JAKARTA (TheInsiderStories) – Indonesian cement products are exempt from the imposition of import duty by the Philippines tariff commission. This was stated in the final report of the investigation into the Philippines tariff commission’ safeguard measures issued on August 9, 2019.

“The exception is due to the value of Indonesian cement exports to the Philippines which is below the minimum threshold of a predetermined imposition,” said Director General of Foreign Trade, Indrasari Wisnu Wardhana in a written statement on Wednesday (09/04).

She added, other countries such as Japan, China, Vietnam, Taiwan, and Thailand are affected by the import duty.  According to her, the investigation had begun since September 2018, where the final result was to apply import duty of 12 Pesos for each 40 kilogram sack of cement.

The Philippines Authority that conducted the investigation consisted of two institutions, namely the Department of Trade and Industry for the initial investigation, and continued the investigation by the Philippine Tariff Commission.

“Recently the Philippines has been quite active in wearing instruments with Indonesia. Among others by the imposition of special agricultural safeguard for instant coffee products, ceramic and glass products,” said the officiac.

In the first half of this year, Indonesia’ total trade to the Philippines  recorded US$3.67 billion, consisting of $3.27 billion exports and imports of $400 million, trade ministry data showed. The country’ trade balance is a surplus of $2.87 billion. Last year, Indonesia’ trade surplus to the Philippines was $5.87 billion, an increase compared to the 2017 surplus of $5.77 billion.

Last year, Indonesia’ main export commodities to the Philippines are coal, motor vehicles, instant coffee, and palm oil. While, the country’s main import commodities from the Philippines are electronic components, cathodes, polypropylene, and electrical fuses.

At the meantime, the government targeting cement exports to reach 7 million tons of cement this year. The amount up 24 percent compared to 2018 with a total amount of 5.64 million tons of cement, said industry ministry’ official statement months ago.

This year, the performance of the cement industry is projected to be more attractive compared to 2018. This is due to government efforts to continue to create a conducive business climate in the country.

Director at the ministry, Adie Rochmanto is optimistic the utilization of the cement industry will be better this year from last year above 75 percent. The utilization takes into account the growing domestic and export markets.

Previously, minister of industry Airlangga Hartarto stressed that his party also continued to increase cement consumption in the domestic market through several ongoing project opportunities, especially those announced by the government.

The minister explained these policies was the government’ commitment to maintaining a conducive business climate so that the national cement industry can grow and develop. Currently, the domestic cement market is an oversupply.

The production capacity of the cement industry is integrated with the country reaching 109.9 million tons per year, while consumption in 2018 is around 69.6 million tons.

The ministry asks domestic players to continue to build an innovation ecosystem to enhance competitive advantage amid increasingly fierce competition both at regional and international levels. Such innovation can be an advantage for the company because it is more efficient, especially in overcoming the excess national cement production capacity.

According to Hartato, the development of strategic industries such as cement plants needs to be maintained because they bring multiple effects to the regional and national economies, including the absorption of labor and small-scale cement-based industrial growth that can be developed.

Previously, the Indonesian Cement Association reported, national cement sales in 2018 reached 75.2 million tons, up 8.6 percent compared to the previous year. A total of 69.51 million tons are sales in the domestic market and 5.7 million tons from the export market.

Reportedly, the national cement exports surged 97 percent in 2018 to 5.7 million tons compared to the previous year of 2.9 million tons. This increase supported by the utilization of domestic cement factories which have an overcapacity of up to 30 percent.

In 2019, the association targets cement exports to reach 7 million tons, up 23 percent from the 2018 results. This export still is a national industry choice to reduce the overcapacity that continues this year.

The association estimates that domestic cement sales growth will only be around 3-4 percent supported by infrastructure and national strategic projects, rural development, and a million house programs from the government.

Meanwhile, state-owned cement producer, PT Semen Indonesia Tbk (IDX: SMGR) reported until the end of last year was able to sell 33.6 million tons or up 7 percent compared to 2017. The growth of the company’ cement sales reportedly was sustained by higher export sales but the domestic cement sales only grew 2 percent to 27.8 million tons.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com