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Biz Buzz: High stakes cement faceoff

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Biz Buzz: High stakes cement faceoff

/ 05:32 AM July 31, 2017

Six thousand employees. Another 115,000 people employed indirectly through large and small suppliers. And speaking of suppliers, we’re talking about 4,500 firms that sell everything from raw materials to fuel to staff uniforms to food.

That’s what the industry of domestic cement producers looks like, comprising four large corporate groups that manufacture in the Philippines this key ingredient for economic growth.

By the way, these four firms together pay the government more than P8 billion in corporate income taxes annually.

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Unfortunately for its many stakeholders, the domestic cement industry is under siege by cement importers who are making significant inroads into the local market, thanks to the cheaper products they sell in the market.

How much cheaper? A discount of as much as P20 per bag of cement, according to our sources. That may not sound like much for quality-conscious conglomerates building multibillion-peso infrastructure projects. But that price variance makes a world of difference for retail cement buyers, especially outside Metro Manila.

So what’s the problem? Domestic cement producers want to level the playing field by having the finished products of importers subjected to the same rigorous quality control process the locally manufactured cement is subjected to.

That means having cement imports go through a rigorous inspection process under the auspices of the Department of Trade and Industry. This is being opposed by cement importers who argue that their imported products are already subjected to quality control at their origin, whether China or Vietnam.

This doesn’t hold water with the local manufacturers, of course, with one of their officials retorting about how easy it is to forge these certification documents: “You want an inspection certificate for cement imports? Tell me which country you want it from and I’ll give you one in five minutes from Recto.”

Another large domestic player pointed out that, despite the slight premium on locally produced cement, it is a small price to pay for the peace of mind of knowing that the structures one builds with them are sturdy and stable.

“We have our trade names on those bags of cement that we sell,” said one official in his nasal Spanish-Filipino accent. “These importers though, you don’t know where they get their cement. And if the structures [built with this cement] collapses, who will you go after? Who is liable? There’s no accountability.”

Thankfully for the domestic manufacturers, Trade Secretary Ramon Lopez is on their side, and so is Trade Undersecretary Teodoro Pascua (the latter being the department’s consumer advocacy chief).

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But given the billions of pesos involved in this key industry, don’t expect the dispute between cement manufacturers and importers to end soon, not with both sides claiming to have President Duterte’s ear with their respective advocates.

This early, however, there seems to be a light at the end of the tunnel, courtesy of a solution that DTI is working out with the Bureau of Product Standards.

If plans don’t miscarry, authorities plan to streamline the inspection process for cement imports, sharply cutting down the number of days these products will have to be held in a warehouse (an added cost for the peso-conscious importers). Biz Buzz hears that the current inspection duration of up to 60 days may be cut in half— something that may assuage importers and the quality-conscious manufacturers.

But the proof of the pudding is in the eating. Can the DTI hammer out a solution amid this politically charged tug of war? Abangan! —DAXIM L. LUCAS

Dominguez’s quick problem resolution

It appears that at the Department of Finance, they give no quarter to workers who treat the Duterte administration’s anti-corruption drive as mere guidelines instead of the law of the land.

Recall that DOF director who recently packaged a birthday celebration with a technical writing seminar in the swanky Edsa Shangri-La hotel—all funded by the Asian Development Bank?

Well, this director offered to resign a day after the incident first came to light in this very column.

No less than Finance Secretary Carlos Dominguez III told us he had accepted the resignation after a swift investigation.

The DOF director was also told to pay the ADB-administered technical assistance facility the full amount of the “inappropriately included” birthday dinner for some 40 guests. The amount, we heard, was in the vicinity of P80,000.

We don’t know about you, but as far as investigations go in any office—public or private—that was pretty quick.

The investigation was done with the help of the ADB.

According to Dominguez, the director was told to conduct the workshop in the Ayuntamiento de Manila in Intramuros “without dinner and charged to the department’s regular budget.”

Instead, this director organized “without prior clearance” the Edsa Shang workshop. The birthday celebration that followed was listed as a dinner for workshop participants. The entire event ran from 8 a.m. until 11 p.m.

Of course, it is unfortunate for one’s career to end in this manner.

But as we pointed out previously, it was a recurring issue and the controversial birthday bash might have been the last straw for government staffers.

Dominguez said their internal processes are being improved to avoid similar situations in the future.

The takeaway from all of this is that people are always watching and, finally, there are those listening as well. —MIGUEL R. CAMUS

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TAGS: anti-corruption drive, Biz Buzz, cement producers, domestic cement industry, Duterte Administration, Secretary Carlos Dominguez III
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