POSTSCRIPT / March 30, 2000 / Thursday


Philippine STAR Columnist

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As in oil, alien cartel hikes price of cement

HANDLERS of President Estrada better think twice about blowing up further that dubious “intelligence” report of a serious assassination plot against the Chief Executive.

When the popularity rating of a leader is alarmingly low, and continues to go lower amid smoldering discontent, spreading talk of people wanting to kill him may just generate more negative thoughts about him.

A head of government is always exposed to possible assassination and similar plots. That’s normal. But for his handlers to foment irresponsible talk of doing away with the President is dangerous.

The timing is wrong. Such loose talk at this time could further feed the growing discontent, and deepen desires in some people of physically eliminating the perceived cause of their difficulties.

* * *

WE all saw it coming early last year, but it seemed that nobody thought it would lead to anything disastrous or that anybody could have done anything about it.

We’re referring to the stranglehold of another alien cartel on another pivotal economic sector – the cement industry — whose full impact, especially on prices and construction, is only now being felt.

From P60 per bag some months back, and P92-P95 a few weeks ago, the price of cement has gone up to P105 per bag. The cartel openly says that the price will continue to rise, probably up to P140 per bag by December.

That is, if indeed the Estrada administration is helpless against alien cartels.

* * *

AMONG the hardest hit sectors are the housing, public works and infrastructure programs of the Estrada administration itself as well as private construction and related businesses.

Cement accounts for as much as 60 percent of the total costs of the shell of modest dwellings of the P275,000 (with lot) variety. In big buildings where steel is extensively used, however, the cost share of cement can go down to some 15 percent.

While squeezing local users, the big cement makers dump abroad some 5 percent of their production at a mere $20 per metric ton, which is only a third of the local price of P105 per bag (equivalent to some $60 per metric ton).

It seems to some observers that local captive users are subsidizing foreign users through the dumping abroad of cheap Philippine cement.

* * *

LOCAL big users can import cement, with China and Indonesia among the nearest sources, but they need silos for storage. These are not readily available where they are needed.

Another problem with importing big quantities is that cement normally has a shelf life of only two months even when it is in bags or containers. An importer cannot stock an excess supply.

This is the anomaly of Filipino importers buying cement from foreign suppliers at P90 per bag picked up at the pier, while the local cartel exports cement at P35 per bag. Why doesn’t the cartel just sell its cement locally and get more for it?

* * *

SHORT supply is one of the reasons given for the price increases. This is uncannily the same excuse of the OPEC (Organization of Petroleum Exporting Countries) for continually jacking up the price of crude.

And the oil supply is low because the OPEC has cut down deliberately its production to force up the prices of crude worldwide.

Why do cement makers still export part of their production when, according to them, the local supply is limited? And why dump the cement abroad when they could sell it locally for triple their export price?

Obviously, the supply and, therefore, the prices are being manipulated.

* * *

WHEN the cartel was still firming up its hold on the market, it was kinder. Why is it that the price of cement is now being manipulated to go higher and higher?

The cartel members are candid enough to say that they want to recover losses. They claim that some of the cement plants that they had acquired in a buying spree the last two years are not as efficient as they want them to be.

In a recent congressional hearing by the House committee on trade and industry, representatives of the cartel admitted that their new price increases this March were not related to any major increase in production and/or marketing cost.

They admitted that price escalation, which would reap for them windfall profits, was part of a strategy to recoup past investment losses.

But most losses are traceable to their own bad business decisions (buying decrepit factories) and bad management (not being able to improve efficiencies). Why would consumers be made to pay for such mismanagement?

* * *

THE Philippine Constructors Association (PCA), the National Confederation of Contractors Associations of the Philippines (NACCAP) and the Association of Concrete and Aggregate Producers of the Philippines (ACAP) are protesting the orchestrated increase in cement prices.

Eric A. Cruz, executive vice president of F.F. Cruz & Co., said these organizations represent 80 percent of total local cement utilization. But in this country, it is not size, but (lobby) performance that matters.

Ranged against captive consumers is the alien cartel that reportedly controls almost 90 percent of the production capacity of the industry. The annual production is about 13 million bags, which industry sources said could be doubled if the cartel wanted it.

In the cartel are the so-called Big Four, namely Holderbank of Switzerland, Le Farge of France, Blue Circle from the United Kingdom, and Cemmex of Mexico. (Le Farge has been reported to be in the midst of merger negotiations with Blue Circle.)

Only the Cojuangco-owned Northern Cement remains in Filipino control.

* * *

THE Philippines and the United States are hosting in Manila until tomorrow the Asian Regional Initiative Against Trafficking (ARIAT) in women and children. Attending the sessions at the Heritage Hotel are representatives from some 20 countries.

Michael H. Anderson, counselor for public affairs of the US embassy, said the conference and workshop will come up with a regional action plan against trafficking.

The US delegation is headed by Anita L. Botti, deputy director of the President’s Interagency Council on Women, and Ralph L. Boyce, deputy assistant secretary of state for East Asian and Pacific affairs.

Trafficking has been described as a form of modern-day slavery. An estimated one to two million persons each year are recruited, transported or sold, sometimes across national borders, through force, fraud, deception or coercion for forced services, including prostitution, servitude, sweatshop labor and other debt bondage.

* * *

WITH his relentless pushing of a “silent protest” campaign against corruption, cronyism and nepotism in government, former Telecommunications Commissioner Linggoy Alcuaz has moved from No. 13 to No. 3 in our list of 3-D Artists (destabilization and other Ds) in media.

Weeks ago, Linggoy was giving away his protest stickers at the Thursday kapihan at Annabel’s in Quezon City. The stickers displayed a white exclamation point across a black square.

We could not follow Linggoy’s very long explanation of that exclamation point, so we did not pick up his stickers. But now, with the gimmick reportedly catching fire, it seems we will have to beg him for some.

* * *

TO many wide-awake people, the roots of the credibility and acceptability problem of President Estrada are quite obvious. The “silent protest” campaign highlights some of them: cronyism and corruption.

The longer the President refuses to acknowledge the problem and its manifestations, the more difficult it will be to solve them and restore public confidence in his administration.

People are waiting for the President to crack down really hard on his kamag-anak and kaibigan who are generally perceived to be busy making money by exploiting their closeness to the seat of power.

Defending relatives and cronies only erodes the confidence that people have in his ability to lead us out of the darkness. The President should make that hard decision and tell his kith and kin: Tama na!

* * *

SOME people think the situation is hopeless, that Mr. Estrada will continue to go down, that his drop has reached a point of irreversibility.

But it is heartening to note that the Church has not given up on him. All that he has to do, Church leaders say, is for him to admit his errors, recognize the problem, correct it, make amends and resolve to reform.

There is no other way.

Erap Estrada has no intellectual or moral capital to carry him on. The only political capital he had when he stumbled upon Malacañang was the 10-million-vote mandate he earned at the polls.

Now that that political capital has been seriously eroded by the runaway cronyism, big-time corruption and gross incompetence, there is no other salvation except probably the way pointed out by the Church.

It does not even require talent or genius to take that path. All it needs is humility.

* * *

(First published in the Philippine STAR of March 30, 2000)

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