Home » SCMAP Perspective » Battles Vs Rising Costs

With the onslaught of rising oil prices business mood appears to be resigned, like ‘there’s nothing we can do ‘.

The rise in global oil prices is being reflected in a series of increases in prices of local oil products. Logistics and supply chain cost elements are beginning to follow. Cost of electricity (transmission) has been announced to decline for a month. But most likely this is just a glitch and just for show. I have no doubt this will be erased by a larger subsequent increase.

PLSA has sent in its bunker surcharge matrix, said to be implemented on March 16. We have yet to hear from the truckers (INHTA). PPA has announced cargo handling rate increase hearings on March 20. Asking for CH rate increases are ATI, ICTSI and MNHPI.

As I said above, business appears passive; just appears to accept the inevitable. There are exceptions, of course. The street militants of course keep repeating their call to remove VAT on oil products to ease the sting from rising oil prices, and to revise the oil deregulation law. So does a former budget secretary. Passenger transport operators are getting restless. I have written in this column several times about oil prices and the huge profits of local oil companies.

Instead the government insists that VAT cannot be removed from oil products because certain unspecified government projects will lose their source of funding and will face disruption or cancellation.

Around two weeks ago, a Japanese company, Nomura Securities, announced that local inflation could rise to 5.8% by end 2012. Last week government announced that inflation just hit its lowest level in quite sometime. It felt like a deliberate timing of announcement to offset the negative effect of Nomura’s prediction. I have no doubt that the series of oil increases will soon get reflected in the inflation rate.

What about SCMAP?

SCMAP has a long history of fighting rising costs, dating back to 1989 when it (DMAP then) started its war versus huge shipping rate increases. DMAP’s battles spread out to truckers, cargo handlers and disadvantageous impositions in shipping, land transport, monopoly threat and other logistics areas.

Since SCMAP’s battles began in 1989, or more than 22 years ago, SCMAP is truly battle-scarred. Does SCMAP now belong to the ranks of currently passive and resigned? We will see.

For the Philippines as a whole, personally I feel that we need to do two things.

– Review government projects alongside private sector needs (i.e., which are more important?)

– Review weaknesses of the oil deregulation law and prepare a revision.

For the first one, government does not seem to appreciate the needs of the private sector for a globally competitive environment, including competitive power cost, transport cost and other logistics costs.

This is where SCMAP can help make the government understand.

Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email scmap.org@gmail.com. Those interested in SCMAP training and other activities are requested to send their e-mail addresses. Visit SCMAP’s website at:www.scmap.org

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