Several business groups in the Philippines publicly appealed to President Ferdinand “Bongbong” Marcos Jr. to revoke an order from the Philippine Ports Authority (PPA) that they claimed would derail the government’s economic recovery efforts.
In an “urgent open letter” published in the country’s biggest newspaper, 17 groups involved in various areas of the maritime industry complained that PPA Administrative Order No. 04-2021 would only add costs to businesses, worsen bureaucratic red tape and ultimately worsen the Philippines’ price inflation woes.
The order was meant to implement the Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS) that requires the registration and monitoring of containers entering and leaving PPA ports, including the scheduling, loading, unloading, releasing, and movement of all containers.
The stakeholders said that the PPA implemented the system although it was “consistently and vehemently opposed by various stakeholders since the first public consultation held on June 15, 2021.”
The business groups said the PPA failed to assess the economic impact of the order which, they said, could worsen price inflation because of the added costs for businesses involved in the importation and transportation of goods.
“The PPA fails to consider that the ultimate victim of these additional costs is the ordinary Filipino consumer, who is already bleeding from an inflation rate of 8.1 percent,” the open letter read.
According to the groups, their estimates show that the order would increase by 50 percent of the cost of additional insurance fees, transaction fees, and trucking fees required by TOP-CRMS/ECSSSF. This would result in an additional annual import cost that could reach PHP35 billion.
But the PPA, in an earlier statement, disputed the claim and asserted the new system would lower the cost of imports, lessening the price of imported products, and helping the government’s anti-smuggling drive.
The country’s port regulator said the new cargo monitoring system was primarily aimed at eliminating container deposits and managing empty containers.
“The resistance, supposedly based on the fear that the program would inflate the cost of logistics, is far from the actual benefits, it can bring to the table,” the PPA said.
PPA General Manager Jay Daniel Santiago claimed that the new system will bring huge benefits against unregulated charges in logistics costs, such as container deposits and missing empty containers.
“For as long as somebody is complaining, the government has to come in and the government has to address what is being complained of. The government’s purpose is to make sure that everything is fair. We try to make sure that the playing field is fair. That’s why we need to introduce regulations,” he added.
PPA insists on TOP-CRMS
Following the directive of President Marcos to implement digitalization in government transactions, the PPA said it would pursue the implementation of TOP-CRMS despite protests from shipping lines and other businesses.
The agency insists that the new system will be the solution to several port problems in the country, particularly the long-term problem of high and unregulated container deposit charges and missing empty containers.
Santiago also refuted that the regulation would add to the prices of imported goods.
“That is wrong because the purpose of the program is to save money from fees that are not monitored by the government such as the container deposit charged by shipping lines for PHP30,000 (US$546) or more which usually takes months or years before it is returned and often there is a deduction or irreversible,” Santiago said in Tagalog.
According to the PPA, the new cargo container monitoring system will allow customers, carriers, freight forwarders, and shippers to access the status of their cargoes and containers and help streamline all transactions at the ports, help lower commodity prices, prevent smuggling, and improve revenue collections.
Under the new system, the usual container deposit fee of PHP10,000 to PHP30,000 for dry containers and up to PHP180,000 for refrigerated containers will be lessened to a flat rate of PHP980 per container.
“The CRMS will also help alleviate storage problems at ports and prevent port congestion through the provision of shared facilities for empty containers as it aims to address the congestion not only inside terminals but also along access roads going in and out of the ports particularly during holiday seasons,” the PPA said.
Santiago said the PPA is doing its part in a whole-of-government approach to fight smuggling in the country.
But business groups countered that the new policy was not designed to address smuggling in the country as claimed by PPA.
“In a Trucking Summit organized by PPA on January 16, 2023, it was categorically admitted by PPA officials that TOP-CRMS was not designed to address smuggling and that its relationship to smuggling is merely incidental,” the groups said in their open letter.
Santiago explained that while the TOP-CRMS is not primarily intended as an anti-smuggling system, it can deter cargo diversion which is a common tool for smuggling schemes.
The program, according to Santiago, will install and use a digital tracking system to accurately locate container cargo in real time.
Using this digital technology tracking system, the transfer of cargo to another warehouse can be quickly and easily detected, one of the known schemes of smugglers.
“With this real-time tracking, law enforcers can now eliminate the fake consignees and prevent additional charges. After all, addressing smuggling should be an orchestrated effort,” said the PPA chief.
“While some business groups are opposing the TOP-CRMS which will help promote transparency and lessen business costs, PPA would like to take a stand for the underprivileged and underrepresented segment of the logistic sector, namely, the truckers, brokers, and stakeholders that will benefit from this whole-of-government approach of digitalization through TOP-CRMS,” he said.
“We are not promising that the TOP-CRMS is a complete solution to all these problems. We will never promise that. What we are saying is the problem of smuggling and other issues that may originate from the ports, is a whole-of-government approach,” Santiago said adding that concerned government agencies should talk, and share information to achieve the common goals and mandates.
Top photo credit: iStock/ClaudineVM. South Habor, Manila.