Displaying items by tag: Department of Trade and Industry

Philippines: The Philippines Tariff Commission has started a formal investigation into the provisional safeguard tariff placed by the Department of Trade and Industry (DTI). Consumer group Laban Konsyumer asked the commission to place a temporary restraining order on the tax but the body said it lacked the power to do so, according to the Philippine Star newspaper. The commission has three months to reach its verdict. The DTI placed tariffs on cement imports in January 2019 to protect local producers.

The cement industry in the Philippines has been generating a lot of ‘steam’ in the past three months. Some of this has now come to a head in the last few weeks with the Department of Trade and Industry’s (DTI) decision to impose tariffs on imported cement and the Philippine Competition Commission’s (PCC) on-going investigation into alleged-anti-competitive behaviour. Then, there was the unnamed sourced quoted by Bloomberg this week that LafargeHolcim was seriously thinking about selling up in the country.

Resistance to imported cement has been building for a while as local producers and importers have repeatedly clashed in the media. The latest thread of this story started in September 2018 when the DTI started an investigation into imports. A review by the department found that imports grew by 70% year-on-year in 2014, 4391% in 2015, 549% in 2016 and 72% in 2017. However, the market share of imports grew from 0.02% in 2013 to 15% in 2017. This was followed by various organisations taking sides. The Philippine Constructors Association, Laban Konsyumer (a consumer group), the Philippine Cement Importers Association and others came out on the side of the importers, warning of the risk to prices and consumers if duties were implemented.

It didn’t stop the DTI though. It imposed a provisional safeguard duty of US$0.16/bag on imported cement, around 4% of the cost of a 40kg bag. The PCC then said that it was going to consider the new tariff as part of its on-going investigation. Its probe started in 2017 following allegations that the Cement Manufacturers Association of the Philippines (CEMAP), LafargeHolcim Philippines and Republic Cement and Building Materials had violated the Philippines Competition Act by engaging in anti-competitive agreements.

Amid all of this, LafargeHolcim popped up earlier this week with a news story that it was actively trying to find the ‘right’ price for its local subsidiary, Holcim Philippines. The ‘right’ price at the moment being something around US$2.5bn for four integrated plants and associated assets. That’s around US$225/t of production capacity using the total of 8.4Mt/yr in the Global Cement Directory 2019 and considering LafargeHolcim’s 75% share in the subsidiary. This is about what you’d expect, but it is certainly higher than the US$120/t LafargeHolcim has officially accepted for its divestment of its Indonesian operations.

Given the anonymous nature of the sources involved, it’s uncertain whether LafargeHolcim’s alleged intentions to sell in the Philippines is anything more than market scuttlebutt. What is more certain is that Holcim Philippines has had a tough time so far in 2018, reporting a 23% year-on-year drop in earnings before interest, taxation, depreciation and amortisation (EBITDA) to US$64.8m in the first nine months of 2018 from US$83.9m in the same period in 2017. Sales have grown but this has been hit by the fuel, power and distribution costs as well as the depreciation of the Philippine Peso against the US Dollar. It also blamed imports for its problems. However, alongside all of this the company announced in December 2018 that it was spending US$300m towards increasing its production capacity by 30% to 13Mt/yr by 2020. This includes upgrades to its plants at Bulacan and Misamis Oriental with the installation of new kilns, mills and waste heat recovery systems.

The latest victory in the war between producers and importers seems to be on the side of the producers as the government steps in with protection for the industry. The Philippines’ economy is doing well with its gross domestic product (GDP) forecast to rise by 6.5% in 2019 by the World Bank. The trick for the government will be striking the balance between shielding industry from dumping and allowing the construction industry to keep on growing. Rumours about LafargeHolcim selling up are enticing but seem less likely than LafargeHolcim’s decision to exit Indonesia. Leaving would mean abandoning South-East Asia and exiting a country with a growing industry.

Philippines: The Department of Trade and Industry (DTI) has issued supplemental guidelines for the certification of cement. The regulations require producers or importers to follow conditions set by the Bureau of Philippine Standards (BPS), according to the Manila Times newspaper. The new rules require producers or importers to post a bond ahead of trading. Non-compliance with the certification rules can then lead to a forfeit of some or all of the bond. Not following the regulations can also lead to a producer or importer being prevented from supplying, distributing, selling or displaying their products. The new rules specify that an importer should apply for a statement of confirmation (SOC) on a per product, per shipment, per bill of lading basis prior to its distribution in the market.

Philippines: The Department of Trade and Industry (DTI) will impose a provisional safeguard duty of US$0.16/bag on imported cement. The decision follows an investigation where it said there were clear elements of a surge in cement imports and that this would cause injury to local producers, according to the Philippine News Agency. The import duty is equivalent to about 4% of the cost of a 40kg bag of cement. Data from the Philippine Cement Importers Association (PCIA) using sources from the Bureau of Import Services showed that of the total 28.6Mt of demand in 2017, local manufacturers supplied 25.6Mt while importers supplied the remaining 3Mt.

Philippines: Napoleon Co, the president of the Philippine Cement Importers Association (PCIA), says that the introduction of tariffs on cement imports may lead to higher prices. He said that if new tariffs were started some importers would cease operating, according to the Manila Standard newspaper. He then argued that local producers might raise their prices to match the higher cost of imported cement. Co made the comment in response to an on-going investigation into tariffs being run by the Department of Trade and Industry (DTI). Several importers allegedly stopped imported cement after the DTI launched the investigation in September 2018.

Philippines: The Philippine Cement Importers Association (PCIA) has warned of a slowdown in the construction sector due to an investigation in tariffs started by the Department of Trade and Industry (DTI) in September 2018. The association says that several importers are ‘wary’ and have stopped imports, according to Philippine Daily Inquirer newspaper. Napoleon Co, president of the PCIA, said that although local cement producers have started building new plants it will take three or four years for these to start production. In the meantime, he argued, importers are required to meet market demand. He added that import tariffs on cement would also add costs to end consumers.

Philippines: Laban Konsyumer (LK), a consumer group, has asked the Department of Trade and Industry (DTI) to delay an investigation into whether tariffs should be imposed on imported cement. It says that any potential duties are bad for consumers as it will decrease imports and create shortages, according to the Manila Bulletin newspaper. Instead the LK argues that the DTI should allow the expansion of local production capacity to finish before investigating imports. The DTI started an investigation into cement imports in September 2018 amid reports of declining revenue from local producers.

Philippines: The Philippine Constructors Association (PCA) has rejected any move to impose tariffs on cement imports, as this will only increase construction costs. The PCA said that imposition of safeguard measures would ‘adversely’ affect customers, according to the Philippines News Agency. In a position paper it has argued that cement imports counteract alleged price rises from cartel-like behaviour. The Department of Trade and Industry (DTI) started an investigation into cement imports in September 2018 amid reports of declining revenue from local producers.

Philippines: The Department of Trade and Industry has notified the World Trade Organisation (WTO) that it is starting a preliminary investigation to examine whether increased imports of cement is causing or threatening to cause serious injury to the local industry. The cement covered by the investigation is classified under AHTN Codes 2523.2990 and 2523.9000, according to the Manila Bulletin newspaper. The investigation will look at 2013 - 2017. The ministry has cited the Safeguards Measures Act as part of its probe.

Philippines: Trade Secretary Ramon M Lopez has started an investigation studying whether the government should protect the local cement industry, following a rise in imports. A review by the Department of Trade and Industry (DTI) found that imports grew by 70% year-on-year in 2014, 4391% in 2015; 549% in 2016 and 72% in 2017, according to the Business Mirror newspaper. However, the market share of imports grew from 0.02% in 2013 to 15% in 2017, leading to claims that increasing imports are damaging local production.

The review contends that the domestic industry's sales revenue increased from 2013 to 2016 but that it declined by 12% in 2017. Industry earnings fell in 2017 following growth. The DTI paper also claims that the cost of cement imports is around 14% lower than local product and that this has led to local producers dropping their prices by 10% to compete.