Samuda’s inventory levels allegation a red herring
Dear Editor,
Our general manager, Anthony Haynes, believes that Minister Karl Samuda’s assertion with regard to the inventory levels held by the company is a red herring, meant to deflect public scrutiny from the real issue, which is the waiver of the Common External Tariff (CET) on cement imported from Vulcan, USA.
In addition, Mr Haynes noted that the imported slag cement is a “like good” as defined under the Customs Duties (Dumping & Subsidies) Act, Section 2 as both products utilise similar manufacturing processes, have similar product attributes, utilise similar distribution channels and go to the same end-users.
In regard to the issue of inventory cover, over the past year, the two importers of cement into Jamaica have held average inventories of just over 12,000 tonnes and 4,000 tonnes respectively. Neither of these importers is holding even one week’s cement cover and it is therefore difficult to understand what value they bring in terms of supply security.
Carib Cement, on the other hand, is now carrying 150,000 tonnes of clinker inventory in stock due to the slow take-off from the plant. This is equivalent to 190,000 tonnes of cement, which is more than three months’ domestic cover. Carib Cement has storage capacity for 42,000 tonnes of finished product at five locations across Jamaica. The company typically holds 30,000 tonnes of cement in stock.
Carib Cement has recently completed a US$200-million expansion and modernisation project that has doubled its productive capacity and improved its efficiencies. The company is currently exporting approximately 20 per cent of its production.
The 15 per cent CET is meant as an incentive for companies to invest in the region and can hardly be seen as a monopolistic tool. The CET factor does not constitute a monopoly for Carib Cement which, after investing millions of dollars in the Jamaican economy, should enjoy some measure of benefit from the CET.
The 15 per cent that is applied to extra regional cement was recently described by the CCJ as lying “at the low end of the rates usually prescribed for goods in the competing category” (paragraph 51: TCL vs the Caribbean Community). Cement attracts a 30 per cent import duty in the Dominican Republic and the USA has the highest number of protective measures in place. Competition in the cement market is in no way deterred by the CET since importers are free to pay the tariff and compete legally and fairly in the region.
Carib Cement Ltd
Jamaica
