Biz Buzz: Back to dark ages of protectionism?

While the Philippines sustained its growth momentum in the first half of 2016 due to sound economic fundamentals and a liberalized trade regime, the Department of Trade and Industry’s Bureau of Product Standards (DTI-BPS) seems to be heading the opposite direction by bringing the country back to the dark ages of protectionism.

Tuesday, the DTI-BPS conducted yet another public consultation on proposals to impose additional testing requirements on imported cement, BI/GI pipes, flat glass and steel products. Importers were naturally up in arms over these new impositions, which they described as unfair, anti-free trade and outright discriminatory.

They claimed that the four affected products already undergo mandatory testing at their point of origin by duly accredited international testing laboratories. To do the same quality tests all over again upon their shipment’s arrival in the Philippines seems to be an onerous, if not whimsical, imposition. Worse, the draft policy seems to be skewed in favor of local manufacturers, which can conduct their own testing in the privacy of their factories, sans strict, eagled-eyed lab technicians.

Reportedly a brainchild of a former DTI undersecretary (whose imminent reappointment was withdrawn at the last minute by the current administration), the proposed Department Administrative Order (DAO) is expected to jack up prices of imported goods due to the costs of double testing, delays in shipment processing and additional warehouse expenses. It is also a cause for worry among traders whose importations are currently in the pipeline.

If adopted, traders argued that the proposed DAO was similar to changing the rules in the middle of the game, which has a grave impact on their investment plans.

The big question is, whose interests is the BPS protecting with this allegedly onerous imposition? Are Trade and Industry Secretary Ramon Lopez and President Rodrigo Duterte even aware of what the boys at BPS are up to? They’d better find out pronto before this trade issue puts the country in the crosshairs of its international trading partners, or before a case for trade sanctions is brought against the Philippines at the World Trade Organization (WTO).  Daxim L. Lucas

Good for business

WITHOUT a doubt, President Duterte’s rise to the presidency has given a much needed boost to the economy of Mindanao, in general, and Davao City, in particular.

And one sector of the economy that has been feeling the generous upside from the current administration is the travel and accommodations industry, thanks in part to the President’s weekly (sometimes more) visits to the city where he once served as mayor.

For one, Biz Buzz has learned that hotels in Davao City have experienced a surge in room occupancy. The most luxurious—Marco Polo, owned by Finance Secretary Carlos Dominguez III—is almost always fully booked. The 245-room hotel is the favorite of politicians and businessmen who frequent Davao, especially on weekends, hoping for an audience with the President.

We’re told that management even raised its room rates after it was deluged by bookings starting last May, but the guests didn’t seem to mind paying anywhere from P4,000 a night for the most basic room to about P12,000 for the biggest (assuming it’s not reserved by some VIP, of course).

Also experiencing a higher occupancy rate is slightly more affordable Radisson Park Inn owned by the SM group with its 204 guest rooms that start at P3,000 a night for the most basic accommodation.

Its main selling point is that it sits adjacent to the SM Lanang Premier mall and its SMX Convention Center, which, as one can imagine, is also experiencing a surge in bookings due to the business conferences that are all going to Davao nowadays.

And the other main beneficiary of the Duterte phenomenon? Airline companies. Both Cebu Pacific and Philippine Airlines have seen higher load factors since May of this year.

According to PAL president Jaime Bautista, the flag carrier’s Manila-Davao-Manila flights (there are at eight on any given day) have had an average load factor of “over 90 percent” compared to the airline’s average of somewhere around 75 percent for all other flights.

In fact, most flights are fully booked that PAL sometimes had to substitute the Airbus A321 it normally uses for the Manila-Davao route with a much bigger A330 wide-bodied jet.

Now that’s good business. Daxim L. Lucas

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