Opposition to cement import tax mounts

The government’s infrastructure-building program is seen to become unnecessarily costlier with the imposition of additional tariff on cement imports.

“The cost of ‘Build, Build, Build’ just went up up up. The question is why are we importing so much? That’s because we need so much and so there’s no need to protect domestic producers because they are selling as much as they can,” said Joseph Roxas, president of local stockbrokerage Eagle Equities Inc.

The Department of Trade and Industry recently said it would impose a provisional P8.40 safeguard duty per bag of imported cement—equivalent to about 4 percent of cost—for more than six months, or until the end of an ongoing investigation into the cement industry.

“The government must protect local producers if they are dying because of unfair competition. That’s not the case here,” Roxas said.

News of higher tariff on imported cement perked up stock prices of listed cement players. The biggest beneficiary was Cemex Holdings, whose shares have gained 12 percent in the last two trading days. On Monday, Cemex shares pulled back by 3.1 percent.

Shares of Eagle Cement and Holcim rose by 3.1 percent and 2.3 percent, respectively, in the last two days, but both companies also trimmed gains on Monday.

Roxas said some producers had low margins because they had to remit franchise fees to foreign parent firms. “They (government) should take that into consideration,” he said.

The biggest associations of housing developers—the Organization of Socialized and Economic Housing Developers of the Philippines (OSHDP) and the Socialized Housing Alliance Roundtable Endeavour (SHARE)—have already expressed alarm over the increases in prices of cement and the shortage in certain areas.

In a statement, OSHDP president Jefferson Bongat noted that prices of cement—the basic building block in houses andsubdivision development and roads—spiked from P205 to P225 a bag in the last two weeks.

“Housing developers were surprised as cement prices were fairly stable in 2015 and 2016. The government’s housing program is now threatened with this development as both the government and private sector are bent on making a dent on the massive housing backlog of 6.5 million housing units. This also exacerbates the fact that the HUDCC (Housing and Urban Development Coordinating Council) has recently increased the minimum floor area from 18 square meters to 24 square meters when it adjusted the price ceilings for socialized housing,” Bongat said.

The Cement Manufacturers’ Association of the Philippines has assured that cement supply would remain sufficient for Build, Build, Build projects but housing developers lamented that they were silent on the requirement of the housing sector.

SHARE president Marcelino Mendoza said that socialized housing was such a very low margin undertaking that spikes in prices, delays caused by material shortages and ability to purchase on credit would impact a lot on the ability of housing developers to remain viable.

Both Bongat and Mendoza opposed the additional burden on cement imports. “This will result eventually in additional cost to be shouldered by housing beneficiaries. Construction materials used in manufacturing low cost housing should not be subjected to new taxes,” they said in their joint statement.