ESCAP urges Asian gov’ts to simplify port tariffs

The Economic and Social Commission for Asia and the Pacific (ESCAP) is urging governments in the region – the Philippines included – to simplify their port tariffs and establish a mechanism that will make way for flexibility in setting rates and encourage investors in port modernization.

The recommendations are contained in a report the United Nations Agency released early this year that compared tariff rates and structure in 21 ports across the region.

The report found the Philippines had the lowest total port costs computed based on nominal foreign exchange rates, nearly seven times less than the tariff rates in Japan.

The ESCAP noted wide gaps in port tariff levels across the region, with the highest tariff level more than seven times higher than the lowest, and stressed the need to identify the man causes of the differences so that governments and port authorities could place themselves in a more price competitive position.

The ESCAP recommends the adoption of flexible ways to determine tariff rates based on a "trigger mechanism that will enable ports to adjust prices to reflect changing costs without resorting to government approval."

The commission noted that while ports are increasingly required to be financially viable and sustainable, "the majority of public and private ports in the region have to go through a lengthy government approval process to increase rates."

"This can be problematic for port users and a disincentive to potential private sector investors who would like to ensure an appropriate revenue stream," the ESCAP explained.

It said the development of a "trigger mechanism" can assist ports more effectively to keep pace with changing cost structures.

According to ESCAP, this can be done by using inflation indices and growth in real gross domestic product as basis for tariff adjustments.

The report argued that this system will encourage private sector investment in port development and modernization as this would help ensure an appropriate revenue stream.

The ESCAP developed several models "to help government and port authorities in the region make pricing decisions in am ore effective manner."