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IF the
government intends to cut shipping costs in the country,
it should review the Manila contract of the
International Container Terminal Services Inc. (ICTSI),
the Philippines’ largest port operator.
Donald
Dee, chairman of the country’s largest business
association, said that the review is needed since the
Philippine Ports Authority (PPA) relies heavily on the
concession fees being remitted by the publicly-listed
ICTSI from its operation of the Manila International
Container Terminal (MICT). The facility, the
Philippines’ biggest, handles an average of 1.2 million
20-foot containers annually.
According to Dee, chairman of the Philippine Chamber of
Commerce and Industry (PCCI), reliance on ICTSI’s fee
payments creates a lopsided revenue base for the port
agency. Besides failing to create or support
competition, especially at the Port of Manila, Dee said
that the agency ends up subsidizing other smaller
facilities.
The port
operator, controlled by the Razon family, remits an
estimated P2 billion yearly to the port agency for the
use of the MICT. The amount is 40 percent of the PPA’s
entire revenue stream. Meanwhile, Asian Terminals Inc.
(ATI), which runs the
Manila South Harbor,
pays less than half of ICTSI’s fees.
“The [ICTSI]
contract should be reviewed. It should be prorated on
capacity based on per container so that port operators
could compete for the cargo to lower cost,” Dee said.
“All operators should be given the same opportunities to
level the playing field. If not, then the cost would not
go down.”
Dee also
warned that the lopsided revenue stream scenario will
once more be played out once the PPA becomes successful
in privatizing the Manila North Harbor under its
proposed single operator scheme.
Under
the arrangement, market forces will be unable to dictate
rates since it will be set the winning operator,
Dee said.
However,
when managed by various companies, not only will the
government’s collect different revenues from operators,
the companies themselves will compete for cargo, thereby
cutting rates.
Earlier,
PPA officials explained that giving the captive market
to an operator was its main strategy to entice more
bidders and players in an arena where only few players
are interested. This then could give the private
operator an opportunity to recoup its investments.
Under
current arrangements, all containers are processed at
the MICT. Although the South Harbor facilitates the
transport of all non-containerized cargo, it is allowed
to handle some containers which the MICT may be unable
to process.
On the
other hand, the Harbour Port Centre Terminal Inc. is
only permitted to handle bulk cargo of its customers.
Although it has long sought government approval to
handle containers, the PPA has never allowed the
operator, closely-held by businessman Reghis Romero II,
to process metal boxes. |
