DTI may suspend incentives enjoyed by cement companies

The Department of Trade and Industry (DTI) is likely to suspend the incentives and privileges being enjoyed by cement companies that have failed to comply with repeated directives to disclose information on their production to justify the recent increases in cement prices.

A top DTI official told reporters that cement manufacturers registered with the Board of Investment (BOI) stand to lose their incentives under the Omnibus Investments Code if they continue to resist meeting the requirements of the DTI in connection with ongoing investigations on rising cement prices.

The official said the DTI is having difficulties making cement companies comply with its directive to disclose production figures to prove that costs are driving cement prices up despite the persistently low demand.

Because of intense competition, cement manufacturers fear that the information would leak out to other companies. However, the official said they have to show information to prove that the price increases were justified by increasing costs of production.

Under Rule IX, Section 5 of the Omnibus Investments Code, no availment of incentives may be allowed an enterprise delinquent in compliance with any of the terms and conditions of registration, including such reports and statistical data which may be required by the BOI.

The official said the code requires the companies to submit the same documents anyway, including quarterly production and sales report, chart of accounts and statement of the total peso value of incentives availed of during the precious calendar year.

The DTI official said the government is already discussing the possibility of suspending existing incentives and privileges being enjoyed by delinquent cement companies.

Incentives that companies have not availed of, the official said, will also be withheld until the BOI lifts the suspension. Should the board decide to eventually lift the suspension of incentives and privileges, he said the resumption will not be retroactive.

These incentives include income tax holidays, deduction for labor expense, tax credits on domestic capital equipment and unrestricted use of consigned equipment among other incentives and privileges.

Eighteen out of the 19 cement companies operating in the country are BOI-registered firms. Listed under the BOI are Solid Cement, Hi Cement Corp., Northern Cement, Limay Cement, Bacnotan Cement, Republic Cement, FR Cement Corp., Rizal Cement Corp., Fortune Cement Corp., Central Cement Co., Continental Cement Corp., Titan Cement Corp., Lloyds Richfield Cement Corp., Grand Cement Corp., APO Cement, Davao Union, Alsons Cement, Iligan Cement and Pacific Cement Corp.

The DTI official declined to disclose which of the 18 cement companies are delinquent.