The Philippines’ foreign equity restriction prevents the Philippines from fully complying with Association of Southeast Asian Nations (ASEAN) targets for the logistics sector, according to a port authority executive.
One of these targets is to “achieve substantial liberalization of logistics services,” according to Emma Suzara, Philippine Ports Authority (PPA) commercial services department manager, during a presentation at a recent ports summit.
“The importance of liberalization of services is that it will create a competitive environment for better and more efficient services,” Suzara explained.
The port executive pointed out the Philippine Constitution’s 60%-40% foreign equity rule prevented the country from meeting the 70% liberalization compliance rate in 2013.
Suzara said the port authority has written to the Department of Justice, which has “rendered favorable opinion on the position of PPA to allow more than 40% equity” to logistics service providers.
According to Suzara, the Subic Bay Metropolitan Authority, which oversees Subic port, “has opened up to 100% in so far as cargo handling services are concerned,” a move that could increase the country’s compliance rate this year.
There are other restrictions that hinder the country from fully integrating its logistics industry into the ASEAN regional supply chain network, said Dr. Adoracion Navarro, a senior research fellow at the Philippine Institute for Development Studies), during a presentation at the PortCalls-organized Mindanao Shipping Conference last June in Cagayan de Oro. These include the cabotage law, Presidential Decree 1466 that allows only Philippine-flag vessels to transport government cargoes, the dual function of PPA as port regulator and port operator, the “one port, one operator” policy, airport infrastructure capacity concerns, and road traffic congestion.
Besides substantial liberalization for logistics services, the ASEAN roadmap for logistics has four other targets—enhance competitiveness of ASEAN logistics services providers, expand capability of ASEAN logistics service providers, provide human resources training, and enhance multimodal transport infrastructure.
There are eight logistics services for integration under the ASEAN logistics roadmap, namely, packaging services/commodity product certification/central product classification, courier services, maritime trade transportation, rail freight transportation, cargo handling services, storage and warehouse services, freight transport agency services, and other ancillary services.
For the country to be ready for and stay competitive in the coming integration, Suzara noted “we have to deal with the pressing issues right now,” such as the Manila port congestion.
Manila port operators recently claimed there has been a dramatic improvement in the situation at the terminals since the indefinite lifting of the Manila truck ban last September.
For the long term, there is a move to come up with a multimodal transport logistics development plan for Luzon, an idea tackled in a recent meeting with the Department of Transportation and Communications, according to Suzara. – Roumina Pablo
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