Philippine cement prices said to be among the highest in E. Asia

CEMENT PRICES in the Philippines are among the highest in East Asia, Board of Investments (BoI) data showed.

The data were made public late on Friday, a week after the 2010 Investment Priorities Plan (IPP) was unveiled with provisions granting incentives to new entrants into the cement industry which the state agency said would encourage competition and thus bring down prices.

Cement here costs roughly $4.56 per 40-kilo bag as of January 2010, higher than the $3.63 average for nine countries in the region according to BoI estimates.

Indonesia has the most expensive cement at $4.62 per bag, followed by the Philippines, whose average price is nearly the same as that in Japan.

The three are trailed by Malaysia, Taiwan, Thailand, South Korea, Vietnam and China.

Among its Southeast Asian neighbors, the Philippines’ cement prices are two-thirds more than Vietnam’s, a fifth more than Malaysia’s, and roughly 40% higher than Thailand’s.

BoI Managing Head Elmer C. Hernandez declined to comment on the figures. Earlier, however, the state agency published the 2010 IPP which now includes the grinding of imported clinker into cement as among the business activities qualified for incentives. The Cement Manufacturers Association of the Philippines had opposed this move, saying it would disadvantage firms with big-ticket investments that produce their own clinker.

But Mr. Hernandez countered that incentives were needed to attract new players into the industry which are hoped to bring down prices via competition.

Sought for comment on the cement price comparison, industry players pointed to high power costs in the country as the culprit.

“We have the highest power rate and coal prices in the region. [These account for] more than 50% of our cost,” Holcim Philippines Senior Vice-President for Sales Eduardo A. Sahagun said in a text message yesterday, adding that transporation costs here are also “very high.”

Holcim Philippines had said it may raise prices in the second half to compensate for the more expensive clinker it has had to import after power interruptions in Mindanao hurt the firm’s production capacity.

The government is ultimately to blame for high product prices, given the “lousy infrastructure” it provides manufacturers, an industry source that declined to be named said. — Jessica Anne D. Hermosa, BUsinessworld