THC may soon
be dutiable
International trade and customs consultant and PortCalls columnist Atty Agaton Teodoro Uvero was
one of the presenters at last week's PortCalls Customs and International Trade seminar.
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SHIPPERS may have to
fork out more with the Bureau of Customs (BOC) plan
to slap duties on all charges being billed by shipping
lines, particularly the terminal handling charge (THC).
“(It’s) not only the THC that will be taxed
but all other charges related to arrastre and stevedoring
being billed by carriers as Customs believes these are
all part of the whole freight cost being charged to
shippers,” international trade and customs consultant
Atty Agaton Teodoro Uvero explained to participants
at last week’s PortCalls Customs and International
Trade Seminar held at the Makati Shangri-La.
“For seafreight, companies this early should start
allocating funds for the additional cost since unlike
the value-added tax, the duty to be imposed on the THC
in particular is not a pass-on tax but a cost,”
Uvero, also a PortCalls columnist, said.
Uvero, who is currently working on a USAID-funded customs
technical assistance program to implement the Revised
Kyoto Convention and draft the Customs and Tariff Modernization
Act, added the BOC is now preparing the customs memorandum
that will implement the levy.
MOL Phils president Cesar Tiutan, a seminar participant,
said however that the BOC should not consider the THC
as dutiable as shipping lines perform many tasks in
ports through third-party service providers such as
Asian Terminals Inc and International Container Terminal
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Services, Inc. Shipping
lines pay ATI and ICTSI for port services rendered to
them.
The new BOC revenue scheme when implemented will
make the Philippines one of only a handful of countries
that tax the THC as many countries do not impose duties
on freight cost and related charges.
The THC is one of the factors identified by a World
Bank report contributing to high logistics costs in
the Philippines.
Documents from the Philippine Shippers’ Bureau
show that THC has cost Philippine shippers approximately
$130 million to $200 million per year. This is increasing
at an annual average rate of 8% (under the Transpacific
Stabilization Agreement), 10%-12% (Far Eastern Freight
Conference) and 24% (Intra-Asia Discussion Agreement).
The THC also accounts for 30%-50% of the shipping cost
of the Philippine-ASEAN and East Asian container trade,
according to PSB. |
MOL president Cesar Tiutan making a point during Q&A.
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AEO program guidelines out next month –
BOC chief
THE Bureau of Customs (BOC) will release
guidelines on the Authorized Economic Operator (AEO) system
at the start of next month.
Customs Commissioner Napoleon Morales, in a chance interview,
told PortCalls that almost all procedures and practices at
the bureau are already compliant and consistent with most
AEO schemes all over the world.
Inputs from a recent AEO meeting in Geneva attended by Deputy
Commissioner Reynaldo Nicolas will also be incorporated in
the final AEO guidelines, he said.
“Give us a little time. The guidelines are almost finished
and we are only ironing out minor details,” the commissioner
said.
“By the end of the month, we expect that the guidelines
will be done and implementation to start (in) August,”
he added.
The country’s AEO program, to be known as C-TAPAT (Customs-Trade
Alliance to Protect and Accelerate Trade, seeks to enable
the Philippines to comply with commitment to implement the
World Customs Organization (WCO) Framework of Standards to
Secure and Facilitate Trade.
It aims to accelerate the country’s compliance to the
latest security measures implemented by the country’s
trading partners. Specifically, it paves the way for the establishment
of a voluntary certification program that follows the WCO
AEO concept. The program aims to help certain economic operators
in the international supply chain adopt control measures to
enhance the security of the chain.
The Philippine scheme is patterned after the Customs-Trade
Partnership Against Terrorism (C-TPAT) of the United States.
C-TAPAT will initially apply to importers already accredited
as Super Green Lane (SGL) importers, then to exporters and
later on to other economic operators in the international
supply chain. Economic operators who want to join C-TAPAT
must have the following: security management systems in place;
risk assessment of their business operations; security measures
stipulated in this order should be included in the company’s
security policy, objectives and commitment; and procedures
for communicating security management information to all stakeholders.
SGL importers had proposed to simply enhance SGL procedures
instead of phasing them out and starting from scratch. They
believe the existing procedures, when enhanced and improved
by adding the safety and security aspect, will qualify as
an AEO system and come with minimum cost impact.
The enhancement of the SGL system will also provide proper
transition period for all importers, they said.
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PPA posts higher revenue but lower income
in first four months
THE Philippine Ports Authority (PPA) posted
a lower net income despite higher revenues in the first four
months of the year
Revenues as of end April reached P2.07 billion, 8.91% higher
than the P1.90 billion posted in the same period last year.
Port revenues grew 10.57% from P1.85 billion to P2.04 billion.
Higher port revenues due to improved port traffic and income
from other sources as well as tariff adjustments tempered
the negative impact caused by the strong peso on dollar-denominated
tariff.
Net income, however, dipped to P777.95 million from January
to April this year from P810.18 million a year earlier.
Fees from port operator International Container Terminal Services,
Inc (ICTSI) contributed 35% to total port revenues. The rest
came from vessel charges (13%), wharfage dues (22%), cargo
handling (18%) and other sources (12%).
Except for the Port District in Northern Mindanao, all five
port districts under PPA jurisdiction recorded higher revenues
in the first four months of the year compared to the same
period last year. Revenue generated by these ports amounted
to P1.65 billion or 81% of the total revenue.
The top five revenue contributors were South Harbor, Batangas,
North Harbor, Davao and Limay.
Fund Management Income (FMI) in April decreased 48.62% from
P53.24 million to P27.36 million due to the low interest income
yield and reduced level of investible fund during the period.
Total expenses for the period rose 18.46% to P1.29 billion
from the previous year’s P1.09 billion.
Operating expenses reached P1.12 billion, 12.69% higher than
the year-ago level.
Non-operating expenses, consisting mainly of foreign loans
and other non-operating charges, also rose by P74.86 million
from P92.51 million in April 2007 to P167.37 million this
year.
Cargo traffic heads south
Cargo traffic for the period continued to lose ground after
PPA-controlled Cagayan de Oro port lost volume to nearby Mindanao
Container Terminal (MCT), now operated by ICTSI subsidiary
Mindanao International Container Terminal Services Inc.
Cargo throughput for Jan-April 2008 dipped almost 9% to 45.90
million metric tons (mmt) from 50.35 mmt for the same period
last year.
According to PPA, the decline was largely due to non-inclusion
of cargoes handled by ports previously managed by the Phividec
Industrial Estates, including the MCT. The MCT volume was
previously counted under the Cagayan de Oro volume.
This also resulted in lower foreign and domestic cargo volumes,
by 11.76% and 5.57%, respectively.
The decline in domestic cargo volume may also be traced from
sluggish movement at the ports of South Harbor, Batangas,
Nasipit and Davao. At the port of Nasipit, shipments of flour,
bottled cargoes, refined petroleum, fruits/vegetable and crude
palm oil decreased while general cargoes, coco products, fertilizer
and petroleum products in Davao also declined.
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VASPS roll out CPRS systems
THE Bureau of Customs (BOC) on Monday began
the second phase of its electronic-to-mobile (E2M) project
starting with the client profile registration system (CPRS).
The bureau has also allowed its three accredited value-added
service providers (VASPs)—Intercommerce Network Services,
E-Konek Pilipinas and Cargo Data Exchange Center—to
participate in the exercise even if they have yet to be accredited
under the project’s Phase II.
Customs deputy commissioner Alexander Arevalo said the BOC
is allowing VASPs to commence their CPRS data buildup to give
BOC time to verify data before issuing digital signatures.
He added that BOC is initially enforcing the CPRS on importers
and brokers then later to banks, exporters, warehouse operators
and other port users transacting with the BOC.
“The VASPs will be using their own system,” Arevalo
explained. “This will determine the flaws to their system
and whether they will be granted permanent or provisional
accreditation for Phase II of the E2M project,” Arevalo
said.
Under the system, port users may use any of the three VASPs
to register and submit their data electronically to the BOC.
BOC examiners will then determine authenticity of data submitted.
After validation, the BOC will issue digital signatures to
importers or brokers which they will use in their cargo declaration.
The three VASPs will conduct road shows to inform their clients
about the new system.
Data from Batangas port are on the priority list. The project
was pilot tested at the port last week.
Aside from CPRS, Phase II includes the electronic license
and clearance system, electronic payment system and online
release system. Phase III, on the other hand, covers export
automatic lodgment, raw material liquidation, and bonds management
system among others.
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Nenaco eyeing all-cargo operations
THE country’s oldest shipping firm
Negros Navigation (Nenaco) is looking at shifting to all-cargo
operations to improve its position in the maritime industry,
according to Maritime Industry Authority administrator Vicente
Suazo, Jr.
As a first step to increasing its cargo capacity, the shipping
line has asked Marina to allow it to import or charter a vessel,
Suazo said.
Nenaco is under a 10-year rehabilitation plan implemented
in 2004. It has outstanding obligations of P2.4 billion, including
P1 billion in bank loans.
The rehabilitation plan calls for the shipping line to sell
its old fleet, use the money to buy newer replacements to
operate more efficiently, and use the newer ships to attain
profitability.
It has so far sold the MV San Lorenzo Ruiz to Liberian firms
Chaston Navigation Inc for $1.6 million and MV Mary Queen
of Peace to Aria Navigation Inc for $1.86 million.
A chunk of the proceeds went to one of Nenaco’s creditors,
Bank of Commerce.
In addition, Nenaco has sold the MV Saint Ezekiel Moreno and
MV Princess of Negros for $2.6 million.
Nenaco saw a turnaround when it booked a net income of P357.44
million for the first 11 months of 2007, from losses of P449
million a year earlier.
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No payment guarantee, no retrieval operation on Sulpicio vessel
BEFORE starting cargo retrieval operations
on the ill-fated Princess of the Stars, foreign salvage firm
Titan Salvage Corp is seeking a payment guarantee from either
the Philippine government or Sulpicio Lines (SLI).
Last week, Titan was chosen by Oriental Assurance, insurer
of the SLI vessel, to conduct salvage operations. Titan was
expected to sign the agreement Monday but declined because
it had no firm commitment on a guarantee. The new date of
signing is today (July 23).
The company insists that UK laws should prevail under the
arrangement. Under UK laws, all salvage operations must be
shouldered and paid for by the insurer of the vessel. Only
Protection and Indemnity Club of London, of which SLI is not
a member, provides such coverage.
The Oriental Assurance coverage on Princess of the Stars is
limited to hull and machinery.
Task Force Princess of the Stars head Undersecretary Ma. Elena
Bautista said SLI should agree to provide the guarantee. “SLI
should sign what is being asked for, anyway this is their
mess so they have to pay for it,” she said.
“Government has already intervened in the cost of the
contract and has lured Titan to reduce the amount from $8.7
million to some $7.1 million,” Bautista added.
The amount only covers retrieval of cargo and bodies inside
the vessel and not vessel refloating.
Bautista said further retrieval delays will increase the risk
of water contamination from toxic substances still inside
the vessel, including the highly toxic endosulfan.
After a survey conducted at the wrecked site, Titan said retrieval
of the cargo would take about 30 days depending on conditions
at the site.
Local salvage firm Malayan Towage Corp earlier turned down
offers to work on salvaging the SLI vessel because of unclear
provisions on who will shoulder expenses.
It said $50 million to 100 million is needed to salvage the
Princess of the Stars. The amount is seven times more than
the government estimate of P600 million.
Earlier this month, SLI announced it was abandoning the ill-fated
ship, leaving government to deal with search and retrieval
operations.
As of this writing, the Board of Marine Inquiry (BMI) has
yet to release its findings on the cause of the accident.
The BMI findings will be used by the Department of Justice
to determine culpability of involved parties.
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