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Biz Buzz: Shipping industry standoff

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Biz Buzz: Shipping industry standoff

/ 05:13 AM August 21, 2017

If one listens to industry insiders speak, Marina—or the Maritime Industry Authority, which regulates all seagoing vessels and shipping activities in the country—had been, for the longest time, operating under a so-called “regulatory capture” environment.

In particular, this government agency has been, industry insiders say, controlled by a cartel of Chinese-Filipino ship owners based in Cebu.

This group, for all intents and purposes, defined policy at Marina, recommending to the President the appointment of top officials, as well as dictating which policies would be passed or rejected.

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In fact, word on the street is that this cartel even gave its generous support to the second family of a ranking government official who was the number one asset of the cartel members in the transport sector. This was, of course, to help ensure that Marina’s top brass would bend to the will of this Cebu group.

But times are changing, and Marina is now run by someone who doesn’t seem to be too keen on bending his knee and bowing before the members of this Cebu cartel.

And while some previous Marina administrators used to quake in fear when cartel members came calling, the new man running the agency—Marcial Amaro III—doesn’t seem to have the same “pressure points.”

Proof of this is a circular he issued last month that sent shock waves across the local shipping industry, most especially among members of the Cebu cartel.

The new Marina rule basically prohibits the importation of old vessels to be used for shipping business. This is meant to make local shipping lanes and the Philippine industry safer for all stakeholders.
In particular, the new circular prohibits the importation of second-hand vessels that are over 20 years old, as well as imposing a size floor of 500 gross tons. In other words, no imports of ships that are either too old, or too small (Marina left a small window for the importation of so-called “fast craft” weighing less than 500GT, to be regulated by another upcoming circular). That’s a major policy shift because the average age of commercial vessels plying Philippine interisland waters is close to 40 years.

More importantly, the act of restructuring, rebuilding or refurbishing a ship will not change the ship’s age, according to the new Marina rule, unlike past practices where one could make the ship “younger” by making certain modifications.

Members of this Cebu cartel are up in arms, citing the already poor economics of the domestic shipping industry. Only by acquiring older vessels (often very cheaply) can they hope to have a viable business, they argue.

So far, the Marina head looks like he’s standing his ground and will not yield to the cartel’s demands. That probably means these influential shipping industry stakeholders will soon bring their complaints to more sympathetic authorities. Who will prevail? Abangan. —DAXIM L. LUCAS

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‘R’ means ‘rare’

Within the local automotive circle, there are enthusiasts, collectors and, at the very top of the heap, an elite group of ultra high net worth (and well connected) individuals referred to as “the movers.”

These often unassuming people have access to the world’s best cars, and the means to acquire them. The thing is, they share an unwritten code of honor among their ranks: fine automobiles are to be treated like true works of art —appreciated, but never flaunted; enjoyed, but never paraded, and discussed only among those with a mutual understanding and genuine passion for these masterpieces.

Despite their considerable resources, however, only a handful of these movers were fortunate enough to be included in the restricted list of approved Porsche 911 R buyers.

Of course, this rare entitlement was quickly capitalized on: All approved buyers quickly and happily finalized their purchases, and their units were quietly delivered to them. The entire episode happened so fast and so discreetly that the authorized Philippine Porsche importer did not even bother to launch the model commercially. Naturally, others who were not included in the list began moving heaven and earth to join the exclusive club but, alas, production in Stuttgart was limited to only 911 units.

Consequently, there is now a “power play” of sorts created by this scarce-supply-and-overwhelming-demand scenario. Some movers are reportedly offering obscene amounts of money in order to acquire the much-coveted “purist’s sports car.” Naturally, no one is selling. Those who are still yearning for one are facing impossible odds, especially now that the bids in the international markets for this rare Porsche masterpiece have reached thrice the original price. Wow. —DAXIM L. LUCAS

Cement wars, redux

In an online space littered with kittens, puppies and even babies looking cute, a video was uploaded about a topic that is not as adorable as these little creatures, but nevertheless still as interesting, as it blamed a government agency for being instrumental in creating an alleged cement cartel.

The three-minute clip which was uploaded earlier this month, blamed the Department of Trade and Industry (DTI) for issuing an order that “will give rise to a cement cartel controlled by oligarchs.”

We are talking about DTI’s Department Administrative Orders 17-05, which requires cement imports to secure an import commodity clearance, unless they are made by cement manufacturers with an integrated cement plant.

The accusations we hear in the video are not exactly new, and that’s partly the reason why this shows an interesting turn. The allegations we hear here are similar to the choice of words and arguments used by industry sources when they spoke to some newspapers last month.

A quick search in Google would show that these officials say that cement price was around P300 in 2014, and now dropped to P197 because “importers entered the picture.”

The YouTube video which was titled “cementing a cartel,” cited the same figures, adding that the price difference when multiplied to annual demand for the product would total to billions of pesos that could either be a boon or bane to consumers because of the department order.

More so, both these industry sources and the online video referenced President Duterte’s drive against corruption, specifically on the latter’s order to remove redundant requirements and to refrain from changing the rules of the game in the middle of the game.

The motive, the clip said, was that “giant manufacturers importers want to corner the cement market” given the Duterte administration’s ambitious multi-trillion-peso infrastructure initiative.

The Philippine Competition Commission is now looking into the cement industry after finding “indications of anticompetitive agreements.” The department order is now part of that investigation.

As of this writing, only about 300 people have watched the video.

The video actually raises more questions than answers, particularly about who is behind this agenda-driven clip. Who’s calling the shots? Who benefits from the public support this video could give?

When the order was seen to be antagonistic to pure cement importers and everyone else without their own integrated cement plant, the answers to these questions may seem logical, but it’s up to the readers to do the guessing game.

But even before we name names, DTI may yet again change the rules of the game. Just recently, it published a draft DAO that interestingly does not include the controversial provision regarding the ICC. So the DTI may be listening. —ROY STEPHEN C. CANIVEL

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TAGS: Business, Cement, shipping industry
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