THE local export industry stakeholders want to eliminate the share of Philippine Ports Authority (PPA) in cargo-handling revenues to bring down logistics costs amid the shipment constraints.
The Export Development Council (EDC) has endorsed the draft executive order (EO) that aims to change the 41-year-old regulation providing PPA cargo-handling revenue share.
The letter, signed by EDC’s Networking Committee on Legislative Advocacy and Monitoring Chair Oscar A. Barrera, was sent last week to Transportation Secretary and PPA Board Chair Arthur Tugade and PPA General Manager Jay Daniel R. Sanitago.
The proposal seeks to amend Letter of Instruction (LOI) 1005-A by removing Instruction 3 and Instruction 4. This, in turn, will eradicate the share of PPA in revenues coming from cargo-handling contractors and port-related service operators.
LOI’s Instruction 3 notes that the government has a share of at least 10 percent from the related revenues. Instruction 4, meanwhile, states that the PPA is instruction to “conduct spot audit either on its own or in coordination with such other government agencies under the visitorial power of the state” to ensure the collection of the government’s share.
“It is a time of acute suffering for exporters whose operations have been most heavily affected by the Covid-19 pandemic. However, the [PPA] has regularly and reliably increased the cargo-handling charges that it permits to be imposed,” Barrera said.
“Further, it [PPA] touts its collections as an achievement, ignoring the impact that its regulatory [policy might have] on local industry. The passage of this [EO] is a small step in the direction of supporting our local manufacturers,” he added.
To recall, the EDC also released a resolution requesting to repeal LOI 1005-A in 2017, which was signed by Trade Secretary Ramon M. Lopez as well.
The resolution said that both instructions result in conflict of interest as the PPA benefits from its own regulation. The regulations in place provide the agency “the incentive to increase the rate to improve its financial health,” it noted.
In addition, the resolution mentioned that the Department of Transportation, Department of Trade and Industry, Joint Foreign Chambers of Commerce and National Competitiveness Council asked for lower cost of port services as this will eventually bode well for the consumers.
The EDC, along with the Philippine Exporters Confederation Inc. (Philexport) and the Supply Chain Management Association of the Philippines (SCMAP), has been against the port fee increase.
In July, the EDC and the SCMAP appealed the 15.33-percent tariff increase proposal by Manila North Harbour Port Inc. (MNHPI) as this is seen to further burden the already ailing economy.
The EDC and SCMAP noted that the “untimely proposal” will take a toll on the micro, small and medium enterprises (MSMEs), whose operations—for most cases—are either temporarily closed or scaled down amid the lockdown protocols.
The export industry stakeholders pointed out that the pandemic has forced logistics service to be more expensive amid mobility restrictions, limitations in personnel and other related capacity concerns. “The new policy of MNHPI forcing ships calling at the port to use their quay cranes—therefore subjecting shippers, and ultimately business, to cranage fee—also was an additional burden, one that did not go through consultation with affected stakeholders,” they added.
“We must anticipate that the rate increase will further diminish the country’s competitiveness, drive away investors and discard the efforts of government agencies and stakeholders to bolster ease of doing business in the country. Moreover, the added cost will ultimately be borne by the end consumers—the ordinary Filipino people, and our foreign buyers,” Philexport President Sergio Ortiz-Luis Jr. said.
Prior to this, the EDC, SCMAP, Philexport and the Philippine Chamber of Commerce and Industry sent a letter to the House of Representatives’ Committee on Transportation requesting the implementation of standardized shipping fees.
The stakeholders stressed that shipping charges based on International Commercial Terminology—a globally-accepted standard for international trade—will allow businesses to have better cost management. As such, they said shipping lines can also be more competitive as it levels the playing field in terms of pricing.