Government’s attempt to tighten up on cement shipments has drawn sharp rebuke from small importers. A group of cement importers has protested department administrative order (DAO) 07-02 of the Department of Trade and Industry requiring them to obtain an Import Commodity Clearance on top of the Product Safety mark. The order exempts the big cement manufacturers-importers from the ICC requirement.
The order has already piqued one importer after the DTI issued the directive as a pretext to protect consumers and ensure the high quality of cement that enters the country.
“Their much-trumpeted investments in cement manufacturing plants which provide jobs in the process do not give them the license to exploit consumers through price and supply manipulation in collusion with some DTI officials to form a cartel,” the importer said.
Small cement importers have slammed DAO 17-02 /05, saying it was grossly biased and would allow the big manufacturers-importers to dominate the industry by acting as a cartel, and thus, gain full control of the lucrative construction projects under the Duterte administration’s Build, Build, Build infrastructure program.
The pure importers denied reports of substandard imported cement proliferating in the domestic market. They argued that small importers and the big manufacturers-importers get their supply from the same sources abroad. The cement quality, thus, is the same across the board.
For all intents and purposes, the DTI certification scheme implies that other countries allow substandard imports. But the industry has not heard of any consumer complaints against the quality of imported cement. In contrast, local manufacturers have been the subject of several complaints and formal charges over substandard quality.
The import clearance requirement, according to small cement importers, discriminated against them and was clearly banning their products from joining the government’s massive infrastructure program.
“How sure is DTI that imports of the big cement manufacturers-importers are not substandard when they are not subjected to ICC procedures? Is being a big manufacturer enough to measure compliance with local and international standards?” one cement importer asked.
Pre-shipment tests
Small cement importers prefer equal treatment with local producers. They said local cement producers should submit themselves to the same certification scheme if they are confident their own imports are of good quality.
The small importers are also posing a challenge to the big manufacturers-importers by agreeing to pre-shipment tests. Tests will be conducted using international standards and will facilitate the ICC issuance without delay.
“There will be no chance of substandard cement landing in the Philippines as no importer in his right mind will bring in a product that will not pass tests from contractors,the Department of Public Works and Highways and other users,” the cement importer said.
Pre-shipment testing, he said, would also assure ample cement supply for the government’s many infrastructure projects.
Ernesto Ordoñez, president of the Cement Manufacturers Association of the Philippines, earlier conceded that local producers could not meet the total demand for the construction material.
Big manufacturers-importers are themselves importing the commodity—proof of a huge demand that they themselves cannot meet.
Think tank BMI Research earlier noted that while Philippine construction industry has “the most favorable regulatory frameworks for private and foreign investments in Asia, in practice, the country’s poor operating and political risk environment limits the attractiveness of the fast-growing market.”
One reason, it said, is that “the construction market is dominated by family-controlled and politically-linked conglomerates that pose a significant barrier against the entry of other companies.”
Small cement importers warned against the emergence of monopolies and cartel-like behavior in industries. They said the Philippine Competition Commission should include DAO 17-02/05 as one of the vital documents in its ongoing investigation of an alleged cartel operation by certain local cement players.
The DTI order clearly violates Articles 14 and 15 of the Philippine Competition Act as it exacerbates the abuse of dominant position by the local cement industry.
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