Smuggling problem also bugs domestic cement industry

Like other industries the cement industry also suffers from the smuggling of the product from abroad.

One type of smuggling is outright. This is when importers bring in the product without the government knowing. The other type is undervaluation and misdeclaration. Misdeclaration is when the real amount of imported cement is declared to be much less. Undervaluation is when the declared amount, whether correct or wrong, is priced much less than the real cost of the product imported.

According to Ernesto Ordoñez the real price of imported cement must be $63—$43 for freight on board, plus and $20 for the freight. Smugglers gain as much as half the price of the commodity, getting away with around $30 per bag through smuggling.

“First of all it’s lying. Second it means that the taxes they pay is half or even less than what they should pay. And finally they deprive us of our revenue so again its unfair competition against jus the legal manufacturers. It’s not fair. It’s unfair valuation. That’s smuggling also because they are lying. Technical smuggling is undervaluation and misclassification and misclassification is cheating,” he said.

Besides the consumers are at risk because smuggled cement products are often substandard in quality.

For instance smugglers would declare an import as Portland but actually its pozzolan, a cheaper and weaker type of cement.

“If you build structures using that they can crash and people can die. We caught that kind of smuggling,” he said.

Cemap caught smugglers sourcing from Vietnam twice from two different shipments, Ordoñez said. Although many Vietnam cements are good some are bad, he added.

Chinese-made cements also find its way to the Philippine market and Ordoñez said these kinds of cements fail Cemap standard during tests. One example is China-made Horse brand cement, which is often sold in Mindanao.

He thinks smuggling of cement is rampant because of corruption and government laxity.

“We want enforcement and this is one of our complaints. We want a better enforcement of anti-smuggling laws. This Horse cement at one time we bought it and gave it to the DTI but they did not catch the smugglers,” he said.

Ordoñez cited a case in Davao four years ago at a time when the DTI was reluctant to round up perpetrators.

“We told the DTI you’re not catching. So they caught after four weeks and that cement was going around the country. So finally they caught and they put it in a warehouse. In the warehouse they put tape, tape instead of padlock. I went there and I said ‘I was an undersecretary for 14 years I’ve never seen tape to secure apprehended goods.’ The cement industry needs more justice,” he said.

Eventually more than 35,000 bags of substandard cement disappeared because of DTI’s negligence.

Despite these incidents Ordoñez began to notice some improvements in the government anti-smuggling campaign.

“After we complained about this it was finally corrected. But up to now undervaluation is rampant. Also substandard imports, they didn’t do anything,” he lamented. –ANGELO SAMONTE, Manila Times