Forget Not the Consumers
The Philippine Star
April 01, 2002

The cement industry has started to orchestrate rallies at the Department of Trade and Industry (DTI) and the Tariff Commission on the tariff issue; more recently, they have come out almost daily with full page advertisements - signed by an omnibus partisan organization called "Alliance of Stakeholders of the Philippine Cement Industry" - decrying the recent recommendation of the Tariff Commission not to extend tariffs on imported cement. They have likewise escalated the word war through radio plugs.

Not to be outdone, cement importers have also commenced mobilization for the non-continuity of the earlier tariff on imported cement. This time, with a coterie of consumerist organizations taking the opposite end of the issue, ads - though less frequent and smaller-sized - have been published lauding the Tariff Commission for its supposed stance to support the truth.

Both sides are fighting out a war to try to influence government's opinion in an issue that ultimately affects the public. Things are turning out to be very interesting, not to mention, expensive.

The cement industry is bandying the welfare of their employees, whose numbers range from 3,000 to 30,000, depending on which side you're talking to. They also point to importers, smugglers and traders - not to mention the Tariff Commission - as the heartless brutes on whose conscience rests the livelihood (and lives) of thousands of employees and their families.

The other side, on the one hand, argues that it is sheer greed and deceit of cement companies that propel them to seek tariff relief from the cheap imported cement. They cite the P1.9 billion income from operations of three major cement companies - all foreign owned - in 2000. They challenge also these very same cement companies to re-employ laid off workers affected when they closed several cement kilns from 1997 to 1999 before cement importations threatened the viability of their operations.

In repartee, the cement industry underscores the "creation of billionaire cement importers" belonging to a "gang of influential traders" that "employ even less than 100 people". Of course, the Tariff Commission's reputation is also put to question when it is accused as conspiring with "big-time cement importers and smugglers" against the local cement industry.

Before more threats /counter-threats and charges /counter-charges muddy up the whole picture, let's sit back and sort out what really is the heart of this raging debate.

In 1998, a year after the Asian crisis, I remember enjoying the benefit of buying cement at less than P50 per bag. It was a time when there was a glut in local cement production, and local construction work was at an almost standstill. It was also the year when two of the world's biggest cement manufacturers were actively looking at investing in the Philippine cement industry.

By year 2000, with the cement industry already largely dominated by foreign cement companies (but before local cement was "threatened" by imported Asian cement), a cement bag was already costing about P120. When imported cement started coming in, prices dropped to just about P100 per bag.

When the temporary 200-day tariff on cement importation was granted in late 2001, cement went back to over P120 per bag. Now the cement industry is urging for a higher tariff that will undoubtedly bring the price of cement to P140 a bag.

Something runs afoul here, if I may lift the wordings in one of the cement industry's ads. It appears that were it not for the importers, we would still be enjoying low cement prices.

While the cement industry tries to steer the debate to the issue of lost jobs for its industry workers, it conveniently sidesteps the issue of pricing. This is understandable because the issue of pricing will not win them any brownie points.

Cheaper cement prices will mean savings for millions of Filipinos who yearn to build their own homes. Cheaper cement will revitalize our construction industry and create jobs for 1.5 million workers and bring food to their families' tables. Cheaper cement will provide a 20% savings in the cost of materials to be used for the construction of roads, bridges, school buildings, and other infrastructure. Inarguably, this could run to billions of pesos saved.

A full-page ad in four of the country's major dailies would cost about P1 million a day. This is big bucks. Do you think that this is money being paid by the cement industry workers? Or by the contractors, suppliers and service providers dealing directly with the local cement manufacturing plants?

The proponent(s) for extending and increasing the tariff on imported cement are pointing their fingers to importers. Because importers have restrained their selling price to the Filipino public to just about P100 a bag?

I have always believed in win-win situations. Presently, local cement production is estimated at P89 per bag. I think that a selling price of P105 per bag will give the local cement manufactures with a decent profit so as not to erode their viability or significantly impact on their market share or start another round of industry layoffs. Big boys as they are, our cement manufacturers should be adept at fighting fair and square by improving their productivity and costs.

P105 per bag will also give importers a reasonable margin. Just let's not have a tariff that will bring up prices to P140 per bag. Aside from assuring our local cement manufacturers of super profits, this will impair our construction industry and its millions of workers, and unduly stress the government budget on infrastructure.

At P105 a bag, best of all, the Filipino consumer ends up a big winner.

***

In my last column, the readers took the floor. Here are two others that deserve attention:

Jerry Quibilan of Ilocos Sur writes:
"On 28 August 2001, President Gloria Macapagal-Arroyo and her Cabinet decided to
employ the services of McKinsey Global Institute to conduct the (micro-economic) study under the direction of the National Economic & Development Authority (NEDA). The study is expected to pinpoint sectors in the economy where micro-economic reforms are required which clear obstacles to growth in these specific sectors and which improve productivity that are crucial to overall economic growth.

"According to Presidential Spokesman Rigoberto Tiglao, and I quote 'This research will be completed in four to six months.' Six months have come and gone and we have not heard or read of any developments. It is my prayer that we will soon know how the study went, what areas need reforms, and how to act on these desired reforms."

***

I leave some truisms, highly recommended, courtesy of Rey Marquez of Magallanes Village, Makati City:

"For every action, there is an equal and opposite criticism."
"No one is listening until you make a mistake."
"To steal ideas from one person is plagiarism; to steal from many is research."
"If you must choose between two evils, pick the one you've never tried before."

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