Draft EO to cut PPA share in cargo handling revenues

MANILA, Philippines — The Export Development Council (EDC) has endorsed a draft executive order that seeks to remove the share of the Philippine Ports Authority (PPA) in cargo handling revenues.

In an Oct.26 letter to Transportation Secretary Arthur Tugade and PPA general manager Jay Daniel Santiago signed by Oscar Barrera, who serves as chair of the networking committee on legislative advocacy and monitoring of EDC, the public-private sector council expressed its support for the draft EO which would amend the Letter of Instructions (LOI) 1005-A issued in 1980.

The draft EO seeks to remove Instructions 3 and 4 of the LOI to scrap PPA’s share in revenues from cargo handling.

Under Instruction 3 of the LOI, the government gets at least 10 percent of the gross income earned by cargo handling contractors and port-related service operators from such services.

To ensure the collection of the government’s share, Instruction 4 directs the PPA to conduct a spot audit either on its own or with other government agencies.

“It is a time of acute suffering for exporters whose operations have been most heavily affected by the COVID-19 pandemic. However, the PPA has regularly and reliably increased the cargo handling charges that it permits to be imposed,” Barrera said.

He also said the collections are touted as an achievement by the PPA, ignoring the regulation’s impact on the local industry.

“The passage of this EO is a small step in the direction of supporting our local manufacturers,” he said.

In 2017, the EDC issued Resolution 3 signed by the council’s chair Trade Secretary Ramon Lopez to push for the repeal of LOI 1005-A, citing conflict of interest.

In seeking the repeal, the EDC said PPA serves as a regulator while also benefiting from the implementation of its own regulation, giving the agency “the incentive to increase the rate to improve its financial health.”

Last July, the EDC and Philippine Exporters Confederation Inc. (Philexport) urged the PPA to defer the approval of the proposed cargo handling rate increase at the Manila North Port.

The groups also called on the PPA to waive its share in cargo handling fees.

Earlier, Philexport president Sergio Ortiz-Luis Jr. said the tariff adjustment would be an added burden to micro, small and medium enterprises already struggling with the impact of the pandemic.

“We must anticipate that the rate increase will further diminish the country’s competitiveness, drive away investors, and discard the efforts of government agencies and stakeholders to bolster ease of doing business in the country. Moreover, the added cost will ultimately be borne by the end consumers – the ordinary Filipino people, and our foreign buyers,” he said.