DTI stands pat on higher capital for freight forwarders

The Department of Trade and Industry (DTI) is standing pat on the implementation of an administrative order that increases the minimum paid-up capitalization requirements for freight forwarding companies.

In a recent dialogue with the Alliance of Concerned Freight Forwarders Inc. (ACFFO), Trade Undersecretary Zenaida Maglaya said that the new rule has undergone due process and suspending its implementation would be difficult.

Maglaya explained that the new rules would ensure that only competent freight forwarders can engage in the business.

"We are trying to prevent the entry of second-rate entrepreneurs who might go into the freight forwarding business just because they can afford the paid-up capital, but are not qualified to deliver appropriate, effective and efficient service," Maglaya said.

She added that the accreditation scheme being implemented by the Philippine Shippers Bureau (PSB) based on the revised rules will guide new exporters in finding a credible and reliable freight forwarder for their operations.

The new rules, which took effect Jan. 2 this year, states that a freight forwarding company is required to raise to P4 million its paid-up capital from the previous P500,000 in order to operate as a non-vessel operating common carrier (NVOCC).

Companies engaged in international freight forwarding must have a paid-up capital of P2 million, up from the previous P300,000.

ACFFO had opposed the increase in the minimum paid up capital requirement and had lobbied to shelve it indefinitely until all legal and factual bases are resolved.

PSB director Pedro Vicente C. Mendoza said consultations with the industry players for the increase were conducted as far back as 1999.

The common stand among stakeholders was for a raise in the minimum paid up capitalization.

"There is an inevitable entry of foreign freight forwarders in the near future due to growth in the country’s foreign trade. Local forwarding companies need to be competitive and at par with foreign multinationals in order to stay in the business as these foreign companies have started to come in," he said.