MAKATI – Trade and Industry Secretary Ramon Lopez reiterated that the new safeguard duty on cement is definitely not punitive, and will not cause a shortage. The move, he says, aims to encourage local manufacturers to expand their capacities to lessen the country’s dependence on imports.
The provisional safeguard duty, Sec. Lopez said, is “definitely not punitive”, “temporary” and will not protect companies because it has only an effect of 3.8% of current prices, “but it sends a good signal to any investor and manufacturer to expand.” The Secretary highlighted that despite the new safeguards, cement can still be imported with no permits required.
Last 17 January 2019, the Secretary had issued a statement on the imposition of provisional safeguard duty of Php 8.40 per bag after an investigation by the Department of Trade and Industry (DTI) on 1 September 2018 due to the increase of cement imports from only 3,558 metric tons in 2013 to more than 3,000,000 metric tons in 2017. This duty will be in effect for 200 days in the form of cash bond on imported cement while the Tariff Commission undertakes its formal investigation.
Further, he said that the surge in imports is a big concern as we do not want to eventually import everything as we stunt the growth of local manufacturing, which will only widen the growing trade deficit: “We have to build capacities for the future especially now that the government has embarked on an aggressive infrastructure development program. Growing capacities also create local jobs that help alleviate poverty. Imports do not create local jobs but help jobs in the source country.”
“We have to strike a delicate balance. We are not over protecting a local industry. Cement does not have any tariff duty protection, unlike in many agriculture products. Imports are still allowed and do not require any import permit. So we can be sure that imports will continue to play its role in providing alternative sources of cement supply,” he added.
Developing local industries is key to slowly wean the country off its dependence on imports and this is the long-term solution to country’s perennial trade imbalance, said the Secretary. Hence, DTI is focusing on broadening the country’s manufacturing base to meet the local demand and eventually have the capacity to enter the export market.
He added that since local manufacturers are required to keep their current prices, the safeguards will not lead to price increases or a shortage of cement.
DTI commits to consistently monitor cement prices while the provisional duty is in force to ensure compliance with this requirement.
“The DTI consulted several stakeholders to get all of their insights. In our decision, we aimed to strike a balance between developing local industries and protecting the consumers,” said Sec. Lopez.