Clinker-based cement companies may not get perks this year

The Board of Investments (BoI) may reconsider plans to grant incentives to clinker-based cement factories this year, and may instead get a commitment from manufacturers to raise output when supply runs short. Cement companies have been ordered to submit data on their idle capacity to help the agency reach a decision, BoI Managing Head Elmer C. Hernandez told reporters on the sidelines of a car launch last Friday. The BoI earlier said it was considering tax perks for clinker-based cement factories under the specific guidelines of this year investment priority plan since this type of production, which needs only to grind purchased clinker, can start operations faster than a greenfield project. The agency has submitted to Malacañang a general list that proposes incentives for cement production this year. It can refine this further by limiting what type of cement production can enjoy tax perks. The Cement Manufacturers Association of the Philippines (CeMAP), however, has opposed a bias for clinker-based factories, arguing it would disadvantage existing firms that sunk in millions of pesos into greenfield projects. The BoI has sought data from cement manufacturers on how quickly they can ramp up production to respond to shortages, Hernandez said. "If we decide not to include clinker, then how soon can you have your idle capacities running?" Hernandez recalled asking cement company representatives. "They said they have idle capacities, so we’re having them submit a timetable. There is no decision yet. It will depend on the submission of data [this week]," he added, adding that the BoI had yet to establish how fast firms must ramp up output when shortages strike. Hernandez said the CeMAP has had no objections to incentives for new greenfield investments. The organization could not be immediately reached for confirmation. The government has had to step in several times in the past to address price spikes allegedly due to speculation. Earlier this year, it imposed price ceilings for cement and filed administrative cases against retailers that could not justify breaching the limits. Aside from the cement provision in the investment priority plan, the BoI is now working on guidelines for new entries in this year’s list of activities eligible for incentives — green projects and those that ease the impact of crises and disasters. The agency included institutions such as schools and commercial establishments, aside from industrial firms, in the list of entities that enjoy duty-free imports of power generators to cope with the power crisis, Hernandez said. "Sixty percent of the guidelines are ready," he said. — Jessica Anne D. Hermosa, BusinessWorld