DTI scrapping of SRP harmful to consumers–IBON

July 1, 2017

by IBON Foundation

Research group IBON said that the trade department’s order to give the private sector the free rein in determining the price of basic goods will harm consumers especially the poor majority. This is a form of deregulation whereby the government reneges on its responsibility to regulate the price of  basic goods and protect consumers, the group said.

The Department of Trade and Industry (DTI) drafted an order allowing manufacturers to determine the prices of goods without government having to approve the Suggested Retail Price (SRP). This will supposedly encourage competition so that firms are compelled to lower their rates to the advantage of consumers.

Instead of encouraging competition, however, price deregulation is wont to push prices upward, said IBON. Competition presumes a large number of producers – and not just a handful, or a monopoly – competing in terms of price and quality to provide consumers’ needs.  In the case of the country’s deregulated electricity and power industry, for instance, the few players in power generation, production and distribution are able to dictate the rates.

The group said that if the same happens to basic goods, the DTI directive will be detrimental to many poor Filipinos, of whom, based on official data, 21.9 million in extreme poverty live on or below Php61 per day and 65 million live on only Php125 or less per day.

According to IBON, the profit-seeking nature of the private sector contradicts the State’s duty to protect consumers in terms of ensuring the affordability of basic goods. Government should uphold its regulatory function and ensure people’s access to basic goods in accordance with the Price Act, which further states that “it is the policy of the State to ensure the availability of basic necessities and prime commodities at reasonable prices at all times” and to protect consumers from various sales malpractices, such as price manipulation.

IBON also cited the 1987 Constitution and Republic Act 7394 or the Consumer Act  of the Philippines that guarantee related consumer rights stating that “The State shall protect consumers from trade malpractices…” and that the State shall ”protect the interests of the consumer, promote his general welfare and likewise establish fair standards of conduct for business and industry”, respectively.