Consumer group Laban Konsyumer, Inc. (LKI) has asked the Tariff Commission to dismiss immediately moves to impose a permanent safeguard duty on imported cement for lack of cause and to stop domestic cement manufacturers’ long dependence on government incentives.
In its final position paper submitted to the TC, LKI President Victorio Mario Dimagiba pointed out that a tariff or safeguard duty is imposed when the national interest requires protection of worthwhile sectors which are still young and need nurturing.
The ideal and logical development is that over time, that sector will mature and flourish and the protection of the state can be dispensed with or reduced and market forces and competition can take over.
“The cement industry is decades years old and has been the beneficiary of various incentives and support from the government, all intended to aid its development,” said Dimagiba.
Dimagiba, who used to be Trade and Industry Undersecretary for Consumer Welfare before becoming a consumer advocate, said that based on his experience in dealing with the industry, “I have concluded that the industry players appear to be perpetually dependent on government incentives and assistance to prop up their operations and have failed to demonstrate their capability to grow into maturity and competitiveness. The conclusion that comes to mind then is that imposing and installing a permanent protection system such as the tariff will only maintain the industry in its dependent stage.”
The latest evidence of the cement firms’ dependence on government was when they manifested at the recent public hearings conducted by the Commission where they said they cannot not make operations more competitive, cannot expand their capacities to meet growing local demand of cement if their profits are in danger of being diminished because a permanent safeguard duty on imported cement is not granted.
“Ergo, government must coddle the industry and make sure it is always comfortable. Stated in blunter form, if similar industries in other jurisdictions can produce a product, sell it at better prices, and still make profits, what is stopping the domestic producers from achieving the same? Is increased protection from the state the only solution?” asked Dimagiba.
“This case is the opportunity for the Tariff Commission to correct the mindset of the industry and keep them on their toes.”
LKI said that cement manufacturers do not look at other ways to make their operations more competitive, LKI said that the only thing they want is the safeguard duty to keep imports at bay because that is the only “threat to profits.”
The DTI has already implemented the P8.40 provisional tariff per 40-kilogram bag of cement and has been passed on to consumers. This add on cost will further increase to P9.40 per kilogram bag because the 12 percent Value Added Tax shall then be added once the safeguard measure becomes permanent.
Already, LKI said retail prices of cement have gone up by as much as P15 since the imposition of the provisional safeguard measure in February based on the DTI E-Presyo largely due to the collection of the safeguard duty of P8.40 per bag to the prejudice of the consumers.
The consumer group has been urging DTI to impose a suggested retail price of cement as promised to keep prices from rising.
Dimagiba further noted that the cement firms under its organization Cement Manufacturers Association of the Philippines (CeMAP) has been engaged in moves to protect the local industry.
“The current investigation is the latest in the string of protectionist measures that the local cement wish to perpetuate to curtail or deny the consumers the opportunity to seek alternative choices of cement at lower prices and better quality.“
Sadly, Dimagiba added, “The DTI had been a cooperative regulator, to the prejudice of the consumers.