LOCAL METAL exporters have put their respective expansion plans on hold as they continue to reel from the adverse impact of the port congestion on their businesses, according to the Philippine Exporters Confederations Inc. (Philexport).
Philexport metals sector trustee Jimmy Chan was quoted in a statement as saying that losses had been “tremendous” for many metals exporters as the port congestion had resulted in delays in production, decline in sales, and tighter cash flows.
“There was the increase of 20 percent in the cost of doing business in the Philippines. Business expansions (are) on hold. Labor demand and job opportunities (are) lost,” Chan said.
“Bank credit line becomes overutilized due to longer process cycle. Interest payments also increased 25 percent due to the three-month cycle. At an interest rate of four percent, an additional one percent is needed to address the congestion problem,” he further explained.
Add to that is the fact that the productivity of many exporting firms have suffered due to delays in production.
“Broken production batches occur due to unavailability of raw materials, components or parts,” he added.
Chan revealed that his company alone suffered a 20-percent drop in sales, prompting it to put up 20 percent more capital to increase its inventory of raw materials.
It was estimated that the Philippines could have lost as much as P25 billion worth of investments in expansion projects last year, as the congestion problems at the Port of Manila might have dissuaded existing investors from pursuing these plans until the problems were solved.
Elmer H. San Pascual, group manager of the promotions and public relations group of Peza, earlier said that about half of the P25 billion in foregone investments could still be recovered or wooed back if the Philippines could show that it could cope with the additional cargo volumes expected during the peak season.
But government officials have already expressed optimism that the country can now handle bigger cargo volumes given the measures that have been put in place, apart from making available the ports in Batangas and Subic.
Trade Secretary Gregory L. Domingo earlier remarked that it would “take a higher level of congestion for us to suffer the same fate” as that felt last year.
“We have learned a lot from what happened last year so our throughput this year, in terms of capacity, should be higher and, therefore, we’d be able to cope better with this issue. There had been many improvements in our system. For instance, our ability to process more containers in a single day is higher now than what it was before,” Domingo explained.
He added that trucking companies and shipping lines should also be able to revert their charges back to their pre-truck ban levels of February 2014, not only because the port congestion had been resolved, but also global oil prices had significantly dropped compared to the figures of last year.