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ON
Tuesday, Malacañang ordered all government agencies to
seek approval from the National Economic and Development
Authority (Neda) Board before they can raise fees for
their services.
This was
in reaction to the World Bank study and exporters’
complaints that the Philippines right now has the
highest port charges and fees in
Asia. Sounds
good, but is that the only thing that the dwellers of
the Palace could do? Why are they so afraid to address
the real problem?
Also,
the government is supposedly investigating the $20/50
dollar per container “security fees” being levied on
traders by the Bureau of Customs (BOC) while not lifting
a finger to stop an imposition that should certainly be
creating havoc on the competitiveness of the country’s
exporters. This is a classic case of the policymakers
pretending to do something while not doing anything.
For a
developing—nay, Third World—country, we shouldn’t be
charging needlessly high shipping fees in order to
encourage manufacturers and exporters to export our way
out of misery. That’s almost a classic formula adopted
by our Asian neighbors in their transformation into
tiger and dragon economies, starting with
Japan,
South Korea and Singapore, among others. Not only should
a country have competitive (read: cheap and of good
quality) export products, the support structures should
also be efficient (read: cheap but quality service).
It’s a great irony, therefore, why we can’t seem to get
this so simple wisdom by charging fees so high we are
actually killing our own export industries.
According to the World Bank study, the handling cost in
the Philippines totals $1,336 per 20-ton container as
against $848 in Thailand, $382 in Singapore and $335 in
China. Yes, the country’s port authorities are charging
fees four times higher than in Singapore and China,
whose ports are among the busiest in the world! And it
keeps on rising because the BOC has also started
charging “security” fess. It seems like we are not
content with having the highest electricity rate in
Asia, the most
expensive international long-distance calls, and
probably the most overvalued currency that hurts
exporters and families of overseas workers—we also want
the notoriety of having the most expensive port
services.
Why this
perverse policy environment? It’s because we have a
long-standing policy environment that nurtures
monopolies and oligopolies through our one-port,
one-operator rule. On top of this is the cruel policy by
Marina that encourages oligopolies in interisland
shipping supposedly because of some vague “cabotage”
rule. When you have monopolies and oligopolies in
arrastre and port operations as well as interisland
shipping, buttressed no less than by government
regulatory bodies (Marina and the Philippine Ports
Authority), you certainly would have higher freight and
port handling costs. That’s one of the main reasons why
over the years, we have failed to evolve durable
manufacturing industries.
With
high port and shipping costs, many companies are
constrained to grow and be globally competitive. No
wonder why our entrepreneurs would rather content
themselves with speculating in real estate and in
putting their money in services that have less links
with the rest of the economy. Managers of these
industries do not require dealing with the ports and
customs authorities, many of whom reek with corruption.
And of
course, many bureaucrats in these agencies—Customs, PPA,
and Marina—would really be really be more inclined to
make money for this sleazy tangle with monopolists and
oligopolists for them to think about public interest.
Too bad
for the ordinary people, because it means the Philippine
economy would never be able to build factories and
businesses that would create more jobs. Too bad for
Mindanaoans because that island’s economic potentials
will always be stymied by the high cost of shipping
goods from Mindanao ports to major markets in the
Visayas, Luzon and to other parts of the world. Almost
two decades ago, integrators were complaining that it’s
cheaper for them to buy corn from Argentina than to ship
them from Bukidnon and South Cotabato. That World Bank
study confirms that this problem is valid even until
now. Through the years, the government and the
policymakers of this country simply ignored this
problem, and it seems it is bent on compounding it with
the new “security fees” that would surely make exporting
and trading in the Philippines more expensive.
Certainly, the solution is clear. We have to deregulate
shipping and port operations to instill greater
competition in these businesses. Policymakers should
also look into putting greater transparency and public
accountability in the operations of the government’s
regulatory bodies.
These
reforms are long overdue because these agencies have
become a burden to society. In the first quarter of the
year, for instance, the country’s GDP grew 6.9 percent,
a proof that economic activities have expanded. And yet,
the government’s tax collection has even declined,
leading people with little choice but suspect that
corrupt bureaucrats have become too greedy to pocket the
gains. Now, we suspect that the rising charges in the
ports are probably one of those ways to fleece the
economy even more. The policymakers should act to
address the problem.
No,
giving a lame order for agencies to seek Neda Board
permission before increasing fees isn’t good enough.
It’s far from good enough. If the Executive is truly
serious about addressing the ironic situation of the
high cost of doing business vis-à-vis a dearth of
revenue, it should look at the larger issues, such as
those raised in this space. Otherwise, it’s all more
smoke blown to cloud the real story. |
