Baguio rep to conduct House investigation oncement cartel

BY DEXTER A. SEE

BAGUIO CITY – Local officials in this mountain resort city, who spearheaded the expose on the cement cartel in the country, denounced the Cement Manufacturers of the Philippines (CEMAP) for “trying to misinform the Filipino people in justifying the skyrocketing prices and poor quality of cement in the country.”

Re-elected Baguio City Rep. Mauricio G. Domogan said he will pursue the House investigation on the unreasonable and unjustified prices of cement in the market especially with the varying excuses being divulged by the manufacturers to justify the “rigged” cement prices.

Last March 7, the House committee on trade and industry, which conducted an investigation on the skyrocketing cement prices, uncovered the lack of first-class or Portland cement and the cement manufacturers were required to give an explanation but the investigation was held in abeyance due to the onset of the campaign period for the May 14, 2007 elections.

Recently, the CEMAP reasoned out that the major factor causing the high prices of cement is the expensive power cost that accounts for 25 percent of its production.

But councilor Daniel T. Farinas, chairman of the city council committee on market, trade and commerce, argued that such a petty excuse is not true since power cost is already incorporated in the P73.95 production cost per 40-kilogram bag of cement.

During the initial stages of the cement cartel expose, manufacturers have claimed that the major factors affecting the price of cement were the high peso-dollar exchange rate and fuel cost, coupled with the high bank interest rates on commercial loans.

Farinas disclosed that since September last year, the peso-dollar exchange rate had improved by almost 10 percent, the fuel cost has gone down by at least 5 percent and the bank interest rates on commercial loans are now down to almost 3 percent, thus, such economic indicators should not be used to justify the high cement prices.

On the purported P9 billion losses of the manufacturers which they want to recover, both officials explained that the Filipino people should not be made to suffer with the lapses in business decision-making.

In fact, the manufacturers were able to purchase six cement plants in the country to the tune of approximately P27 billion but Domogan and Farinas added that they could not comprehend why two plants, particularly those in Batangas and Bulacan, were shut down without justifiable reasons.

They exclaimed that the cement manufacturers are just asking for an undeserved sympathy by stating their P9 billion losses from 2002 to 2003 due to the dumping of imported cement and they also claim that they have enough supply to last for the next six years as to justify the high prices of cement products.

Assuming that there is a soft demand for cement, the officials revealed that this is only because the price of cement per ton is pegged at $72, the highest in the Asian region, and the law of supply and demand would show that there will be equilibrium when both the satisfaction of demand and supply are met.

Domogan said the cement manufacturers’ capability of providing cement for the next six years shows that there is no shortage of cement and hence, there is not need for the high prices. If there is adequate supply of cement for the next six years coupled with the construction boom that the Philippine government is presently implementing, then the prices of cement should decrease so that physical infrastructure projects which are of importance be implemented.