In June, President Rodrigo Duterte issued Executive Order No. 28 restricting the use of firecrackers to designated areas within a barangay selected by the authorities. He ordered the police to go after those violating the order by exploding firecrackers outside of these so-called community fireworks display areas.
How did the president’s order affect the fireworks industry?
As of December 2017, the Department of Trade and Industry’s Bureau of Product Standards listed 19 fireworks and pyrotechnic manufacturing companies that received Philippine Standard (PS) licenses and are authorized to display the PS mark on their products. However, only five of these companies have financial statements filed with the Securities and Exchange Commission (SEC).
Of the five companies, Dragon Fireworks Inc. is the oldest and biggest fireworks and pyrotechnics manufacturer. It leads the list by a wide margin. Its revenues of Php46 million in 2015, the latest available, are 73 percent more than the next biggest company. That year, it made profits of Php1.6 million. (See infographic)
As a market leader with a bigger share than the others combined, Dragon Fireworks officials have a good feel of how the stricter government regulation and other factors have affected the industry. Overall, the impact has been quite bad, they say.
“There’s a downward trend on firecracker manufacturers and sellers,” said Jovenson Ong, Dragon Fireworks president, in an interview aired on ABS-CBN News Channel on December 27.
He largely blames local governments that are exceeding the restrictions imposed by the EO for the industry’s lower sales. “We do see that some local government units are not following the EO. They probably misunderstood what the EO is about and forgot about Section 2, which allows pyrotechnics to be used, and come up with their own ordinances against usage of pyrotechnics as well,” he explained.
According to Ong, EO No. 28 is supposed to dissuade people from using firecrackers (such as labintador, triangles, sawa) and persuade them to use pyrotechnics (such as fountains, sparklers) instead. But since the general public is confused with the difference, consumers tend to not purchase anything at all instead.
That has hurt Dragon Fireworks' sales of pyrotechnics, which make up a bulk of its output. Firecrackers only make up less than a tenth of sales, Ong said.
“We downsized last year. Our workforce is down to 40 percent,” Ong said. “We’re hoping that once everybody knows what EO 28 is all about, and everybody knows that they can use pyrotechnics, we’ll see a very big uptrend in our sales.”
Apart from stricter regulation, Ong also cites smuggling as another factor that has hurt the local fireworks industry. “I do hear from my friends in China saying that more than 200 containers are coming here in the country. They import it much earlier. So you see the dangerous piccolos, those are smuggled firecrackers. For the past 10 years, they cause like 60 to 70 percent of injuries, (mostly hurting) kids. These are smuggled from China. They are not made here. But when you look at the casing, it says ‘Made in the Philippines,’ not made in China. But they are not.”
Looking forward, Dragon Fireworks is trying to cope with the decrease in sales by planning to export to other countries. “Right now we’re trying to get the permits to be able to export to the US, and we’re in talks with European companies as well. So there will be some transfer of technology, hopefully, and then we will be able to export to the Europe as well,” Ong shared. He said there’s a “very big chance” they will start exporting by next year.
This story originally appeared on Entrepreneur.com.ph. Minor edits have been made by the FHM.com.ph editors.