The Department of Transportation and Communications (DOTC) is working with the International Finance Corporation (IFC) to undertake policy and regulatory reforms in the Philippine shipping sector to improve farmers’ market access and integration by cutting domestic shipping costs.
The two parties signed a cooperation that aims to generate growth for the agribusiness trade, directly benefiting workers in the agricultural and fisheries sectors across the country, in line with the Aquino administration’s push for inclusive growth.
This will involve a diagnostic review by the IFC to identify areas where pro-competitive practices will help meet those goals, the transport department said.
The DOTC will work with the Maritime Industry Authority (MARINA) and the Philippine Ports Authority (PPA), in reviewing the results of the study and implementing the recommendations of the IFC from 2013 to 2016.
“This partnership with the IFC …will have a major impact on our economy, especially for farmers and fisherfolk who stand to realize the most gains from our policy reforms,” the DOTC said after signing the agreement with the IFC.
The DOTC said cutting domestic shipping costs will bring down the prices of commodities. A study prepared by the United Nations Development Program (UNDP) in 2005 said transport and logistics costs comprise 24.2% to 43.8% of the wholesale price of food products.
The initiative will be implemented nationwide, beginning in ports with high volumes of agricultural cargo shipments in Luzon and Mindanao.
Streamlining shipping costs, the IFC said, will result in additional investments in the logistics industry of as much as $17 million a year.
“By making it cheaper to move agricultural goods from farms to markets, the prices of these commodities will also be reduced, making them more affordable to consumers,” the DOTC said.
The project is partly funded by the Canadian International Development Agency and will require no cost on the part of the Philippine government. It is also part of the IFC’s Philippine Agribusiness Trade Logistics program.
IFC Resident Representative Jesse Ang said the agreement shows the IFC’s confidence in the DOTC, MARINA, and PPA’s efforts to undertake shipping and port reforms.
The government is eyeing reforms in the shipping industry to help boost economic growth. These include diverting cargo traffic away from Manila, which is suffering from congestion problems, to underutilized facilities in Subic and Batangas.
Photo from www.dotc.gov.ph