Biz Buzz: Cementing a monopoly

Small cement importers are raising a howl over what they suspect to be a move to drive them out of the market through the issuance by the Department of Trade and Industry (DTI) of a department administrative order (DAO) tilted in favor of big cement importer-manufacturers.

According to the small importers, they have played a big role in bringing down to around P197 per bag the current prices of cement thanks to “lively” competition. But these small players warned that prices may shoot up even higher than the P300-per-bag level seen in 2015 because of the DTI order.

Issued by DTI’s Bureau of Product Standards last March, DAO 17-02 as amended by DAO 17-05 mandated that cement sourced from abroad by small importers must also have an Import Commodity Clearance (ICC) aside from a PS (Product Safety) mark. The ICC requirement was described by the importers as “arbitrary and capricious”, saying it would cause them irreparable damage. They added it would violate the equal protection clause of the Constitution that guards against monopolistic trade practices.

The importers slammed the DAO for running counter to Philippine treaty obligations, including the World Trade Organization (WTO) agreement of 1994 and the Asean Trade in Goods Agreement (Atiga).

The small players are now asking the DTI some tough questions.

Why did DTI issue an order that would result to the cement supply being cartelized once again by importer-manufacturers and cause cement prices to rise sharply?

Why is DTI “hijacking” President Duterte’s policy of simplifying government procedures especially for major projects like those in its “Build, Build, Build” infrastructure program?

As it is, even without the infrastructure program, 600 million cements bags are sold by importer-manufacturers, with another 120 millions bags being imported. Why then did DTI issue a DAO that would limit the number of cement players to the importer-manufacturers who have in the past constricted cement supply to drive prices up especially for the local cement they produce?

Why require an ICC for importers when the giant importer-manufacturers—who are exempted from the ICC requirement—have the same foreign suppliers, meaning the quality of imported cement is the same, especially with the PS mark certification?

Why are the imports of importer-manufacturers exempted from the ICC requirement, but the products of mere importers need ICCs?

For the sake of consumers, these questions demand answers. —DAXIM L. LUCAS

A very public spat

An extraordinary event occurred this week. Countless Filipino citizens set aside partisan differences to voice their united support for ridesharing in the country— led by Uber and Grab—against a government effort that would ultimately hurt the service, displace thousands of drivers and well over a million customers.

In a shocking display of tone-deafness, the Land Transportation Franchising and Regulatory Board (LTFRB) said it would not back down and called out the two companies for breaking the rules by allowing drivers to operate without the necessary government permits.

(This is strange because it was the LTFRB a year ago that halted the processing of new driver applications).

Worse, the LTFRB made a strange comparison by painting regulated public utility vehicles in a favorable light. Anyone who has tried to hail a taxi cab in Metro Manila (there are a few exceptions) would find this a laughable thought. Taxi operators, despite their constant complaints that Grab and Uber were hurting their business, have failed or refused to improve until this very day.

Perhaps the LTFRB forgot that ridesharing companies did not ram their services down the public’s throat. Commuters tried it and realized it worked.

This is an unfortunate twist when only last week, ridesharing operators Grab and Uber heaved a partial sigh of relief after admitting that most drivers were operating illegally and were fined P5 million each. During that hearing, the LTFRB leadership added that they supported the technology. That statement now rings hollow given a directive to arrest erring drivers, which would eliminate most of the existing ridesharing driver network.

It is true that Grab and Uber were remiss, but the government has its fault here as well. LTFRB said both companies should show good faith while it creates its technical working group to discuss accreditation, pricing and accountability. That must be quite a group to take more than a year to convene.

It’s a clear case of technology and demand simply outpacing an outdated model of regulation, which, ironically, runs counter to President Duterte’s desire to cut red tape. Regulatory issues need to be addressed. Uber and Grab need to yield as well. But not at the expense of the riding public. —MIGUEL R. CAMUS

Saving the humble jeepney

Cebu’s Aboitiz Group, best known these days for its power interests, has had a keen interest in expanding in transport infrastructure. Unfortunately, the plan has been hampered by current government policies, which have made this initiative somewhat more restrictive than in the past.

Good thing there’s the humble jeepney.

An Aboitiz-led venture plans to unveil next week more details on a massive plan to transform the iconic but sadly outdated jeepney vehicles plying our roads. Specifically, a company called QEV Philippines—a venture led by Endika Aboitiz, Enrique Banuelos and Jose Maria Roger—wants to partner with local jeepney manufacturers to shift some 50,000 diesel jeepneys into cleaner electric-powered vehicles “at a reasonable cost.”

QEV is an international company formed by Banuelos to install electric charging stations. They are present in Europe and South America and the technology was developed by Banuelos and Asea Brown Boveri (ABB) as a result of their working together to launch F2 electric racing cars, which race in circuits worldwide.

Early this year, the company sent one jeepney to its Barcelona research and development center to study how to convert them into electric vehicles. And more recently, their engineers worked with the pioneer jeepney manufacturing firm Sarao to produce a prototype electric public transport vehicle that is efficient, clean and modern. QEVTech will put up chargers for the e-jeepneys in Ayala and SM malls and Shell stations. These can charge an e-jeepney in slightly over 10 minutes. —MIGUEL R. CAMUS AND DAXIM L. LUCAS