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Will a cement cartel rear its ugly head?

Updated

By Deedee M. Siytangco

Angel  Thoughts

“Never reply when you are angry. Never make a promise when you are happy. Never make a decision when you are sad.” —Buddhist Vision

At our Bulong Pulungan forum at the Sofitel last week, we had guests, two party-list representatives, from ABS (Arts, Business, and Science) Atty.-CPA  Eugene de Vera and Ang Edukasyon’s Atty. Salvador “Bong” Belaro Jr., both first termers.

The investigation continues Reps. Eugene de Vera from ABS and Salvador Belaro Jr. of  Ang Edukasyon (Ed Santiago)

The investigation continues Reps. Eugene de Vera from ABS and Salvador Belaro Jr. of Ang Edukasyon (Ed Santiago)

We were very impressed with the capabilities of the two gentlemen and we earnestly wished that all party-list representatives would be like them, articulate, fully committed, capable, and knowledgeable in their legislative tasks.

Both belong to the Committee on Good Government and Public Accountability and that is where the issue of the infamous “Ilocos Six” is at.

It’s not a witch hunt, the two said, the committee has been investigation anomalies in the use of the tobacco farmers’ funds which have been largely unauthorized, undocumented, and outright misused, by the provincial government of Ilocos Norte. The purchases it seems were authorized by Gov. Imee Marcos which makes her part of the “Ilocos 6” Roll of Shame.

The provincial officials have been called and they appeared but adamantly refused to answer, De Vera said, and this led to the committee and the House citing them for contempt and “jailing them” in the House compound until the next hearing next week. They have also summoned Gov. Imee who has remained defiant against appearing to answer important questions on her culpability in the flawed purchase of motor vehicles without authorized public bidding.

 As to the Court of Appeals telling Congress to release the Ilocos 6 and the Speaker threatening to abolish the Court of Appeals, the two lawyers opined that since the CA was a “creation of Congress” it could lawfully abolish the CA. But, the two congressmen remain confident they can function efficiently even with sensational momentarily distracting them.

They are, as this corner noted during the forum, real assets to the “party list” sector in Congress as they are so hard-working. De Vera confessed he did not even want to go on official travels because he might miss out on his legislative work. As minority leader, he belongs to all the committees in the House. Belaro is with the majority sector. He is from Bicol and De Vera from Ilocos Sur.

 * * *

In the late ’70s and early ’80s, the two biggest retail outlets in Manila were Fairmart and Plaza Fair. It was set up by our young friend, Danny Velasco whom we tagged the “Retail Icon.”

The onset of bigger investors in the retail industry overshadowed Danny’s stores, and he was forced to lie low for a few years. Now back and eager to carve his own niche in the same ball field, Danny will open new stores at the San Andres on Leveriza Street and also plans to open the Merry Season department store there this week.

In October, he will open Fair Center Raon on Rizal Avenue and Florentino Torres, the Plaza Fair hyper market in Malaybalay in Bukidnon, and in Dumaguete in November. He is also preparing a lifestyle store inside New Greenhills and in Fairview Terraces by next year and a store on J.P. Rizal in Makati.

He has invited old friends and business partners such as interested banks and suppliers at the San Andres store this  Friday for an “Open House” from 9 a.m. to 7 p.m. He is also presenting visiting violinist Alexander Bekesh from Germany at the Ayala Museum this Thursday at 6:30 p.m. and on Aug. 2, the Season Concert No. 2, Eduardo Lato’s Spanish symphony.

Good luck, Danny!

* * *

Now…it would not come as a surprise if an undersecretary of the Department of Trade and Industry (DTI) finds his head on the chopping block considering President Rodrigo Duterte’s aversion to corruption.

 A complaint has already been filed before the Ombudsman against the DTI undersecretary (usec) by a DTI assistant secretary no less over an underhanded action by the usec that would sabotage President Duterte’s eight-trillion peso “Build, Build, Build” infrastructure program.

Supposedly, the usec threw his weight and when he was a mere officer in charge at the DTI’s Bureau of Product Standards cooked  a Department Administrative Order (DAO) that would bring about a crippling cement shortage and cause cement prices to skyrocket. This is because DAO 17-02/05 would drive out of the local cement market pure importers by making it virtually impossible for them to import because of a burdensome requirement to first secure Import Clearance Certificates (ICCs).

 The ICC requirement to pure importers is puzzling because the same is not required of cement manufacturers-importers even if the two groups buy their cement abroad from the same sources and thus the imported cement are of the same quality.

 It is claimed that the ICC requirement is also superfluous because all imported cement are vetted as to quality by the international body that stamps them with the PS (Product Safety) Mark.

 So, the question being whispered around the construction sector is: Did “favor” change hands to—with the help of DAO 17-02/05—pave the way for manufacturers-importers to operate anew as a cartel by removing the spirited market competition provided by pure importers? Cement prices hover at R197 a bag at present precisely because of the healthy cement supply and competitive prices provided by pure importers to meet Philippine annual demand of about 720 million bags per year.

Without the steadying presence of the pure importers, cement prices will surely shoot up to R300-plus per bag like in 2015 when manufacturers-importers had their field day. But with Build, Build, Build under DuterteNomics requiring still millions more of cement bags to build schools, hospitals, air and sea ports, roads, rails, and bridges, DAO 17-02/05 will undoubtedly tighten cement supply.

With cement prices going sky high due to DAO 17-02/05, DuterteNomics may grind to a screening halt and with it the hundreds of thousands of jobs which the government wants to create in the construction sector.

 There is a silent struggle a battle at the DTI over the underhanded issuance of department administrative order (DAO) 17-02/05 that would drive cement importers out of the market, leaving cement manufacturers-importers with their own cartel.

A graft complaint has been filed before the Ombudsman by a DTI assistant secretary against a DTI undersecretary for allegedly  pressuring an officer in charge of the DTI’s Bureau of Product Safety into issuing the DAO that required cement importers to secure an Import Clearance Certificate (ICC) but exempting the manufacturers-importers.

Now, you decide who among the assistant secretary and the undersecretary is on the side of consumers since the DAO would bring back the cement cartel which in 2015 caused cement prices to spike up to R300 per bag.

If cement prices are hovering in the R197 level per bag, it’s because of the healthy competition posed by the pure importers on the manufacturers-importers who, of course, want to get the former out of the picture so they can command high prices for local cement.

 Stakeholders claim that the DAO is a travesty of justice and fair play because it only required the pure importers to secure the ICC on top of the Product Safety (PS) Mark and did not impose the same ICC requirement on manufacturers-importers.

 Why require the ICC on pure importers and not on manufacturers-importers when they buy imported cement from the same sources abroad and thus are of the same quality?

 This issue is critical because if the DAO stays, there will be a tight supply of cement in the local market and prices will shoot up, more so in the light of the big additional cement requirement of the Duterte administration’s eight trillion peso Build, Build, Build infrastructure program.

Consider that in 2015, the average cost of a bag of cement roughly R300/bag. By 2016, when cement imports increased, the average price went down to R219/bag. Today, the price hovers in the vicinity of R197. The dramatic price drop due to ample supply in the market has benefited consumers.

It is estimated that the country needs an estimated 600 million bags of cement a year, and local cement manufacturers are hard-pressed in coping  with demand. This is why cement imports are needed to supply the needs of the construction industry.

 DAO 17-02/05 is said to run counter with President Duterte’s desire to cut  red tape, a known source of corruption. Remember that the President has asked everyone to blow the whistle on any shenanigans they encounter in government.

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