| Philippine Business
Magazine: Volume 10 No. 5 - Updates |
Local Advantage
The local cement industry has a reason to celebrate.
The Court of Appeals (CA) ruled in June that the Department
of Trade and Industry, not the Tariff Commission, has the
final say on the outcome of Philippine Cement Manufacturers
Corporation’s (PHILCEMCOR) safeguard petition against
cement importers.
PHILCEMCOR, an industry association which counts
as its members about eighty percent of the country’s
cement manufacturing firms, invoked the provisions of Republic
Act 8800 (Safeguard Measures Law) in its petition against
cement imports that it purports to have caused injury to the
local cement manufacturing industry. The safeguard petition
was filed almost right after RA8800 took effect in late 2000.
RA 8800 aims to protect local industries from foreign competition
by slapping provisional or definitive safeguard measures in
the form of additional import duty, and even quantitative
restriction.
The DTI is the agency that will do preliminary
investigation on a safeguard petition filed by industrial
sectors. If and only if DTI comes up with positive preliminary
findings pertaining to the petition would Tariff Commission
be asked to do a definitive or final investigation of the
case.
In the case of PHILCEMCOR’s safeguard
petition, DTI’s preliminary findings had it that there
was sufficient ground to subject the case to the final investigation
of the Tariff Commission. Unfortunately, the Commission concluded
that the safeguard petition lacked merit. This could have
meant the lifting of the additional tariff burden on cement
imports. However, the aforesaid CA’s intervention, sought
by Philcemcor, has it that the findings of the Commission
do not necessarily constitute a final decision, and that the
DTI Secretary has the discretion to render a final decision,
either affirming or reversing the report of the Commission.
As a result of this development favoring the
local industry, the DTI was able to order, effective July
17, the continuance of the safeguard measure against cement
imports – this time a definitive or final one, not just
provisional tariff – for the next three years. The maximum
initial period for the application of the safeguard measure
is four years, including the period when the provisional relief
was in effect. In return for this “protection”
extended by the Trade Department, the local industry has to
follow its adjustment master plan to facilitate positive adjustment
to import competition, especially when the time comes when
the definitive safeguard duty on imports would have been lifted.
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 The
slowdown in consumer prices for five consecutive
months reversed in June when inflation rate reached
a 13-month high of 3.4% from 2.7% the previous month
as food, beverage and tobacco prices expanded faster
by 2.7% from 1.8% in May. This is partly owed to
the fact that three typhoons pushed up the inflation
rate for vegetables and fruits to 6.6% and moved
fish prices up to 2.1%. Also, after twelve straight
months of declining electricity rates, a higher
5.8% inflation rate for power was posted in June
due to the depreciation of the peso-dollar exchange
rate. Meantime, as expected, the school opening
raised inflation for clothing index to 2.3% from
1.9%. Ironically, however, the inflation rate for
the educational services sub-index slowed down to
7.3% from 8.2% in the previous five months. |
 The
fiscal deficit shrank 33.5% to P79.6 billion in
the first semester from P119.7 billion a year ago
- favorably below the projected P102.2 billion deficit
for the period. This is partly made possible by
a 14.9% expansion to P306.3 billion in government
revenues, surpassing the P285.5 billion revenue
target. The Bureau of Internal Revenue’s (BIR)
P209.9 billion collection surpassed its P209.2 billion
target as well as its P188.7 billion collection
a year ago. The Bureau of Customs likewise performed
better than expected, collecting P53 billion out
of a P47.5 billion goal, and was 19.4% higher over
last year’s P44.4 billion collection. On the
expenses side, while current operating expenditures
increased 6.4% to P333.4 billion from P313.3 billion,
capital outlays decreased 28.3% to P49.8 billion
from P69.3 billion. |
| Despite
the drag on imports from the SARS outbreak and the
war in Iraq, overall imports expanded 12.8% in the
first five months, a turnaround from a 4.9% contraction
in the same period a year ago. In January to May,
total imports reached US$15.6 billion from US$13.9
billion last year. With merchandise exports of US$14.0
billion, the trade deficit, however, widened to
US$1.6 billion in the said period from same period
of last year’s US$99 million. |
| The
ratio of non-performing loans among commercial banks
improved to 15.4% in May from 15.5% in April and
18.4% in May 2002. The level of NPLs rose to P257.0
billion versus May of last year’s P305.5 billion.
Notably, despite the continuous build-up of non-performing
assets, the Bangko Sentral reported that the NPA
ratio slightly improved to 13.66% in May from 13.72%
the previous month and 15.1% in May 2002. Non-performing
assets expanded to P446.3 billion in May from P442.6
billion in April but declined from P473.6 billion
in May 2002. |
| Growth
in domestic liquidity accelerated from 2.5% in April
to 4.0% in May attributable to the expansion in
domestic credits and net foreign assets. This development
is accompanied by improvements in domestic demand,
particularly domestic spending and manufacturing
volume of production. |
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