Small cement importers want level playing field

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The scuttlebutt in business circles is that an undersecretary at the Department of Trade and Industry (DTI) now faces a complaint before the Office of the Ombudsman filed by a subordinate over the issuance of a department administrative order (DAO) that’s seen to give undue advantage to the giant cement manufacturers-importers at the expense of small importers.

It would appear that the undersecretary who was then the officer in charge of the DTI’s Bureau of Product Standards, was responsible for the issuance of DAO 17-02 issued on March 17 this year (and amended later by DAO 17-05) stipulating that an Import Commodity Clearance (ICC) would be required for all cement importations except those brought in by big cement manufacturers operating integrated cement plants in the country. The ICC requirement is on top of the Product-Safety (PS) mark that is mandatory for all cement imports.

The small importers are up in arms against DAO 17-02/05 and the ICC requirement for a number of reasons.

First, the big cement manufacturers-importers who are exempted from the ICC draw their imports from the same foreign suppliers, hence the quality of imported cement is the same across the board, especially with the PS mark certification.

Second, the DTI order imposes an unnecessary burden on them and runs contrary to President Duterte’s repeated pledge to reduce red tape in government and to ease the cost of doing business in the country.

Third, the DTI order is arbitrary and capricious as this was issued without any public consultation. Worse, following complaints from cement importers, the agency surreptitiously tried to cure the flawed order with certain exemptions.

Fourth, the order would cause grave and irreparable injury to them as its implementation constitutes a material and substantial infringement of the right to import.

Fifth, the order is unconstitutional as it violates the equal protection and due process clauses in the 1987 Constitution, as well as  the proscription against unfair competition and unfair trade practices.

And sixth, the order violates Philippine treaty obligations, specifically the Asean Trade in Goods Agreement (ATIGA) and World Trade Organization (WTO) Agreement of 1994.

In 2015 the average cost of a bag of cement in the country was around P300 per bag. By 2016  when cement imports increased, the average price went down to P219 per bag. Today the market price is around P197. The demand for cement in the country is about 720 million bags per year. If small importers will be driven out of the market by what they consider an oppressive DTI order, cement prices will surely shoot up to P300 or more per bag like in 2015, when the big manufacturers-importers lorded it over the market.

The small importers believe the DTI order could actually set back the implementation of the Duterte administration’s aggressive P8-trillion “Build, Build, Build” program envisioned to usher in the “golden age of infrastructure” in the country, as cement supply from the big manufacturers-importers may not be sufficient to meet the expected big demand for the commodity. Indeed, with no less than 75 big-ticket infrastructure projects up for implementation until 2022, cement manufacturers and importers would have to work double time to meet tight deadlines.

The small importers  are convinced that DAO 17-02/05 lays the ground for the big cement manufacturers-importers to operate as a cartel that could easily manipulate supply and prices.

What applies here is the time-tested rule that in any industry, “what’s sauce for the goose is sauce for the gander”. The DTI order actually runs counter to the concept of a level playing field that allows fair competition rather than control of the domestic cement industry by a few big players.

The small importers are apprehensive that the DTI may be unduly protecting the interests of the  big cement manufacturers-importers at their expense.  The net effect of this would be to drive them out of business, which could lead  to higher prices as more cement imports tend to lower the average cost of the commodity in the domestic market.

 

E-mail: ernhil@yahoo.com.



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