THE construction sector is abuzz with talks questioning a Department of Trade and Industry order being seen as an effort to put in place 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.
While requesting anonymity, industry sources also 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 Product Standards issue department administrative order 17-02/05.
The DAO requires importers to secure an Import Commodity Clearance on top of the ‘PS’ or Product Safety 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 had been cited why the DAO 17-02 and subsequent DAOs should be suspended or totally revoked.
“First of all, 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 around 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 business group wondered why both manufacturers-importers and small importers get their cement from mostly the same plant abroad: So how could there be any difference in quality?” he asked.
The DTI order “actually runs counter to President Rodrigo Duterte’s pronouncement to stop corruption, reduce red tape and improve the ease of doing business in the country.”
In his inaugural speech, Duterte had said: “The fight [against corruption] will be relentless and it will be sustained… I order all department secretaries and heads of agencies to remove redundant requirements and compliance with one department or agency shall be accepted as sufficient for all…[They should] refrain from changing and bending rules, government contracts, transactions and projects already approved and awaiting implementation…Changing the rules when the game is ongoing is wrong.”
The DTI order could actually set back the implementation of the Build, Build, Build infrastructure development program as cement supply from local manufacturers may not be sufficient to meet the expected big demand for the commodity, industry sources 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 sources added, is “arbitrary and capricious as this was issued without any proper public consultation.”
They said that if this DAO would be implemented, “the highly ambitious Build, Build, Build infrastructure program would be the first to feel the impact with skyrocketing cement prices and manipulated supply.
“At the same time, the public is expected to bear the brunt of such irresponsible move.”