PCCI suggests trade, logistics reforms to aid PH businesses

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nomic cluster to consider” reforms to further ease doing business in the country, including using technology in risk management and establishing the Authorized Economic Operator (AEO) program instead of pushing through with the proposed pre-shipment inspection (PSI) for import cargoes.
nomic cluster to consider” reforms to further ease doing business in the country, including using technology in risk management and establishing the Authorized Economic Operator (AEO) program instead of pushing through with the proposed pre-shipment inspection (PSI) for import cargoes.
The use of technology in risk management is just one of the proposals put forward by the Philippine Chamber of Commerce and Industry to further ease doing business in the Philippines.

The Philippine Chamber of Commerce and Industry (PCCI) is proposing trade and logistics reforms that would help further ease doing business in the country.

While the country has significantly improved its ranking in the World Bank’s recent report on ease of doing business, “the Philippines still has a long way to go” compared with its peers in Southeast Asia, according to PCCI honorary chairman and chief operating officer Donald Dee in a presentation at the Export Development Council-Philippine Business Groups-Joint Foreign Chambers meeting on October 16.

“At 95th out of 189 economies, the country lags behind Singapore, Malaysia, Thailand and Vietnam in the region,” Dee noted.

He said “it may be instructive for the (Cabinet) economic cluster to consider” reforms to further ease doing business in the country, including using technology in risk management and establishing the Authorized Economic Operator (AEO) program instead of pushing through with the proposed pre-shipment inspection (PSI) for import cargoes.

The PSI is one of the provisions mooted about in the Lower House version of the Customs Modernization and Tariff Act (CMTA).

Instead of PSI, applying technology to risk management and clearance processes as well as establishing the AEO program of the Bureau of Customs (BOC) should be considered, Dee said.

An AEO is a party involved in the international movement of goods approved by or on behalf of a national Customs administration as complying with the World Customs Organization or equivalent supply chain security standards. AEOs include manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors.

Dee said the PSI “goes against the goal of trade facilitation, which is to reduce associated cost and maximize efficiency while safeguarding legitimate regulatory objectives.”

Partylist representative Jose Atienza, Jr., during one of the CMTA hearings at the Lower House, proposed that voluntary inspection of containers at the port of origin be introduced in the bill to mitigate smuggling.

The private sector is against the PSI, mainly on account of added cost on the part of the importer. Customs commissioner Alberto Lina in a Senate hearing last May had also made known he was not keen on expanding the pre-inspection program to containerized cargoes. Currently, only bulk and breakbulk shipments are required to undergo pre-inspection.

Meanwhile, Dee said government agencies “should not impose requirements when they are not prepared with the necessary infrastructure”. Companies should also “not be made to absorb losses and suffer the inconvenience.”

Citing as example of poor preparation is the Department of Finance’s (DOF) two-tiered accreditation procedure introduced in 2014, which requires importers and customs brokers to secure clearance first from the Bureau of Internal Revenue then the BOC. Dee noted “there are no issues with the BOC clearinghouse; it is in the BIR, where the documentary requirements and procedures for accreditation are tedious, cumbersome and costly.”

He pointed out that BIR requires 22 supporting documents from various government agencies, which need to be certified true copies. Accreditation procedure and application for permit and licenses must also be done directly and with personal appearance at the BIR National Office in Quezon City.

“To businesses from the Visayas and Mindanao, travelling to Metro Manila for the sole purpose of filing application for accreditation and the requirement of personal appearance is very costly and burdensome, particularly for MSMEs (micro, small, and medium enterprises),” Dee noted.

He said a BIR representative, at a recent PCCI meeting, said the request to decentralize the Import Commodity Clearance was not granted because of the pending automation program of the agency.

“The absence of automation was the same reason given by the FDA (Food and Drug Administration) at the meeting of the Export Development Council when the issue of tedious and lengthy processing of the LTO (Land Transportation Office) and CPR (certificate of product registration) was discussed,” Dee said.

He noted, too, that there was no timetable given as to when automation would be completed given the government’s stringent procurement process.

Dee said that while there has been a marked reduction in the steps to starting a business, “across sectors, business process and licensing still varies.”

In capital-intensive investments such as minerals exploration, power generation and transport infrastructure, the business permit licensing system continues to be tedious, he said.

Even when approved, transport infrastructure projects face delays because of the tedious procurement process and road right-of-way-acquisitions. For oil exploration, more than 1,000 permits are said to be required, and the process for securing them could take up to two years. Building a power plant, on the other hand, needs about 160 permits, and takes a year or more to complete the requirements, with cost of compliance estimated at US$1 million.

PNP permit extension

The group also called for the extension of the expiration of the temporary permit for acquisition of chemicals under the recently amended Philippine National Police’s (PNP) controlled chemicals master list while implementing rules and regulations have yet to be put in place.

PNP recently added 41 chemicals to its regulated chemicals list pursuant to Republic Act No. 9516, or the law on explosives. Most of the new additions are, however, commonly used in the manufacturing industry. Thus, suppliers must now apply for separate licenses and permits to purchase, unload, move and possess such chemicals, and request for plant/factory inspections.

They must also request for a PNP escort when transporting the chemicals, and the escort fee comes up to P2,500 per container plus the cost of services that includes transportation, meals, and accommodation. The escort fee cannot be accounted for as no receipt is given, while the inefficient coordination process of the PNP national and local offices in processing applications has resulted in delays in the granting of permits, Dee noted.

Meanwhile, the application for a fire-safety inspection certificate, which is part of the application process for construction permits, takes a long time due to the limited personnel available to undertake the necessary inspections. – Roumina Pablo

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