Recommendations (Logistics)

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Headline Recommendations

  1. Promote Batangas Port for CALABARZON-destined shipments and Subic for Luzon-destined shipments by inviting feeder vessel operators to call, linking them through Singapore, Kaohsiung, and Hong Kong to worldwide shipping.
  2. Develop Subic as a true freeport for logistics to the Asian region for goods from the US and Europe.
  3. Allow direct deconsolidation of cargoes to PEZA bonded warehouses instead of using non-PEZA CY/CFS operators.
  4. Develop a transshipment industry similar to Dubai and Singapore. Allow transshipment of cargo in various modes, air-air, sea-air, and air-sea by asking the BOC to implement relevant transshipment rules.
  5. Open the door to foreign investment along the entire multi-modal transportation chain.

Recommendations: (25)

A. Promote the port of Batangas for CALABARZON-destined shipments and Subic for Central Luzon-destined shipments. Batangas should become the primary port for manufacturing companies in CALABARZON, which are mostly export-oriented. Develop the port of Subic to cater for companies in Central Luzon and the northern periphery of Metro Manila.

A1. Invite feeder vessel operators to call at Batangas and Subic to take on CALA-BARZON manufactured exports, linking them through Singapore, Kaohsiung, and Hong Kong to worldwide shipping. (Immediate action DTI, PEZA, and private sector)

A2. Request port operators to offer special promotional rates for feeder ships calling at Batangas and Subic. (Immediate action DTI, PEZA, SBMA, and private sector)

A3. Promote the use of both ports with PEZA and SBMA. (Immediate action DTI and private sector)

A4. PEZA should organize a meeting of export companies from CALABARZON, shipping lines, customs, PPA, and the operators of Batangas port to coordinate actions to increase export cargo volume at Batangas. (Immediate action PEZA, PPA, and private sector)

B. Modernize port operations in Batangas to serve automotive companies in CALABARZON in order to significantly reduce the competitiveness gap in automotive production costs between the Philippines and Thailand, Asia’s third largest automotive industry. Automotive materials and parts should be imported through the port of Batangas instead of the port of Manila. (Immediate action PPA and private sector)

C. Create a plan to eventually phase out international cargo at the port of Manila over five years. The government should have the political will to implement the plan. Study the possibility of making it more expensive for ships to use Manila to encourage a shift to Batangas and Subic. (Immediate action PPA, PEZA, DTI, and private sector)

D. Develop Subic as a true freeport for logistics to distribute goods from the US and Europe to Asia. (Medium-term action SBMA, BOC, DOF, DTI, and private sector)

D1. Allow cargoes to freely enter uncontrolled assigned “to–order” of bearer as long as goods will not leave the freeport.

D2. Move customs out of the Subic freeport to a perimeter defined by SBMA.

D3. Before allowing goods to enter the port uncontrolled, put in place tight safeguards against smuggling.

D4. Organize and convene a public-private planning group to promote an Asian Distribution Center of Goods.

E. Allow transshipment of cargo in various modes, air-air, sea-air, and air-sea by requiring the BOC to implement relevant transshipment rules (1) to capitalize on the capacity of Middle East carriers delivering cargoes from surrounding countries to Europe and Africa, (2) to invite additional carriers to the Philippines, and (3) to develop a trans-shipment industry similar to Dubai and Singapore. (Immediate action BOC, DOF, and private sector)

F. The government should provide CIQ services whenever needed; overtime charges should not be paid by carriers.149 (Immediate action DOF, DOH, and DOJ)

G. Open the door to foreign investment along the entire multi-modal transportation chain, including domestic forwarding and distribution to (1) reduce domestic distribution cost and (2) increase service levels. In domestic distribution there are some grey areas. Review to what extent these restrictions make sense in the age of multi-modalism and international service supply chains. (Immediate action DOJ, DTI)

H. Allow direct deconsolidation of cargoes to PEZA bonded warehouses instead of using non-PEZA CY/CFS150 operators, thereby (1) reducing shipping cost of less con-tainer load shipments for manufacturers, (2) increasing competition, and (3) decreasing red tape and protection for a few operators. (Immediate action BOC and PEZA)

I. Take advantage of quick turnaround cycles and local BPO capability to develop new export products and labor-intensive business processing jobs. (Medium-term action private sector)

J. Facilitate IOR services to develop expanded access to Internet trade. Clarify EVAT rules as points of sales are abroad, but shipments IORs handle are subject to VAT on entry without domestic resale. (Immediate action BIR)

K. Continue to implement recent reforms in customs practices (ratified Kyoto Protocol, E2M, and national single window) that will make Philippine logistics more competitive. Extend E2M to all customs offices. Pass the Customs and Tariff Modernization Act (CTMA) as early as possible in the 15th Congress. Remove the de minimus limit in the law and allow it to be set by the Executive Branch. (Medium-term action BOC, Congress, and private sector)

L. Reduce high domestic shipping costs.

L1. Liberalize rules that do not allow foreign companies to operate in order to provide cheaper and better quality transportation services. Encourage more joint ventures between foreign and domestic shipping firms. (Immediate action DOJ, Marina, and private sector)

L2. Introduce more reliable new ships with larger TEU capacity that are less expensive to operate. (Medium-term action Marina and private sector)

L3. Limit the age of ships that can be imported to operate in the Philippines. (Immediate action Marina and DOTC)

M. Groups of importing companies should explore chartering ships and pooling container shipments in order to save international transportation costs. (Medium-term action private sector)

N. Develop better data for the logistics sector in order to be able to chart and analyze its growth. (Immediate action NSCB, NEDA, and private sector)

Manufacturing and Logistics FGD Participants, Moderator and Secretariat members
March 11, 2010
Joint Foreign Chambers of the Philippines
FOCUS GROUP DISCUSSION ON MANUFACTURING AND LOGISTICS

Footnotes

  1. This issue is also discussed under Tourism, Medical Travel, and Retirement below.[Top]
  2. Container Yard/Container Freight Station[Top]