Trade and Industry Undersecretary Elmer C. Hernandez, who is also BoI managing head, said they are now preparing to restore the listing of cement production under the 2006 IPP. Cement production was delisted from the IPP three years ago because of supply glut in the local and global market.

Hernandez said the move is also in consonance with the Medium Term Philippine Development Program (MTPDP), which assumes a 12 percent annual growth of the construction industry.

"While we have surplus in local cement supply until 2009 the MTPDP expects a deficit by 2010," he said. Cement consumption is based on the growth of the construction industry.

According to Hernandez, data from the Cement Manufacturers Association of the Philippines (CeMAP) showed that total industry’s kiln capacity is placed at 462 million bags a year.

Local cement demand in 2005 was at 265 million bags but based on the 12 percent annual growth of the construction industry, demand is expected to reach 468 million bags by 2010 as against total industry capacity of 462 million bags.

"Since cement project has long gestation of between three to three and half years we must be ready by now to ensure we have enough capacity by 2010," Hernandez said.

But since cement production had been delisted from the IPP, new projects have the option to register under the Industry Cluster listing of the IPP while the 2006 IPP is still being finalized.

The Industry Cluster listing allows up to clinker production as this is among the activities eligible for BoI incentives under the mining.

Industry Cluster Listing of the IPP, which promotes the use of indigenous raw material. This is where mining is qualified and mining also identifies clinker production as one of its activities.

"Under the Industry Cluster there is no limit to forward linkages because the idea is to promote production of higher value added products," Hernandez said.

Already, the BoI has received keen investment interest from new players.

It could be recalled that since the delisting of cement production in the IPP three years ago, no new cement plant was put up.

What happened was pure acquisitions of existing plants by global players such as CEMEX, Lafarge and Holcim. What remains now are two small cement plants, the Northern Cement and Pacific Cement in Surigao.

The industry has also enjoyed government protection against imports with the imposition of safeguard measures a couple of years back.

An estimated investments of billion have been poured by the three global cement plants to gobble up local cement plants.

Among the big three cement players, Lafarge has the biggest capacity with 7.7 million MT with its seven plants, Holcim’s four cement plants have a combined capacity 7.238 million MT and Cemex with 4.6 million MT.(BCM)