More “forceful” EO from Duterte seen to ease port congestion, rising costs

Trade Secretary Ramon Lopez on Monday (July 15) said steps had been taken already to draft a more “forceful” executive order from President Rodrigo Duterte to address port issues, including rising shipping costs and port congestion, amid a delay in a Joint Administrative Order that would remove obstacles to the smooth flow of goods into and out of the Philippines and help make doing business in the country easier.

Lopez said he is asking the technical working group that worked on the draft JAO to also work on a draft EO that would be presented to Duterte for signing.

“This will address the institutional arrangements required to regulate high shipping costs and address the problem of port congestion,” he said at a speech during the second Logistics Services Philippines Conference and Exhibition attended by stakeholders who regularly feel the impact of the country’s high logistics costs.

The Department of Trade and Industry (DTI) earlier this year promised to release the JAO in February. But after several months, that promise remains unfulfilled as the JAO is still missing a crucial signature.

The JAO was supposed to be signed by the DTI, Department of Transportation (DOTr) and Department of Finance (DOF). Lopez said he and Transportation Secretary Arthur Tugade had already signed the JAO.

Lopez told reporters on the sidelines of a press conference that the DOF was just looking at some “legalities” in the JAO. The EO, he added, was next after the JAO.

The difference between the two orders, according to Lopez, was that the EO would identify which agency would be in charge of setting guidelines for shipping rates which are currently “freely set” by the private sector.

“Normally, we don’t like interfering with how rates are set,” he said. He added that the government would just “set parameters” to “avoid overcharging, unnecessary charges or fees imposed on importers.”

He also urged importers to negotiate better deals with suppliers to lower costs.

Asked if setting rates was the most contentious part of the order, Lopez replied: “We may have to be more determined and forceful on it. That’s why the EO is the recommended mechanism.”

He said the while the DTI has no control over when the EO would be released, it was planning to finish the draft “in a month’s time.”

At the press conference some of the issues raised on ports were a truck ban and a coding scheme which former Customs chief Alberto Lina, also Air21 group founder, were the “principal cost element” behind high logistics costs.

The International Finance Corporation (IFC), a member of the World Bank Group, said in December 2018 that logistic costs gobbled up to 27 percent of income from sales by manufacturing firms in the Philippines in 2017, the highest among selected Southeast Asian countries.

IFC senior private sector specialist Roberto Galang said the think tank was doing another survey, which will be released later this year.

Lopez said he wanted to bring down the share of logistics costs in company sales to below 20 percent, which should be reflected in the next survey.

Galang said IFC hoped to release an online portal under the DTI in a few weeks to give a better picture of port situation in the Philippines.

Called logistics observatory, the portal would collect, among other data, usage rates of port operators and container yards on a monthly basis.

This, he said in an ambush interview, was prompted by different government agencies giving conflicting information and data about the state of the country’s ports.

“At least, you’ll get a better sense of where things are headed. Before, we didn’t know. One would say it’s congested, another would say it’s not,” he said./TSB