The international scapegoat

The “world financial crisis” has now become the best excuse as well as the international scapegoat.

In the Philippines it has become the foolproof excuse to lay-off employees, it has become the best excuse for government and government agencies to ask for more money, and it has also become the best excuse for businesses to ask for tax cuts and more incentives.

Perhaps it is also now the best reason for the authorities to really scrutinize businesses that have taken too much advantage of bureaucratic laziness in offices such as the Board of Investments, the Department of Trade and Industry, as well as the BIR and the Bureau of Customs.

For starters, people at the DTI and the Board of Investments should evaluate their overly supportive attitude to alleged foreign investors represented by Filipinos who in reality are “Dumping” foreign made goods into the Philippines. In paper it is nice to see foreign brands and companies “investing in the Philippines”. But the real question is: Are they?

It’s about time to re-study the profile and investments of companies in the Philippines. Companies that give much needed employment without taking away much needed capital such as those in Business Process Outsourcing (BPO) or tourism should be given a lot of support. But companies that take advantage of cheap labor and then sell the same products to Filipinos at international prices there by taking away local capital should now be reviewed in terms of the benefit they allegedly bring to the country.

Last week, members of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) aired their appeal for lower excise taxes and more incentives for the industry. This organization represents 90 percent of the Japanese automotive brands in the Philippines but just how much of their products are actually made in the Philippines?

How much of all their products are honestly completely knocked down from abroad and assembled in the Philippines? And how much local content such as Mag Wheels, tires, batteries, tints etc are added on locally? A few weeks ago, I asked a distributor of a European car brand if their car had any local content? The answer was NONE.

According to several motoring Journalists car manufacturers have indicated a surprising profit for the month of January. No big bonanzas but at a time when they expected the worse, car sales reportedly turned out positive. If sales were good, then why ask for more incentives and tax cuts? Are the people at the BOI so gullible? Or are they simply lazy?

Real retail…

DOE Secretary Angelo Reyes is clearly caught in the crossfire between the giant oil firms versus re-fillers and retailers of LPG domestic gas.

On one hand the “Big 3” oil firms earnestly want to eradicate the re-fillers and non-branded retailers. This would expand the market control and profit base of the oil firms. Meanwhile, the so-called illegal re-fillers and non-branded LPG retailers have successfully provided an essential service to the market that the “Big 3” and their traditional gas stations have not served.   

Rather than take sides on the issue by showing his anger and bias against the re-fillers and retailers, perhaps Secretary Reyes should do more research on our laws as well as the practices of other countries regarding fuel distributorships versus retailing of by-products.

By his language, Reyes wants to adopt the “Iron fist” policy and give complete control of the LPG market to the “Big 3”. In fact Reyes wants more power to enforce DOE policies on the market. Unfortunately, Secretary Reyes may not have realized that if the retail sales of LPG goes to gasoline stations completely, we would all have to bring our tanks to gas station instead of the barangay based home delivery, home service system.

If Secretary Reyes gave the market to the “Big 3” he would in effect destroy a thriving “backyard industry” that employs thousands and services millions. One of the reasons, the market for automotive LPG has not taken off is because the “Big 3” controls the supply, but have not invested in the system and network. Very few if any of their traditional gas stations sell LPG for cars.

Once again, the market was developed by small businessmen who are at the mercy of the “Big 3” oil firms. If the automotive LPG market actually took off, there is nothing to stop the Big 3 from stepping in and calling the pioneers as “Illegal re-fillers”.

Perhaps, it may be necessary to draw the line. The “Big 3” makes sufficient profits from selling their products in bulk. In the interest of creating small business opportunities and employment, there should be a law that will prevent Mega business from entering SME level (small to medium enterprise) retailing due to unfair competition. Simply put a stop to the commercial bullying and supplies will soon be normal!  

If Secretary Reyes really wants to leave a mark in the minds of consumers, then he should address a nagging problem, which annoys consumers. Reyes should enforce a one-regulator policy for all LPG tanks. Don’t blame the “illegal retailers” for this mess because it was the major oil firms that set up different regulators in order to have a captured market. It is not a small matter or a shallow concern because in addressing the problem, Reyes will simply matters.  

In the end, Secretary Reyes should have been more prudent on the LPG controversy. First of all, the matter of hoarding and pricing was the responsibility and JURISDICTION of the Department of Trade and Industry headed by secretary Peter Favila. Reyes should have asked Favila to deal with the matter instead of allowing his passion and emotions to take reign.

A man who knows the real problem, will easily find the real answer.