Industry players from the cement and construction sectors said that the Department of Trade and Industry’s imposition of burdensome requirements on cement importers, goes against the policy of President Rodrigo Duterte, who has vowed to reduce bureaucratic red tape to ease the business process in the country.
The same group added that the DTI imposition will jeopardize the massive infrastructure projects under the Duterte administration's Build, Build, Build program through high construction cost by bringing prices of cement to stratospheric heights.
The cement industry players said that in his first State of the Nation Address on July 25, 2016 and on his second Sona on Monday, July 24, 2017, President Duterte vowed to go after corrupt officials in the government.
“A year ago, I also warned government officials and employees that I will never tolerate corruption in my administration, not even a whiff of it. Let the dismissal of several high-ranking officials”•whom I myself appointed”•serve as a warning to all that I will never back down on my commitment to cleanse this government,” Duterte said in his second Sona to thundering applause of the audience.
“Since we launched this hotline [8888], we have received numerous complaints from the public on government… slow government processing and clearance, of changing procedures and requirements, centralized issuance of clearances and permits in Metro Manila, and discourteous government employees, among others,” Duterte said in his second Sona.
But according to industry sources, those in the DTI have turned a deaf ear to the President’s resolve to cut red tape in government as they have issued an order that imposes additional burden on small-scale cement importers.
They said that the order could only lead to the emergence of a cartel composed of giant cement manufacturers-importers who reportedly want to bring back cement prices to the P300 per bag level in 2015 from its present price of about P197 per bag, sources said.
Industry sources have welcomed the filing of a graft and corruption complaint against a DTI undersecretary before the Office of the Ombudsman for the official’s role in having the DTI’s Bureau of Philippines Standards issue Department Administrative Order (DAO) 17-02/05.
At the same time, the source said that a separate case is being prepared against another DTI official for approving the highly controversial order without going through proper public consultation.
He also claims that the rush to cure the flawed order is being kept under wraps by the DTI.
The controversial DAO requires importers to secure an Import Commodity Clearance on top of the 'PS' or Philippine Standard mark for imported cement.
The DAO, however, exempts from the ICC requirement the big cement manufacturers operating integrated cement plants in the country but also importing cement.
Several reasons have been cited why the DAO 17-02 and subsequent DAOs should be suspended or totally revoked.
“The DTI order creates an environment which could threaten the stability of the cement prices in the market as the DAO 17-02/05 is a surefire formula for prices to spike uncontrollably and for supply to be manipulated,” said a source in the construction sector.
The source pointed out that in 2014, the cement price was around P300; when importers entered the picture, the price immediately fell to around P217; currently, the price hovers at P197.
This, the insider said, “offers solid proof that open competition augurs well for the public.”
“If DAO 17-02/05 was intended to protect the public by ensuring the quality of the imported cement, the industry group wondered why both manufacturers-importers and small importers get their cement from the same plant abroad: So how could there be any difference in quality?” he asked.
“At the same time, if quality is the issue as announced by the DTI official recently in defending the order, why are the big manufacturers-importers trying to negotiate with cement plants abroad so they can exclusively sell cement in the Philippine market, thus removing the pure importers from the equation?” he added.
The DTI order could actually set back the implementation of the Build, Build, Build infrastructure development program of the Duterte administration as cement supply from local manufacturers may not be sufficient to meet the expected big demand for the commodity, the industry source said.
The insider lamented that the DTI “wittingly or unwittingly strengthens the stranglehold by a few giant cement manufacturers-importers that have been acting as a de facto cartel to dictate cement prices in the domestic market.”
Prior to the implementation of DAO 17-02, the release of covered imported cement was allowed by mere presentation of the PS mark. An ICC was not required, whether the cement importer operated or did not operate an integrated cement plant in the country.
The DTI order, the source added, is “arbitrary and capricious as this was issued without any proper public consultation.”
Moreover, the insider said that if this DAO is implemented, the highly ambitious P9 trillion Build, Build, Build infrastructure program will be the first to feel the impact with skyrocketing cement prices and manipulated supply.
