The Export Development Council endorsed a draft executive order that seeks to repeal a 41-year-old regulation that gives the Philippine Ports Authority a share in cargo-handling revenues.
Members of the council, in a letter dated Oct. 26, 2021, asked Transportation Secretary Arthur Tugade, chair of the PPA board, and PPA general manager Jay Daniel Santiago to support the draft EO and help exporters recover from the impact of the crisis.
The letter was signed by Oscar Barrera, chairman of EDC’s networking committee on legislative advocacy and monitoring.
The council, created by Republic Act 7844 or the Export Development Act of 1994, consists of government officials and private sector representatives who craft the Philippine Export Development Plan. It is headed by the Department of Trade and Industry.
“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 in the letter.
“Further, it touts its collections as an achievement, ignoring the impact that its regulatory [policy might have] on local industry. The passage of this executive order is a small step in the direction of supporting our local manufacturers,” he said.
The draft EO aims to amend Letter of Instructions 1005-A by eliminating instructions 3 and 4, a move that will take away the PPA’s share in cargo-handling revenues generated by cargo-handling contractors and port-related service operators.
Instruction 3 of the LOI states that “the government share for all cargo-handling contractors and port-related service operators shall be at a rate not less than 10 percent taken from their gross income earned from such services.”
Instruction 4 states that in order to ensure the collection of the government’s share, the PPA is directed to “conduct spot audit either on its own or in coordination with such other government agencies under the visitorial power of the state.”
The EDC also issued EDC Resolution No. 3, signed by the council’s chair, Trade secretary Ramon Lopez in 2017, to push for the repeal of LOI 1005-A, which was issued in 1980 by the Marcos administration.
In seeking the repeal of the LOI, the resolution said both instructions “constitute a conflict of interest” as the PPA, being the regulator, also benefits from its own regulation, giving the agency “the incentive to increase the rate to improve its financial health.”
EDC Resolution No. 3 also highlighted that the Department of Transportation, Department of Trade and Industry, Joint Foreign Chambers of Commerce and National Competitiveness Council support need for policy reform to lower the cost of port services for shippers to eventually benefit the consumers.
The EDC and the Philippine Exporters Confederation Inc. were strongly opposing any cargo-handling rate increases at Philippine ports. In July, PHILEXPORT and EDC asked PPA to defer the approval of the proposed cargo-handling rate increase at Manila North Port.
PHILEXPORT and EDC, in their July 28 petition letter, urged Santiago to suspend the approval of the cargo-handling rate increase “considering the state of the Philippine economy in these trying times.”
They also suggested that PPA waive its share in the cargo handling fee to resolve the conflict of interest issue around PPA and enhance the competitiveness of the economy.
PHILEXPORT president Sergio Ortiz-Luis Jr. said the group was “strongly opposed” to the petition for tariff adjustment, adding that it would be an added burden for struggling MSMEs.
“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,” he said.