3.44 million MT, of the cement imports in the January to June period came from Vietnam, while the other sources are Indonesia (2%) and Japan (5%).

According to CeMAP, the cement industry is among the few where nearly 100% of raw materials are sourced locally.

“This industry is both capital and energy intensive and operates without government subsidies for energy costs or taxes. Despite these challenges, it capitalizes on the country’s abundant natural resources and skilled workforce to produce cement at fair and competitive prices,” it said.

“Economies of scale and high capacity utilization are crucial for cost efficiency; however, with current utilization rates at only 55% to 60%, production costs remain suboptimal, forcing some plants to temporarily shut down,” it added. 

Nonetheless, CeMAP said that the initiation of the investigation is very timely as the imports are really making the local industry suffer.

“By supporting local production through these safeguard measures and the recently passed Tatak Pinoy Act, the government plays a crucial role in stabilizing employment, bolstering local industries, and maintaining essential construction standards,” it said.

“Without such measures, the ongoing influx of foreign cement poses significant risks to jobs, businesses, and the broader economy,” it added.

The DTI, through a department order in Dec. 16, 2022, imposed anti-dumping duties on Ordinary Portland Cement Type 1 and Blended Cement Type 1P imports from Vietnam for five years.

This was later on updated through a department order dated Feb. 14, 2023.

In March 2023, the Bureau of Customs posted Customs Memorandum Order 05-2023 which imposed a definitive anti-dumping duty on imports from Vietnam ranging from 2.33% to 23.33% depending on the company.

Meanwhile, DTI Bureau of Import Services Director Maria Guiza B. Lim noted that safeguards and anti-dumping measures are applied differently.

“Safeguard measures are global in application while anti-dumping is country- and exporter-specific,” Ms. Lim said in a Viber message.

“Safeguard measures are a safety net for the surge in imports causing injury to domestic industry, while anti-dumpinWg occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect,” she added. — Justine Irish D. Tabile