THE proposed revenue memorandum circular
(RMC) on the withholding tax for freight forwarders
continues to hang as the Philippine International Seafreight
Forwarders Association (PISFA), the RMC proponent, and
the Bureau of Internal Revenue (BIR) remain at odds
over the tax base. In a recent hearing on the RMC, the
BIR said it wanted to subject the full amount of freight
to withholding tax which PISFA opposes. "There
is no way freight forwarders can determine how much
they earned from freight charges as carriers such as
the airlines do not issue an official receipt per transaction,"
PISFA secretary general Atty. Romeo Sto. Tomas told
PortCalls in an interview. He said the current
payment practice also makes it difficult for freight
forwarders to show to the bureau how much they earned
from freight charges; freight forwarders do not pay
to individual carriers but through banks and banks,
in turn, do not issue receipts or a break down of payments,
making it hard for freight forwarders to determine their
earnings from freight charges. "What we are proposing
is to have the entire amount subject to a 5% tax, just
like what the International Air Transport Association
charges its agent airlines," Sto. Tomas explained.
"The RMC will define everything particularly questionable
transactions which current guidelines cannot answer.
This is the very reason why we want a separate RMC,"
PISFA president Rico Brizuela told PortCalls in
an earlier interview. "Aside from the income of
freight charges, we see no other debatable provisions
in our proposal. Once the issue of freight charges has
been settled, we expect a favorable decision from the
BIR and we expect to get it by the end of the first
half," Brizuela said. PISFA wants the immediate
release of the RMC to help members cushion the impact
of the Reformed Value-Added Tax (RVAT), which the association
claims will chop 5 to 10% off from members' revenues.
Truckers seek
scrapping of carriers' retainer's fee
TRUCKERS want the seven to 10% retainer's
fee collected by shipping lines from truckers scrapped
as this contributes to falling revenues. Shipping lines
collect a retainer's fee for loads they pass on to truckers.
The fee is automatically deducted from shipping lines'
payment to truckers.
The truckers said the percentage is too high considering
shipping lines load only a handful of cargoes onto trucks.
"The situation will be very detrimental to the
trucking industry if shipping lines continue to collect
such amount and the needed rate increase is not given
to truckers," Allied Transport Group (ATG) president
Lino Costales said. If the practice continues, truckers
will be forced to increase their rates whether or not
industry groups such as the Distribution Management
Association of the Philippines (DMAP) and the Philippine
Liners and Shippers Association (PLSA) agree. As it
is, truckers are finalizing their letter to DMAP and
PLSA asking for another round of rate increase, claiming
the recent hike is not enough to offset costs such as
VAT expenses. Costales said truckers would be happier
with the earlier announced 30% trucking rate increase
or P5,600 per TEU for delivery within Metro Manila.
Instead, an 18% increase was instituted. Aside from
the additional increase, truckers want an automatic
rate adjustment scheme once fuel costs increase or decrease
by 10%. - Chris C. Paringit
Northern
Mindanao shippers to initiate cargo pooling
SHIPPERS in Northern Mindanao said
they will start a cargo pooling project in July, which
they hope will pull down freight cost by half and help
small and medium-sized firms to access markets in Manila
and Luzon. The Northern Mindanao Shippers' Association
(Norminsa) said it would create a network of ports in
Cagayan de Oro, Misamis Oriental and Bukidnon, targeting
about 300 small shippers, mostly member firms of the
Philippine Exporters Confederation. Officials of the
Philippine Shippers' Bureau said they support the project,
which if successful could be used in other parts of
the country. "Cargo pooling is not a new idea itself.
But it will be the first time this project will be tried
in Mindanao for small shippers, across various trade
groups, and different commodities," according to
the group. Under the plan, small and medium-sized firms
in the area will conduct at least one test shipment
for the pooled cargo within the first six months of
the project's implementation. After a year, it is expected
that consolidation of volumes of various commodities
has already been institutionalized, and that the cargo
can now be bid out among the shipping lines.
"For the second and third year, the same activity
can be replicated in other ports like Iligan and/or
Ozamis," the group said. It is asking the World
Bank for P1 million funding, mainly to cover administrative
expenses such as the pay of the project manager who
will convince small shippers to join the project. A
coordination office will also be put up. Norminsa will
provide P200,000 as counterpart funding. To sustain
the project, the group will charge a facilitation fee
of P100 per 20-footer container van from the participating
shipper and pro-rated if the shipment is loose cargo.
The group is confident there's more than enough cargo
for the project considering only 10% of the 1,000 20-footer
vans per week is shipped out from the Cagayan de Oro
Port alone.
- Christopher C. Paringit
GOVERNMENT is open to dredging a
portion of Batangas Port to allow for servicing of
larger ships, but only when facility has attracted
enough cargo. PPA assistant general manager for corporate
affairs and special projects Raul Santos said the
port can be easily dredged from the current 13.5 meters
to 14.5 meters. "We've not dredged it to its
maximum because there's no need yet," he explained.
The port has attracted only a handful of international
vessels. Shippers also regard the terminal as a second
option to Manila due to infrastructure problems in
Southern Tagalog.
PPA said it would sink in $2 million in cargo-handling
equipment to lure more ships into the port.
The phase-II Container Terminal Berth of Batangas
Port was commissioned into service September 2, 2005.
It has a container yard of 15 hectares, berth depth
of 13.5 meters, total handling capacity of 400,000
TEUs, berth length of 470 meters and access and service
road of about four kilometers. It can also handle
two panamax ships. Asian Terminals, Inc., which operates
the port, earlier said the government should act to
perk up interest of ships to use the Batangas Port.
"We believe that the main trigger (in Batangas
port's success) will either be government intervention
to encourage traffic out of Manila, or in the longer
term waiting for natural overspill of cargo volume
out of Manila," said Jeremy J. L. Rickcord, ATI
president.
AFTER gaining entry into the Indonesian
port business, International Container Terminal Services,
Inc. (ICTSI) is now setting its sights on four other
locations for overseas expansion this year - South
America, Europe, the Middle East and China. "ICTSI
is very active in other ports worldwide. We would
like to have a port in Dubai, China and another one
in South America and we are set to bid on several
this year," ICTSI general manager Francis Andrews
said. In China, it is looking at three possible locations.
"We have already submitted one bid and we're
preparing to have some more, but these things take
timeÉ about six to 10 months to complete,"
he said. Locally, the company has no immediate plans
to expand as there is still no significant market
to merit an expansion. ICTSI operates Tecon Suape
in Brazil and the Baltic Container Terminal (BCT)
in Poland. It took over Naha port in Japan and the
Port of Madagascar in Toamasina last year. Recently,
it bought into Indonesia's PT Makassar Terminal Services.
It is also looking at restarting negotiations for
the Guerero Port in Guam. At the moment, 66% of ICTSI
revenues come from Manila International Container
Terminal operations and 36% from its overseas terminals,
particularly Brazil and Poland.
PORT operator International Container
Terminal Services, Inc. (ICTSI) expects a 4.8% volume
growth from its flagship terminal Manila International
Container Terminal (MICT) this year. MICT general
manager Capt. Francis Andrews, in a discussion during
the PPA's Ports 101 seminar last week, said the target
volume growth this year would translate to about 1.3
million TEUs, up from last year's flat growth of 1.2
million TEUs. Andrews explained that the growth may
only come during the latter part of the year, or traditionally
when the country's trade surges. MICT first reached
the million-TEU mark in 2002, and has started to post
record growth since. The slowest growth was recorded
in 2005. "Judging from our recent figures (April
2006), I think it (volume) is starting to pickup but
only at about 1%," Andrews said. He said the
company expects significant growth starting July.
Data earlier obtained from the from the Philippine
Ports Authority (PPA) showed that for the first three
months of the year, containers handled in MICT, the
country's largest container terminal, dropped some
6%. Some 151 ships called at MICT for the first quarter
of 2006 down from last year's figure of 167 vessels.
Container traffic slightly declined to 93,380 TEUs,
from the previous year1s 94,796 TEUs. ICTSI attributed
the decline to the general weakness in the Philippine
economy, particularly exports of electronic products
and other materials. ICTSI reported a first-quarter
consolidated net income of P375 million, 41% higher
than the P266 million it reported last year. "Continued
strong performance at the company's international
operations accounted for virtually all of the increase
in quarterly earnings relative to the prior year's
period," the company said. It added foreign operations
contributed 53% of the period's net income, higher
than the 35% in the first quarter of 2005, and 34%
for the full year 2005. - Chris C. Paringit
