Cement Importers to Benefit from Cess Reduction

Local cement importers will benefit from a reduction on the cess levied by the Port Authority of Jamaica to inspect each tonne of the product.
The cess, which will be reduced from US$5 to US$1 until March 31, 2008, will allow importers to bring more cement into the island to alleviate the current shortage.
Addressing journalists at a post-Cabinet press briefing on (September 25), at Jamaica House, Minister of Industry, Commerce and Investment, Karl Samuda, said the US$5 cess posed a serious challenge for importers of the commodity.
“When you consider the increased cost of freight from China, and the devaluation. and warehouse cost, they found it very hard to make a profit. So, they were reluctant to import cement and so Cabinet and the Port Authority have agreed ..to reduce the cess from US$5 to US$1, which I understand will make a significant difference and enable the importers to go ahead, because they would be assured of some margins,” the Minister said.
He explained that since last year when the local construction sector faced problems as a result of the release of poor quality cement, the country’s sole manufacturer of the product, Caribbean Cement Company had introduced the quarantine cement in their mix at a rate of 5 per cent per month.
“This is what they call the quarantine cement, which is about 1.5 million tonnes available remaining, which is to be out of the system hopefully by the end of October. It is this that is now short and we have to make up that shortfall,” the Minister explained.
Citing further efforts by the government to ease the current shortfall, Mr. Samuda said that the Ministry of Finance and Public Service was also looking at the basis on which the common external tariff (CET) and general consumption tax (GCT) are charged on the product.
“You will recall the CET of 40 per cent that was imposed and although it has been removed or relaxed, or waived, the calculation includes the percentage on which the GCT is charged, so it has the effect of increasing the cost,” he explained.
“This is something that, although they are refunded, affects their cash flow and if it affects their cash flow, it impacts through interest charges which adds to their cost and businessmen have to make a profit. The Ministry of Finance is undertaking a review of that, with a view to ensuring that the calculation more accurately reflects the position at the point of payment rather than to wait to receive payment at a later date,” he said.
According to the Minister, with these two measures in place, importers have given the assurance that more cement would be coming into the island shortly. Mr. Samuda said that it is hoped that at the end of October, 30,000 tonnes of the product would arrive in Jamaica, with 30,000 more tonnes to arrive in the month of November.
He also said the government has approached the Cuban government about importing cement from that country, and that a team would leave the island for Cuba on Thursday (September 27). “This will be to finalize the arrangements for the supply of some 40,000 tonnes of cement, which will be arriving on a phased basis,” he said.
The current demand for cement is 85 to 95,000 tonnes per month, with Caribbean Cement Company only able to supply up to 75,000 tonnes.