Price control if not properly managed could be disastrous to the economy. It maynot only lead to higher prices in the long-run, but can even disrupt an industry. If pricesare not allowed to vary in response to greater risk, cost of production, and increasing costof staying in business, not enough producers would be encouraged to supply the product.| A Term Paper|
B I B L I O G R A P H Y
Philippine Institute for Development Studies, Economic Issue of the Day Vol. X no.2 (March 2010), "The Janus face of price controls"
The Business Star, “DTI Price Monitoring Scheme Now Underway In All Provinces,” May 17, 1989, p. 12.
Cement price control to create panic, says Holcim
By: Ma. Elisa P. Osorio (The Philippine Star)
“Price control is a draconian measure that will create more panic and will scare people into hoarding cement that will result in supply shortage,” Ed Sahagun senior vice president of Holcim Philippines.
The reaction came on the heels of the warning issued by the Department of Trade and Industry (DTI) that they will impose price control on cement if the market continues to experience cement shortage and overpricing.
“The DTI has conducted extensive market monitoring at the end of the year and the start of 2010. We found out that there has been tightness in supply and if ever it is available in retail it is overpriced,” Trade Secretary Peter B. Favila said. During the market visits, the DTI has issued to retailers a total of 150 notice of violations (NOV) and 50 notice of no supply (NNS).
The suggested retail price of a 40 kg cement is P205 which was pegged during the period of Ondoy disaster. During the market visits, Favila noted that a retailer has sold cement at P270 per bag.
The reported overpricing was denied by Sahagun saying that they can even sell cement at P196 per bag in their warehouse in Pasig. “We will sell cement at the correct price and we assure the public that there is enough supply.” Sahagun said that for Holcim, 200,000 bags of cement are available daily while the demand in Metro Manila is 100,000 to 150,000 bags per day.
For his part, Cement Manufacturers Association of the Philippines (CEMAP) president Ernesto Ordonez said that there is no need for price control at this time. “The government can catch those who are selling above the suggested retail price even without price control. They can be charged with profiteering.”
Meanwhile, on the increased purchases of cement, Favila said that maybe consumers are buying more cement at this season because they have additional money from their Christmas bonuses to repair damaged homes brought by Ondoy. Cement manufacturers, on the other hand, reported that all plants are running and that there should be no problem with supply.
The DTI sent letters to the three cement factories asking why there is a shortage in the market and why cement is overpriced at the retail level. “We are asking them to submit to us official receipts of cement pick ups from their plants and its price, as well as delivery receipts. They are given up to Thursday 7 January 2010 to give these records to our office,” Favila said.
REPUBLIC ACT NO. 7581
May 27, 1992
AN ACT PROVIDING PROTECTION TO CONSUMERS BY STABILIZING THE PRICES OF BASIC NECESSITIES AND PRIME COMMODITIES AND BY PRESCRIBING MEASURES AGAINST UNDUE PRICE INCREASES DURING EMERGENCY SITUATIONS AND LIKE OCCASIONS.
Sec. 1. Short Title. - This Act shall be referred to as the "Price Act." Sec. 2. Declaration of Basic Policy. - It is the policy of the State to ensure the availability of basic necessities and prime commodities at reasonable prices at all times without denying legitimate business a fair return on investment. It is also a declared policy of the State to...