Doing business is a hazard

Did you know that hydrogen peroxide is a dangerous and hazardous chemical that may only be transported with a police escort—for which service a certain fee is charged? So all of you who are reading this must have been blatantly violating the law. Hydrogen peroxide is something we all use to clean wounds and disinfect surfaces. But the supermarket you buy it from must have paid for a police escort to bring it to the store, as police regulations require.

You think I’m joking? A strict interpretation of one of the more absurd Philippine laws says exactly that. The Philippine National Police have an “Explosives Kind Masterlist” which has been incorporated in the Bureau of Customs’ “Regulated Import List.” Both lists identify 43 chemicals that can’t be imported or transported without payment of a (substantial) fee and for a police escort.

The absurd PNP list includes as well muriatic or hydrochloric acid. A company purchasing just two bottles of this kind of material (worth P2,500), a noncombustible and nonexplosive chemical used in the electronics industry, had to pay P15,000 in police escort fees. As a result, the price of hydrochloric acid rose from P68/gallon to P900/gallon.

Common household salt was also on that PNP list until they recognized their error and replaced “sodium chloride” (salt) with “sodium chlorite” (a chemical compound used for disinfection and manufacturing paper). A simple typographical error or simply a foolish error?

One chemical distribution company estimates that fees for police escorts total P8 million a year.

When exporters of seashell handicrafts are not able to purchase hydrogen peroxide, which they need to bleach their shells, fishermen, who supply the shells and who depend, for daily survival, on proceeds from the sale of seashells they collect, go hungry—needless to say, together with their families. As had happened in the past. In September 2015 alone, buyers of Philippine seashells cancelled orders worth P10 million from exporters.

A foreign investor in the mining sector estimates that complying with these “FEO” requirements would entail additional costs amounting to $7 million a year. Yes, in dollars. These are not made-up stories, these are absurd realities.

What’s an FEO, you may well ask? The FEO is the PNP’s Firearms and Explosives Office, which prepared the masterlist of “Explosives Kind” of products. It lists 43 chemicals. The police say it is an evolving list, so more may even be added to it anytime in the future. The intent is fine, that is to regulate the transport, distribution and sale of materials that could be used to make bombs.

It is, however, the application of the regulations that has turned out to be “explosive.” It is blowing up all kinds of industries: paint, chemicals (one of the fastest growing and most promising sectors in the country), cement, cars and bikes, plastics, cigarettes, fertilizer, even medicines, and many, many more.

Some companies in the semiconductor industry, where the Philippines’ future lies, almost shut down in July because they couldn’t get some of the chemicals on the PNP list.

I said earlier that you violate a law when you take some hydrogen peroxide home—that’s a figure of speech. It’s not actually a law, it’s a misinterpretation of a law by the very people who should know better—the law enforcers. The PNP issued the related memorandum circulars without consulting with anybody, least of all those affected.

So the PNP is violating a law by applying a “law” they’re not authorized to. They even require you to get from them a “Permit to Import” and a “Permit to Unload,” for which fees are charged. Then you need a “Permit to Purchase and Move” and a “License to Possess.” Once you’ve got all those permits, you then must call the police to escort the goods, for a fee for which only an acknowledgement receipt is given. So you can’t even put the cost into your books. No wonder foreign investors prefer Vietnam.

When the K-to-12 program was still being considered for implementation here, only two other countries in the world didn’t have a 12-year basic education cycle. The lifting of the Bank Secrecy Law is being discussed now. This, too, must go; only three countries (Lebanon, Switzerland and the Philippines) are still implementing a Bank Secrecy Law. But here we have a world’s first: The Philippines is the only country that regulates these chemicals as explosives, in this manner.

No one disagrees that possession, transport and distribution of explosive materials should be controlled, but what those explosive materials are should be determined according to international classification standards, not according to the judgment of the local police. And who is buying it should be taken into account. A reputable company producing microchips shouldn’t be considered a terrorist organization, which is what this absurdity accuses it of.

Last Oct. 14, the Federation of Philippine Industries wrote President Aquino, asking him to harmonize the PNP list with those of other countries and international organizations, and to remove overlaps among agencies and to introduce a sensible, costless system. Copies of this letter were sent to all concerned agencies. Let’s hope the President moves swiftly and forthrightly to get rid of this expensive nonsense.

There’s no question that some—certainly not all—of the chemicals on the list can be used to make explosives; but including those that can’t be used to make bombs, is simply absurd.

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E-mail: wallace_likeitis@wbf.ph. Read my previous columns: www.wallacebusinessforum.com.