The Export Development Council (EDC) has identified priority legislation that needs to be tackled by the incoming 17th Congress in order to spur development of a more competitive export industry.
One of these is amending the charters of the Philippine Ports Authority (PPA) and Civil Aviation Authority of the Philippines “in order to separate the regulatory and operator functions of both agencies,” according to the EDC’s Networking Committee on Legislative Advocacy and Monitoring.
This proposal is being pushed by several other studies, including the Department of Trade and Industry’s (DTI) draft National Logistics Masterplan, which said the amendment of the PPA and CAAP charters would address the “overlapping and conflicting function/mandates of the regulatory agencies.”
A Lower House study entitled “Learning from the Manila Port Congestion” also suggested breaking apart the functions of PPA. But it noted this may pose a challenge because Subic port—regulated separately by the Subic Bay Metropolitan Authority—could become a competitor to PPA ports and “erode PPA’s revenue substantially.”
A Philippine Institute for Development Studies paper entitled “Competition Policy and Regulation in Ports and Shipping” said PPA’s regulatory and operator roles lead to “conflict of functions and interest problems.” It added that PPA’s setup—as a port owner that also has the capability to issue permits to private companies to construct and operate ports—is disadvantageous to non-PPA ports and limits competition in the industry.
“This set up creates the wrong incentive for PPA which may not approve the private sector’s application for construction or expansion if this threatens PPA’s port ownership and revenues,” the paper said.
Meanwhile, EDC is also pushing for the repeal of Presidential Decree 1221, which requires mandatory dry docking of ships at Maritime Industry Authority-registered shipyards. In the World Bank’s Philippine Economic Update 2015 report, the financial institution said this practice “not only reduces competition among shipyards, but also increases the cost of domestic shipping operators.”
Moreover, EDC supports the proposed amendment of Republic Act 9501, or the Magna Carta for Micro, Small, and Medium Enterprises, to allow the 10-year extension of the mandatory lending provision of the law.
While EDC projects a 5.4% growth in the export sector in 2016, the country has experienced, from April 2015 to March 2016, a downturn in exports due to the weak global economy. This has prompted the DTI and the National Economic and Development Authority to ask exporters to look at tapping non-traditional export destinations and products to widen their market base.
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