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Biz Buzz: Challenging the ports duopoly

/ 12:13 AM June 13, 2016

WITH just three weeks left before the Aquino administration gives way to the Duterte administration, some last-minute issues unfold at the pier area.

We’re talking about a ruling of the Bureau of Customs (BOC) that opens the door for Manila North Harbour Port Inc. (MNHPI) to engage in the handling of international cargo—an expansion of its original role of handling only domestic cargo.

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Approved by Customs Commissioner Alberto Lina as part of the Customs Modernization and Tariff Act, the ruling designates MNHPI as an authorized customs facility, broadening its permit to operate.

The rationale of the move is, of course, to prevent a repeat of the crippling port congestion problem experienced a few years ago when the country’s international trade practically ground to a halt due to logistical problems. Indeed,  a glance at the latest cargo handling data show that MNHPI is right up there with the big boys with a license to handle 1.2 million 20-foot equivalent units (TEUs) of domestic cargo yearly, compared to the two million TEUs of international and domestic cargo of International Container Terminal Services Inc. (ICTSI) and the 900,000 TEUs of international and domestic cargo of Asian Terminals Inc. (ATI).

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As part of the mandate to ease port congestion, Customs designated MNHPI’s 53-hectare port in Tondo, Manila as an additional port to handle foreign cargo volumes to improve vessel turnaround time.

MNHPI has adequate container cranes, yard space and the latest terminal operating systems. MNHPI is, of course, a joint venture between businessman Michael Romero and San Miguel Corp.

But no less than ICTSI and ATI have protested this move of the BOC. Understandably so, because it is in the interest of the incumbents—ICTSI, as the largest firm in this sector, and ATI, as the second-largest player—to keep the business to themselves, says an industry source.

Just like in the telecommunication sector, greater competition than what the present ports duopoly provides is expected to lead to better service and lower prices for everyone involved.

But will the prevailing ports duopoly succeed in stifling competition, just like what happened in the telecommunications sector? Abangan!  Daxim L. Lucas

Speaking of which…

THERE seems to be no end to the corporate battle between businessman Michael Romero and his father, Reghis Romero II.

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The latest salvo comes from the father who wrote the Philippine Stock Exchange (PSE) last week, asking it to sanction his son for allegedly committing “fraudulent activities in relation to listed firm Global Port 900 Inc.”

In his letter, the elder Romero reiterated his position that the 2011 acquisition by Harbour Centre Port Holdings Inc. (HCPHI) of a 68-percent stake in Harbour Centre Port Terminal Inc. as a subsidiary “is based on fraudulent acts and falsified documents.”

Reghis then goes on to detail a list of alleged misdeeds by his son, Michael, including making advances of P690 million to the father’s R-II Builders (in exchange for control of HCPHI) for which no supporting documents can be found. The advances are “false,” the father said.

“The sad fact is that the primary victim of all these corporate and financial maneuverings is the Romero family led by family patriarch Reghis Romero II, who through dubious accounting entries and falsified documents, is portrayed as having totally given up in favor of Michael Romero all his rights and interests in the Harbour companies to the exclusion of the rest of the members of the Romero family,” the father said in his letter.

Not so, says Michael, who has maintained that his takeover of the growing ports empire had the blessings of his father (especially when the latter was in dire financial straits), but who then changed his mind and decided to try to retake control of Harbour Centre once the son had turned it around.

In any case, the father asked the PSE to delist Global Port from the bourse and ban his son from ever becoming a director or officer in any listed firm.

So why is this father-and-son dispute important? Apparently, these transactions form the basis of Michael’s control of the port operator which has since entered into a joint venture deal with conglomerate San Miguel Corp. through Manila North Harbour Port Inc.

Stopping Michael from exercising control over the ports business can also stop San Miguel from entering this industry. That’s the bigger picture, Biz Buzz hears. Daxim L. Lucas

More fireworks at Customs

 

A DISPUTE over steel import clearance is hounding Customs Commissioner Albert Lina. It is a legal debate between businessmen crying foul over alleged red tape and a regulator invoking responsibility to undertake “enhanced due diligence.”

A young steel entrepreneur Lawrence Sy—backed by the Philippine Chamber of Commerce and Industries (PCCI) and the International Chamber of Commerce Philippines—has accused Lina before the Ombudsman of violating Section 11 (a) of Republic Act No. 9485 or the Anti-Red Tape Act of 2007 for refusing to release 5,000 metric tons of deformed reinforcing steel bars.  The steel bars were consigned by Sy’s company, Manage Resource Trading Corp. (MRTC), and which arrived in Subic on April 20 on board vessel Well Faith from China.

In a petition filed last week, Sy asked the Ombudsman to investigate the possible “collusion” between Lina and Roberto Cola, president of the Philippine Iron and Steel Institute, who had allegedly alerted Customs against the shipment and lobbied for its inspection. Sy’s counsel, Amado Valdez, accused Cola of conniving with big steel players in discouraging new and young importers from importing “better quality steel products.”

PCCI chief operating officer Donald Dee said Lina’s action would set a “very dangerous precedence,” adding that under the law, shipments that had passed scrutiny by the BOC as well as the Bureau of Products Standards (BPS) of the Department of Trade and Industry (DTI) should immediately be released. On April 19, the BPS-Zambales issued a provincial Import Commodity Clearance (ICC) to facilitate the release of the shipment but Cola reportedly questioned the validity of the ICC anew.

MRTC argues that all paperworks were in order, adding that for two occasions, Lina was shown the provisional ICC on April 18 and the final ICC on May 19. Under the law, Sy said the only reason for seizure of a shipment was when it did not have an ICC.

Asked for his side on this controversy, Lina said the issue at hand was “safety,” saying that the ICC obtained by MRTC was “conditional.” He said the steel shipment was warehoused and could only be released once documentary requirements were submitted.

Lina said MRTC had yet to submit the final report and a confirmation from the DTI head office.

“That is enhanced due diligence. If something unfortunate happens—for instance, if these are released and used to construct a building and then the building collapses, who will be held accountable but us? Safety is the issue,” Lina told Biz Buzz.

It’s interesting how the next Customs Commissioner Nicanor Faeldon will deal with this. Doris Dumlao-Abadilla

PCC’s reality check

THE NEWLY-CREATED Philippine Competition Commission (PCC) got its first taste of what it was like to deal with the powerful telecommunication duopoly here.

That maiden test over the acquisition of San Miguel Corp.’s (SMC) telco unit by Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom emerged last Friday.

This was after the PCC asked both buyers to resubmit their transaction notice, which both telcos said on May 30 was all they needed to show to get the P70-billion deal through the PCC.

Turned out that, according to the PCC, the form was lacking certain details and that both needed to resubmit this notice.

Biz Buzz heard both telcos had responded to the PCC to, well,  respectfully decline that request.

No need, they’ve fully complied and a disclosure to the stock exchange detailing this would be made today, in fact.

Why this exchange matters has to do with differing premises over what the PCC can do in this issue.

After all, many perceived the takeover had as much to do with freeing up SMC’s valuable radio frequencies to improve mobile internet as it did with ending SMC’s dramatic bid to become a telco player.

A submission of a mere notice seems  harmless, but in this case, its timing was  crucial given the opposite views held by the telcos and the PCC.

Recall that both PLDT and Globe said the deal was deemed approved since they gave the notice before the PCC’s implementing rules came out. No rules meant they weren’t covered. The PCC issued the rules on June 3, shortly after the May 30 deal was sealed, and it still takes effect after 15 days.

The PCC said the deal was not deemed approved and the law was in effect regardless of when the rules were released.

The PCC, of course, has the power to stop deals that would “substantially” restrict or lessen competition. Telcos can run to the Court of Appeals for reversal.

To many observers, Friday’s display was to test the PCC. What matters, of course, is what the commission does in response. Miguel R. Camus

 

E-mail us at [email protected] Get business alerts and a preview of Biz Buzz the evening before it comes out. Text ON INQ BUSINESS to 4467 (P2.50/alert).

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TAGS: Bureau of Customs, Business, customs modernization and tariff act, economy, Manila North Harbour Port Inc., reghis romero ii
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