THE freight and logistics sector is seeking similar incentives granted by the national government to the inter-island and overseas shipping industries.
This year, the amendment to the Overseas Shipping Development Act and the Domestic Shipping Development Act were both signed into law by President Gloria Macapagal Arroyo. Both laws, for a limited period of time, provide tax incentives to shipping operators who will import raw materials and equipment.
In an interview at the sidelines of the recent PortCalls Cargo Economics Conference 2004, Port Users Confederation acting president Dominador de Guzman said the logistics sector needs assistance from the government. “The freight forwarding and the logistics sector are in the same business as domestic and overseas shipping companies. We move cargoes and we play an important role in trade,” he said.
De Guzman said the assistance may come in the form of granting tax holidays or incentives in the importation of certain equipment used in logistics operations, particularly in the heavylift or project cargo sectors.
“This will be a big help to total logistics providers offering this kind of service since the importation of heavylift equipment such as cranes and stackers cost so much these days,” he said. Philippine International Seafreight Forwarders Association vice president for Internal Affairs Nelson Mendoza said such a development would aid in the modernization of logistics equipment in the country. “Even if the present situation does not really call for the grant of these incentives, the government must take an initiative to help the industry because we play a very crucial role in the movement of commodities in and out of the country,” he noted.
However, he said, this would not necessarily translate to lower freight costs, except for total logistics providers that may avail of bigger incentives in the importation of their heavylift equipment. Virtual Logistics, Inc. president Bobit C. Aquino, on the other hand, believes it takes more than tax incentives to bring the sector forward.
“This is good, especially for those companies which are really struggling to survive in the market. However, not everybody will benefit from it,” he said.
He fears of a congested freight forwarding industry once tax perks are granted. “Since everybody can import [equipment] at lower rates, anybody can start building their freight forwarding companies and just hop right into the business,” he said.