Govt. Imposes 40 Per Cent Duty on Imported Cement

Parliament has approved a Resolution to make permanent, a 40 percent rate of duty for grey building cement and other hydraulic cement under the Provisional Collection of Tax Act.
Tabling the Resolution in the House on Tuesday (Nov. 30) Finance and Planning Minister, Dr. Omar Davies said the move was to deter attempts made by importers to bring cement into the island under the headings of “other” and “other hydraulic cement” at a lower rate of duty.
In giving further background on the decision taken, Minister Davies said the Anti-Dumping and Subsidies Commission, the official agency established to determine whether goods are being imported into Jamaica in quantities and under conditions, which cause or threaten serious injury to the domestic industry, had commenced investigation in October 2003, in response to a complaint made by a local manufacturer about the increased importation of Portland grey cement and the effect on the domestic industry.
He said as a result of the findings, which confirmed the reports, a provisional safeguard measure, amounting to 25.83 percent was added to the existing 15 per cent by the Commission, making a total customs duty of 40.83 per cent. Dr. Davies however pointed out that although the Commission had recommended a 40.83 per cent duty rate and the World Trade Organisation (WTO) had a 50 per cent bound rate the decision was taken to have a 40 percent duty rate.
“We could raise the level of protection to 50 percent because we were duly authorized by the WTO to have a bound rate of 50 percent but we do not believe that a duty regime of 50 per cent is necessary and hence we have relied on the findings of the Anti-Dumping and Subsidies Commission and that’s why we have put the rate at 40 percent,” the Finance and Planning Minister said.
Furthermore he noted, the Government was committed to the protection of the consumer, while safeguarding the rights of the manufacturer.
Additionally, he said, the decision to remain at 40 per cent served to ensure the continued efficiency of the Cement Company and maintain their ability to respond to increased domestic demand and expand its capacity.
Dr. Davies informed that at a meeting with principals of the company, he had indicated the intention to make the 40 per cent figure into permanent legislation for a specified period based on the Commission’s findings.
Noting that the cement market grew by seven per cent in 2003 and 11 per cent for 2004, Minister Davies said the Cement Company had to align itself to deal with a growing domestic demand. He informed that to date, the Company had broken all its sales records and sold 650 metric tonnes of cement, filling 91 per cent of the demand. “We are dealing with real achievements here,” he noted.
In responding to questions from Opposition Speaker on Finance, Audley Shaw, on the company’s commitment to making substantial investment in the country Commerce, Science and Technology Minister Phillip Paulwell said the aim of the safeguard was to provide a defense to imports that can cripple the local industry and give the local industry some respite, during which time, they could become more efficient and offer effective competition against imports.
He outlined that the period would allow Caribbean Cement to invest over US$100 million in its plant to improve its operating capabilities and expand its facilities. The plant has a current capacity of 660,000 tonnes. The new plant will have the capacity to produce two million tones of cement and will utilize cutting edge technology to improve its environmental impact and reduce energy cost in the production process.
Minister Paulwell said the company had advised that the expansion programme would involve an investment in the local element of up to US$20 million, with an additional 40 workers employed during the construction phase. The company is also in discussion with the Rockfort HEART Academy for a major training programme for persons in the area slated to begin in January 2005, the aim being to utilize their skills instead of importing workers for the project.
In the meantime, the company has assured that there will be no price increases once the current foreign exchange rate is maintained. The expansion is expected to take three years with the new plant being commissioned in 2008.