Suspected technical smuggling of cement worries manufacturers
A group of local cement manufacturers has raised alarm over the alleged technical smuggling of cement, saying this would not only deprive the government of much needed revenue but might also lead to more serious violations such as importation of substandard products.
Ernesto M. Ordoñez, president of the Cement Manufacturers of the Philippines (Cemap), claimed that the declared freight costs for nine out of 12 imported cement shipments they inspected were undervalued at only $3 to $10 per metric ton.
This was significantly lower than the average freight costs of $19 per MT for shipments from Vietnam and China. The difference in the freight costs further meant that the government was losing an estimated value added taxes (VAT) of at least P8 million, he added.
Based on this sampling, Ordoñez alleged that about 75 percent of the imported cement shipments might be undervalued, prompting the need to further inspect the other shipments that came in the last quarter of 2015 and in the first quarter this year.
“If freight undervaluation goes unidentified and unpunished, this may lead not only to more such cases, but also to more serious violations such as cement misclassification and substandard cement. These pose imminent danger to safety and lives,” said Ordoñez, who also serves as the private sector chair of the National Competitive Council’s anti-smuggling committee.
According to Ordoñez, technical smuggling of cement is a fairly recent development given the unprecedented growth in demand for the product. This was on the back of increased infrastructure spending by the government and the growing number of construction activities being undertaken by the private sector.
Data from Cemap showed that in 2014, cement imports stood at only 4,000 tons. This surged to about 314,000 metric tons in 2015. In the first quarter of this year, cement imports reached 161,000 tons. If the same volume of cement imports will be required from April to December, this meant another surge in imports can be expected this year.
Local cement manufacturers are said to be unable to supply the requirement of the domestic market as their respective expansion plans have yet to be completed.
