Opposition to PPA AO 04-2021 flares anew
Renewed opposition has ignited against a Philippine Ports Authority (PPA) order prescribing the registration and monitoring of containers, as trade groups argue the regulation will only add to the undue cost burdens of businesses and consumers amid runaway inflation and container delays.
The organizations—Philippine Chamber of Commerce and Industry (PCCI), Philippine Exporters Confederation Inc. (PHILEXPORT), Supply Chain Management Association of the Philippines (SCMAP), and four networking committees of the Export Development Council (EDC)—seek the scrapping of PPA Administrative Order 04-2021 and its Implementing Operational Guidelines (IOG).
In a January 10, 2023 joint position letter to PPA general manager Jay Daniel Santiago, the groups expressed their “vehement opposition to the implementation and strongly recommends the immediate rescission of PPA Administrative Order 04-2021 and its Implementing Operational Guidelines (IOG) on the Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS).”
The order will only bring regulatory burden to all affected stakeholders while violating the Ease of Doing Business (EODB) Law, the groups said.
“It is with great dismay that the arguments and opposition that we, along with the brokers, truckers, the shipping lines and other affected stakeholders, had expressed in meetings and position papers submitted last year on this policy seemed to have fallen on deaf ears when the PPA proceeded with this latest IOG,” they further stated.
Since PPA AO 04-2021 was issued in late 2021, it has only received flak from various stakeholders, who have warned about the regulation’s potential to “negatively impact port operations and disrupt the delicate balance of commerce at the port.”
As far back as May 2022, some 14 trade, industry and transport and logistics groups had issued a solidarity statement seeking the “immediate revocation” of the policy, as it “threatens to cripple the transport and logistics industries and the national economy as a whole.”
PPA AO 04-2021 sets the policy for the registration and monitoring of containers entering and leaving PPA ports, including the scheduling, loading, unloading, release and movement of all containers.
It aims to generate a record of accountability to “enable PPA to monitor the movement of containers from the time of entry, discharge, return and storage, and re-export,” with the objective of preventing smuggling.
Further, the order “shall apply to all containers originating from foreign ports that will be unloaded at government and/or private ports under the administrative jurisdiction of the PPA.”
Issues vs. AO 04-2021
In their letter to Santiago, the trade groups levied a number of issues against PPA AO 04-2021 and its IOG.
Among others, the groups said the order directly encroaches on the function of the Bureau of Customs (BOC), which under Customs Administrative Order No. 08-2019 is given the task to monitor the movement of containers inside and outside the port.
Moreover, the BOC’s monitoring activity is also supplemented by the E-TRACC, a real-time monitoring system of containerized cargoes using GPS-enabled electronic locks which has been in place since 2019, added the letter.
Further, the customs body is already implementing the container identification and accountability program of the World Customs Organization Cargo Targeting System (WCO-CTS), requiring all foreign shipping lines operating in the Philippines to submit in advance their container and import shipment information to the WCO-CTS.
The trade groups also expressed doubts PPA AO 04-2021 will help prevent unlawful acts such as smuggling because it only covers the ports managed by the authority.
“Unlike the monitoring mandate being performed by the BOC which covers all ports in the country, the TOP-CRMS project does not include Off-Dock Container Depots, among others. This puts in grave doubt the capability of the PPA to effectively and efficiently achieve this objective,” said the letter.
That the policy will reduce the transport cost of goods was met with similar suspicion by the groups, which believe that container monitoring by PPA will rather further inflate costs.
The letter said: “Other than the container insurance cost of PhP980 plus VAT, there will also be a service fee of PhP3,520 plus VAT per container for use of the staging facility beyond the first three days. This is in addition to the accreditation fees to be paid by the shipping line, trucks and insurance companies. Ultimately, all these costs will be passed on to the end consumer.”
Another area of contention is the legality of PPA’s jurisdiction to accredit and allow the establishment and operation of an off-dock staging facility. The trade groups said this function actually falls under the jurisdiction of the BOC per Republic Act No. 10863 or the Customs Modernization and Tariff Act (CMTA). The accreditation, establishment and operation of such facilities is subject to BOC approval, they stressed.
PPA’s claim that the container insurance is meant to replace the problematic container deposit fee is also contested. The trade groups pointed out that the issues against the deposit fee are now being successfully addressed by the Container Ledger Account (CLA) system. The CLA is the alternative solution initiated in December 2021 by the Association of International Shipping Lines to replace and simplify the complicated container deposit practice in the Philippines.
And still another issue raised is that by imposing its will upon international shipping lines in the posting of a container deposit, “PPA is already arrogating upon itself the role as a regulatory body of the international sea carriers, to which it is not,” the letter claimed.
Another objective of PPA AO 04-2021 that the groups oppose is how it will supposedly simplify procedures and remedy port congestion through an electronic monitoring system for container movement. They pointed out that PPA did not sufficiently explain how the system could effectively prevent port congestion.
“PPA AO 04-2021 is a tedious, redundant and expensive system. This redundancy generates additional undue costs to businesses and consumers who are already laden by the skyrocketing inflation rate and delays in the movement of containers that further worsen congestion in the ports,” the groups asserted.
The organizations recommend instead that for information gathering purposes, PPA should make sure its systems are interoperable with those of the BOC, trade department and other stakeholders.
They also reminded PPA of the EODB Law requirement to conduct a Regulatory Impact Assessment prior to the issuance of any proposed regulation
of ‘reducing transport logistics cost to sustain the country’s economic recovery’, we strongly call for the rescission of PPA AO 04-2021 (TOP-CRMS) and its IOG,” they concluded.
The position letter was signed by George Barcelon, president of PCCI; Sergio Ortiz-Luis Jr., president of PHILEXPORT; and Dennis Llovido, president of SCMAP as well as by the heads of different EDC networking committees, namely, Philip Young, agri policy; Rami Hourani, legislative and advocacy monitoring; Danilo Lachica, trade policies and procedures simplification; and Enrico Basilio, transport and logistics.