Home » Customs & Trade » ASEAN 2015 requires key PH logistics policy changes

For the Philippines to take full advantage of the free flow of goods, services and investments in the ASEAN plus five Economic Community when put in place by 2015, it must cut down the cost of domestic shipping.

This was on top of three major policy recommendations made by Meneleo Carlos and Enrico Basilio, co-chairmen of the Export Development Council (EDC) transport and Infrastructure Committee.

Carlos and Basilio traced high shipping costs on domestic shipping to seven major factors. These included: the high cost of fuel, high interest rates on loans, high insurance premium, higher taxes, subsidized passenger fares passed on to freight cost, inefficient port services, and lack of a domestic shipping development program.

Both pointed out that while foreign shipping lines are only subjected to 2.5% tax on gross incomes, domestic shipping lines are slapped with 3% common carrier’s tax, 10% value-added tax and 34% income tax.

“We should include the shipping industry in our airline taxation and CIQs advocacy. The advocacy must not be limited to airlines but must include the maritime industry,” Carlos and Basilio suggested.

On the problem of ever-increasing cargo-handling charges in inter-island ports, the EDC officials recommended that the Philippine Ports Authority as regulator, must not be made a beneficiary of its own regulations.

They pointed out that the PPA gets 10% of the port handling charges collected by private service providers from domestic shipping lines and 20% from foreign vessels. They called the present practice a case of conflict of interest on the part of PPA.

A way out of the high cost of domestic shipping, the EDC officials said, is the domestic roll on-roll off shipping system which has proven to have cut down domestic shipping rates for live cargo by 57%, fish cargo by 27% and consumer goods like beer by 23%.

The domestic ro-ro system, they further recommended, must be interconnected with the ro-ro network in the ASEAN Economic Community which will bring down all barriers to cross border trade by 2015. An expanded Asian ro-ro system that includes ports in China and Japan will make regional trade in goods faster, easier and cheaper by the second half of this decade.

The last of the recommendations is for the government to hasten the full use of Batangas Port as an alternative port of entry and exit to the now congested Manila seaports. The EDC pointed out that close to half of goods shipped in and out of the Manila port are from or bound to the Cavite Laguna Batangas and Rizal or Calabarzon region.

These could be handled better if those goods are no longer coursed through Manila with its traffic gridlock and trucking ban.

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