By Al Edwards, Business Co-ordinatorTHE Government's decision earlier this week to increase the CET from 15 to 50 per cent for Portland Grey Cement will redefine the cement industry and significantly curtail the importation of cement.
Explaining this latest decision the Minister of Finance and Planning said in Parliament: "The objective here is to provide Caribbean Cement Company Time to retool in order to face competition which will be forthcoming under FTAA." The request to raise the tariff has been with the Government for two years.
Dr. Davies added: "In looking at the data provided by the cement company, it is our opinion that unless they are provided with this additional period of protection, the viability of that plant could be in question. There is a commitment not to increase prices because of this."
Speaking to the Financial Gleaner last night, the CEO of Island Wide Concrete, which uses between 2,000 to 3,000 tons of concrete per month said: "This decision is completely ludicrous. It is done to protect the local industry but doesn't protect the consumer. The product offered by the local industry is well below what is being imported. This means that competition is now at an end and that Caribbean Cement Company will now have a monopoly on the industry which goes against what the FTAA and World Trade Organisation (WTO) is trying to do. You will now see the cost of the construction industry increasing. With no effective competition in Jamaica it will put the brakes on both the construction and cement industry. There needs to be fair competition in Jamaica. Just imagine the mobile phone industry without Digicel coming along."
PLEASED WITH RESOLUTION
Responding to this latest news on the Common External Tariff, Caribbean Cement Company Limited said: "We are pleased that a resolution seeking to increase the Common External Tariff (CET) on cement and other locally produced products was tabled in the House of Parliament recently. The company is optimistic that the resolution will find favour in the House and there will be a 50 per cent duty imposed on cement imports to Jamaica."
Anthony Haynes, general manager, noted that the global market place has pitted local producers against foreign producers of the Far East and Europe, which supply markets many times larger than Jamaica. Small, island economies like Jamaica continue to be vulnerable in this type of global trade and many manufacturers have gone out of business in the face of unfairly priced products. Governments therefore need to be on guard against foreign predators who in the longer term do untold damage to local economies. He went on to state that Government must be commended for tabling this resolution, which gives domestic producers and the wider community a sense that the Government is supportive of the manufacturing sector's drive to be competitive.
Mr. Haynes again stressed that his
company had the capacity to supply the domestic market, both in terms of quantity and quality. He said that the company was committed to continuing its drive to becoming more efficient and able to produce and compete at world standard by 2006. He said that the survival of the company was dependent on achieving this goal and that the implementation of the bound rates would afford the company this opportunity. The general manager indicated that the company has demonstrated its commitment to its customers by rolling back prices twice in 2003 as a result of improved efficiencies and cost saving. Mr. Haynes also wished to assure his customers that prices would not be increased capriciously but would be held at the current level, pending a stable rate of exchange
and input costs. Mr. Haynes said that the company is committed to continue the upgrading of its plant, which has already been started. In addition, with the implementation of the bound rates, it is now easier for the company to access the funds critical for its capital expansion project. An estimated US$100 million will be needed for the project. At the end of the upgrade the company will export approximately one-third of its production, bringing in much needed hard currency and maintaining its commitment to "building Jamaica".
UNDER-SUPPLYING
The Opposition Spokesman on Industry, Karl Samuda, said: "History is replete with instances where you over-protect an industry and end up with a higher price that you can do nothing about. You cannot be under-supplying and expect to get protection."
Mr. Samuda said there is a demand for 900,000 tonnes of cement and Caribbean Cement Company is only able to produce 700,000 tonnes.
A spokesman for Mainland Cement said that the decision to raise the Common External Tariff from 15 to 50 per cent would seriously impact its cement operations and that it would have to now re-evaluate how it will proceed with the cement arm of its business.
