Home » 3PL/4PL, Customs & Trade » PH business group hits ‘policy instability’ in FedEx case


The Court of Appeals has voided Fedex’s permit to operate freight forwarding services in the Philippines due to the country’s foreign ownership rules.

EMBATTLED Federal Express Pacific Inc. has gained support from an influential Philippine business group, following the Court of Appeals’ voiding one of the international cargo forwarding giant’s permits to operate in the country.

Makati Business Club (MBC) chairman Ramon del Rosario, according to a newspaper report, said the recent CA ruling highlighted the risks in doing business in the country.

In early June, the appellate court ruled that FedEx Pacific is a foreign-owned public utility and, as such, is prohibited by the Constitution from operating locally.

“This is most unfortunate as it again illustrates the lack of stability and predictability in our economic policy environment,” Del Rosario was quoted as saying.

He added that the court ruling “emphasizes the urgent need to address a fundamental problem in attracting foreign investments” – the economic provisions of the 1987 Constitution that limit foreign ownership to 40% of any local firm.

Del Rosario drew parallels between the FedEx Pacific case and a similar ruling last year by the Supreme Court against telecommunications giant PLDT.

“The FedEx and PLDT court rulings demonstrate the inadequacy of relying on executive pronouncements and rulings that are subject to judicial challenge, without dealing with the constitutional restrictions,” he said.

Del Rosario said the MBC was supporting moves in Congress to liberalize laws on foreign ownership to make the local environment more attractive to investments from abroad.

“It is time for Congress to act on these restrictions and we support [House] Speaker [Feliciano] Belmonte’s efforts in this regard,” Del Rosario said.

FedEx Pacific –one of the largest freight forwarding companies in the world – holds a five-year permit to operate in the country granted by the Civil Aeronautics Board (CAB) in May 2011.

The CAB permit was backed by a Department of Justice opinion issued in 2004 stating that “international air freight forwarders are not covered by the nationality requirement under the 1987 Constitution, hence, may be issued a certificate of public convenience subject to the CAB’s pertinent rules and regulations set forth under Republic Act No. 776 and other existing laws.”

In its decision first issued on Jan. 23 this year, the CA said it was “not bound by the resolution of the justice secretary”. The court sided with locally owned complainants Merit Freight International Inc. and Ace Logistics Inc. and denied FedEx Pacific’s appeal in another ruling on June 6.

Image courtesy of Artur 84 /FreeDigitalPhotos.net

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