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THE
other day, the Mindanao Federation of Shippers
Association called on the Philippine Ports Authority (PPA)
to speed up the expansion and redevelopment of three
major ports in the Mindanao, namely, the ports of Davao,
General Santos and Zamboanga City. We support this call,
given its tremendous positive impact not only on
Mindanao but also on the entire Philippine economy.
There
has been a continuing call for spreading the benefits of
growth from all sectors. Even the government has been
mounting similar objectives. But if our policymakers are
serious about this, heeding the Mindanao shippers’ call
is one of the surest bets, especially as it came
following observations that the volume of cargo traffic
in and out of Mindanao cities is on the upsurge. It
means economic activities in the country’s
second-biggest island are probably improving as well.
It’s
probably a better investment than the so-called
“national broadband network” which addresses nothing but
the desires of lazy government bureaucrats for easy and
faster access to Internet porn. Right now, Mindanao
serves as the country’s food basket (producing rice,
corn, sugar and livestock) as well as a major
foreign-exchange generator through the production and
export of agricultural and natural resource-based
products, including bananas, rubber, pineapples, tuna,
coconut products, mangoes, asparagus and other
high-value crops. Given bigger and more efficient ports
and related infrastructure, Mindanao has the potential
of becoming a major growth driver for the country.
Mindanao shippers say since PPA funds are probably not enough to
finance the development of these ports, the government
might need to tap overseas development assistance,
assuming of course that government could ensure
transparency. For instance, government could tap funds
from the Asian Development Bank, World Bank or the Japan
Bank for International Cooperation. We cite these
organizations because they seem to be sticklers for
transparency and strict good governance rules, thus
forcing local-government implementing agencies to behave
properly.
Tapping
overseas development assistance, of course, has it own
limitations. If government couldn’t provide counterpart
funding—not only because it doesn’t have money, but also
because decision-makers in “Imperial Manila” have
different priorities—nothing will happen. The best way
to address the problem of funding for port
infrastructure, therefore, is reforming the existing
policy on port management and development to mobilize
private-sector resources. If government can’t generate
public money quick and fast, it can at least tweak
policy and achieve the same end.
Right
now, the country’s ports system—according to Gilbert
Llanto, an economist from the Philippine Institute for
Development Studies—is dominated by the PPA. A
government agency, the PPA serves as the developer,
operator, owner and regulator of ports, including those
of the private sector. It also regulates cargo handling
by awarding contracts to private cargo-handling
services, and issues permits for the construction and
operation of ports.
And how
does the PPA finance its operations? From concession
fees from the lease of the South Harbor; port charges
such as wharfage, berthing and pilotage; and share of
cargo-handling revenues from private cargo-handling
operators and port charges of privately operated ports.
In other
words, the PPA—according to Llanto—is suffering heavily
from conflict of interest, being both owner and
regulator. Since it earns money from its own ports, it
has no incentive to grant permits for the construction
and expansion of privately operated ports that may
compete directly with PPA-owned ports. This is why there
is practically no competition in the port-operations
business. And since the PPA dominates the port business,
it doesn’t also have the incentive to move quickly on
requests for port upgrading. Mindanao shippers’ requests
for upgrading the ports in Davao, General Santos and
Zamboanga City have been there more than a decade ago,
but the PPA and government in general has been slow to
respond.
The PPA
also regulates and approves tariff-rate increases in
cargo handling and gets a 10-percent share from
cargo-handling revenues. It, therefore, has the
incentive to approve requests for tariff-rate increases
since it’s going earn more money from such increases. No
wonder, we have the highest shipping and port-handling
costs in the Asia-Pacific region, making a lot of our
exporters less competitive in world markets.
Solution? Llanto says there is a need to review and
amend the PPA’s charter to separate its regulatory role
from its ownership, development and operations
functions. The government should consider the
establishment of an independent port regulator. The
ideal situation should be that the state serves as an
enabler while the private sector owns and operates the
ports under a competitive policy environment. The entry
and exit of the private sector in this business should
be wide open and transparent.
Under
such an arrangement, the private sector could easily be
relied upon to upgrade the ports and expand their
operations once they sense there is a growing volume of
cargo coming in and out. Their response to market demand
would be fairly automatic. That way, shippers from
Mindanao or other parts of the country don’t have to beg
from PPA overlords once they suffer shipping
bottlenecks. |
