• New PNP racket will kill our exports

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    Doing business in the Philippines is hard enough. But things got way harder after 41 chemicals from the Philippine National Police (PNP)’s “Explosives Kind Masterlist” recently found its way into the Bureau of Custom (BOC)’s list of “regulated imports.”

    In one fell swoop, many ordinary or common household chemicals such as hydrogen peroxide, muriatic acid, lacquer thinner (and would you believe, even ordinary table salt?!) suddenly needed a PNP license to be imported, bought, moved, kept or sold. This added layer of red tape caused an artificial shortage of chemicals, which in turn resulted in a sudden spike in retail prices.

    There are reports that prices of semiconductor-grade hydrochloric acid, commonly used by electronics manufacturers, jumped to P900 per gallon from P68 per gallon. And due to the abnormal supply, shell craft exporters have resorted to buying muriatic acid in the black market, which supposedly costs four times more.

    So how did we find ourselves in this mess? It all began with the passage of Republic Act 9516 in 2008, amid reports of bomb plots in highly-populated areas of the country by al-Qaeda-linked groups using improvised explosive devices. The law basically amended a Marcos-era law – Presidential Decree 1866 – by criminalizing the manufacture, assembly, trading, acquisition, disposition, importation or possession of “any [chemical]ingredient…of any explosive or incendiary device.”

    The problem is RA 9516 never defined what these chemical ingredients were, or what quantities or concentration are covered by the regulations. The way it was written, RA 9516 practically gave blanket authority to the PNP to determine what chemicals should be considered explosive ingredients subject to their licensing requirements. It appears the police agency was only too happy to oblige that they even confused table salt (sodium chloride) with sodium chlorite, a combustible material when mixed with certain chemicals.

    The result is Memorandum Circular No. 2012-006 issued by the PNP’s Firearms and Explosives Office requiring SEPARATE permits to import, purchase, unload, move, possess and sell 41 chemical substances. In fact, if the law and PNP circular were applied to the letter, keeping a hydrogen peroxide antiseptic or an acetone nail polish remover in your house could land you in jail, considering that mere possession of any these chemicals is prima facie evidence of intent to use such substance to manufacture or detonate an explosive device.

    Some legal experts say the 2008 amendment is unconstitutional for violating the due process clause because it does not clearly state what conduct is being punished. But we will dissect this “void for vagueness” concept in another column.

    Anyway, aside from the long, expensive and tedious application process that is the hallmark of the Philippine bureaucracy, once the permit is issued, the PNP rules also require that the chemicals be escorted by policemen when being moved from one location to another.

    We’re told that the application fee for each permit costs anywhere between P15,000 to P25,000. On top of that is the “escort fee” of P2,500 per movement for which no receipts are issued.

    One chemical company supplying an electronics firm claims their escort fees alone reached P5 million in just a few months, not to mention the routine delays brought about by the lack of available escorts. Businessmen likewise tell the story of a small-to-medium-enterprise (SME) that bought 2 liters of hydrocholoric acid and was required to be escorted by policemen for P2,500.

    The PNP circular has already impacted many businesses that a big multinational semiconductor company employing thousands of Filipinos threatened to close its operations last year due to the lack of chemical supply. One handicraft exporter allegedly lost a P10 million order for seashell products because it couldn’t get the chemicals it needed for production.

    The new rules are clearly a regulatory overkill. For instance, the United States, which is the prime target of global terrorists, does not even regulate most of the chemical ingredients in the PNP’s “Explosive Kind Masterlist.” At most, the Department of Homeland Security requires chemical facilities to submit a report if it possesses quantities of a certain chemical beyond the so-called “screening threshold quantity.”

    Another prime terrorist target, the United Kingdom, only regulates seven chemicals that are considered “explosive precursors” and only if the chemicals exceed a certain “concentration threshold” (usually measured in percentage by weight [% w/w]). The PNP circular, on the other hand, regulates 41 chemical substances (and counting), regardless of quantity and concentration.

    With the country’s exports dropping by 5.6 percent last year to $58.6 billion from $62.1 billion in 2014, and with our economy slowing down to 5.8 percent in 2015, the last thing we need are hare-brained rules that make it even harder for our exporters to earn much-needed foreign exchange. True, protecting our national security is paramount. But it must also be tempered with common sense and reasonableness.

    PNoy has been briefed about this imminent crisis but we’re told he’s too busy campaigning for another six years of “daang matuwid” to give a damn.

    And he wants the business sector to vote for his heir apparent?! Ano siya, hilo?!!

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    7 Comments

    1. Request their Explosives Division to devise a weak bomb and they would not be able to identify which chemicals to use. The regulators not knowing what they’re controlling about?

    2. The PNP also has racket regarding brand new vehicle registration. They require all new vehicle to have PNP-HPG clearance for P300 per unit, when in fact they don’t even take a look at the actual vehicles. Last 2015, the auto industry sold about 310,000 units, and that sum of to P93 million pesos in generated revenue. The question is, where the money goes after that?

      PNP-HPG clerance should only be required when the subject vehicle is pre-owned, and not brand new and for registration only for the first time.

    3. Crisostomo Ibarra on

      These just shows how backwards our policy makers are here in our country. They should stop copy/pasting our policies and hire at least somebody with the foresight to handle this type of life changing policy.

      Obviously, the implementation of this new PNP’s “Explosives Kind Masterlist” is flawed and should be temporarily suspended. The “policy” should be amended, to provide guidance with the goal of eliminating these unnecessary (overkill) “obstacle” to legitimate business which uses these type of chemicals.

    4. Yes, there are Chemicals with high explosive value and majority of them are being use in Paint Industries, Textile Industries and Electronics Industries. Restrictions on these chemicals put a stress on the industrial side. The legitimate users should be totally responsible for the control of these chemicals. Making sure it does not fall into
      wrong hand.

    5. This is an OLD racket …..which surface during Marcos time, continued during Cory’s time and blossomed during Fidel Ramos time……and continues,,,,,

      This is the CHEMICAL BUSINESS in the Philippines…….from a little known Marcos decree that was used for security reasons the ,PNP turned it into a multibillion peso business and even had the capability ti have a law to amend or replace that which Mrs Aquino stopped during her last days in office,,,,,

    6. Rodolfo Liporada on

      The Province of Pangasinan should be quarantined. It is the biggest supplier of Soldium Chloride in the country. ???

    7. And we wonder why so many multinational companies are moving out of this country. More harebrain ideas or is this more of a money making scheme thought of by PNP? Just like what BIR requiring each company to apply for import accreditation before a company can import. Another fund-generating scheme that leaves many BIR mployees ver happy.