The government must act quickly and decisively against the dumping of cement from Vietnam, as the influx of the product is expected to worsen amid the glut in the fast-industrializing nation.

The Vietnam Cement Association indicated that production in the first six months of the year was estimated at 44 million tons, similar to last year’s output, with factories operating at only 70 to 75 percent of their designed capacity. Inventories have piled up to five million tons.

With weak demand in their domestic market, some Vietnamese producers have shipped their products to the Philippines at cut-throat prices.

The Department of Trade and Industry (DTI) has acted swiftly, initiating an investigation into the suspected dumping of cement.

In a notice dated 28 October, signed by Trade Secretary Ma. Cristina Roque, the DTI invited stakeholders to submit comments on the proposal to impose a safeguard measure and whether a protective tariff would be in the public’s interest. The DTI said it found sufficient evidence to initiate and conduct a preliminary safeguards investigation.

The next steps of the government will be crucial, as Vietnamese factories are looking to foreign markets to dispose of their excess production, making this problem not unique to the Philippines.

According to state figures in Vietnam, cement manufacturers are facing long-term losses primarily due to declining cement consumption.

The total capacity of the industry is about 123 million tons per year, with actual capacity possibly exceeding this by tens of millions of tons. A weakening market coincided with the launch of four new production lines.

In 2023, 42 production lines suspended operations for one to six months, with some even ceasing operations for the entire year because of weak demand, according to a sectoral report.

Demand has weakened due to the slow implementation of public projects and sluggish housing demand, while social housing projects have progressed slowly.

High fuel prices, particularly for coal, have compounded the situation. Increased energy costs have led to higher transportation expenses, impacting production costs and sale prices.

The industry group reported that major companies such as Bim Son Cement, Vicem Hoang Mai and Vicem But Son are projecting heavy losses.

The export of cement to China, a key cement market, is facing challenges due to the ongoing slump in the Chinese real estate market.

As a result, excess production is being targeted at countries where demand remains high, such as the Philippines, South Africa and Central America.

The Vietnamese government is also considering a proposal to abolish the export tax on clinker, a key component of cement, to help mitigate the losses of cement manufacturers.

Many large-scale construction projects in Vietnam have been halted or canceled due to a lack of investments, with both the government and businesses adopting cautious spending behavior.

Many cement factories in Vietnam are petitioning the government for help with debt restructuring due to the product glut.

Based on the preliminary findings of DTI, domestic manufacturers are being severely affected by the influx of cheap imports from Vietnam, with revenues dropping from Php 79 billion in 2019 to Php 64 billion in 2023. Operating profits declined by 69 percent in 2022 and by a staggering 137 percent in 2023.

DTI’s investigation also indicated that the difference between the average selling price of imports and domestic products shows a 24-percent price undercutting.

Domestic cement manufacturers have been forced to reduce their prices by two percent to compete with the cheap imports.

Previously, the government imposed punitive tariffs on selected brands from Vietnam, but these measures have had little effect in curbing the flooding of the market with cheap imports.

A more decisive step is now needed to save local cement producers, who provide jobs to hundreds of thousands of Filipinos and have kept the spirit of industrialization alive.