Government should bow out of tanker business

What is this I hear that government-owned PNOC Shipping and Transport Corp. (PSTC) is planning to buy new vessels? It has been over 10 years since I left PNOC and I thought PSTC should have been privatized by now. PSTC is actually what was Luzon Stevedoring Corp. or Luzteveco, before it was nationalized by the Marcos martial law regime.

I know for a fact that at about the time I left PNOC, PSTC was high on top of the list of PNOC subsidiaries that were supposed to be privatized. The problem that was being encountered then was the high book value of PSTC assets compared to the decrepit nature of most of its vessels. The only thing going for it was the assured market of Petron, which I understand, they have since lost.

The question now is, why resurrect an almost dead entity? The private sector now holds around 87 percent of total industry capacity such that PSTC cannot even justify its existence because of national security. PSTC's market share is down to about 10 percent or less. PSTC now only owns two vessels but has time chartered two more from Japan. Even this foreign charter is questionable in the light of locally available capacity from the private sector. It is a definite waste of scarce foreign exchange resources.

I seem to recall that two biddings have been held to privatize PSTC. The first bidding failed when only one bidder showed up. The second bidding attracted six participants but the winner backed out and so did the runner up. That's how much market value PSTC has.

I can make a guess why PSTC wants to buy new vessels, which may not even be really new as in brand new. That will justify the company's continued miserable existence. There could also be substantial money to be made from those who will broker the sale of the vessels.

If government ends up owning newly acquired but most likely, overpriced vessels, Juan dela Cruz stands to lose even more in an enterprise that has long been determined to be rather hopeless. While we do not expect President Gloria Macapagal Arroyo to micro-manage, it is perhaps best that Malacañang look into this reported plan of PSTC.

Malacañang should make it clear to its functionaries that the policy calls for the private sector to be the engine for growth in areas where there is no clear need for government presence. Also, it is the declared policy of government not to compete with the private sector.

This new capex program of PSTC means money out from the National Treasury or subsidized financing from GOCCs, both constituting unfair competition for the private sector operators. The new tonnage PSTC proposes to acquire may also aggravate current industry surplus that is making life miserable for everyone. As it is, I am told that seven vessels from the private sector are idle due to lack of business.

Malacañang should reject the claim of the PSTC board that there is a need to make PSTC healthy (first) so they can get a better price when they privatize. I have heard that line for over 15 years while I was at PNOC and even after I left. I doubt if that will ever happen. If PSTC couldn't make money when it had the Petron captive market and when it was part of the PNOC industry dictatorship, how could it make money now in a highly competitive free market where its share is down to, at best, 10 percent?

The best option is for government to cut losses right away by selling it or dropping it. PSTC should either be totally privatized now, even if government takes a book loss, or scuttled to minimize further government losses. Government should be able to find better uses for its funds than to buy tankers the country does not need or to continue subsidizing a hopeless business operation it shouldn't be in, in the first place.

Koizumi

It is obvious that one of the reasons Japanese Prime Minister Koizumi is going the rounds of ASEAN countries is to lay the groundwork for a common trade area between Japan and ASEAN. Japan must be worried about a similar understanding between ASEAN and China that was hatched in the last summit meeting in Brunei.

If Japan is ready to consider a common trade area with ASEAN, it must also be because of its present economic problems. It cannot risk the loss of the ASEAN market to China, specially because it is Japan and not China that has heavily invested in the ASEAN region for many years.

A common trade area with ASEAN means that Japan is now willing to sacrifice its highly protected agriculture sector. There is no way the Japanese rice farmers, for instance, can compete with the Thais and the Vietnamese. That is also good news for our agri sector because we will have a leg up against Latin American competitors in bananas, for instance.

One thing is sure: things are changing pretty quickly and we had better be alert to take advantage of it, not be a victim of it.

Clean air

As soon as I got out of the NAIA 2 terminal building from my PAL Los Angeles flight last Saturday, I knew I was back home. It is almost as if an anti-dengue mosquito fogging machine was busy at work on that bright Saturday morning on the terminal driveway. The culprit was a decrepit dirty white bus that seemed to have come straight from a junkyard in Tokyo or Taipei. The driver was waiting for passengers and kept the motor running. Unfortunately, its ancient engine was incapable of burning all that diesel without causing massive air pollution.

I called the attention of the airport police out of pure citizen concern. I was worried not just about my health but the kind of lousy first impression that would make from all those tourists arriving in our fair land. I was told that it was not the problem of the airport police but that of the LTO. The airport policeman could hardly breathe himself, but refused to do anything anyway. Actually, the airport police should make it its concern because all that mess and obvious violation of our laws are happening right in its jurisdiction.

The airport is one area where we should put our best foot forward. Maybe air quality should be a concern of airport authorities as well. At the very least, it adversely affects the health of the airport policemen who must inhale all that poison. And by the way, we should stop importing all those junk buses unless we are able to make them follow the standards of our nice Clean Air Act.

Falling hair

Now, here's Dr. Ernie E.

Bill has the typical observant wife. One evening after dinner, she handed him a bottle of Rogaine hair restorer.

Bill told her while he was indeed starting to thin out some, he didn’t really think he needed hair restorer yet.

She said, "Oh. It’s not for you, it’s for your secretary, she seems to be losing quite a bit of her hair on your jacket."

(Boo Chanco's e-mail address is [email protected])