A STUDY published by state think-tank Philippine Institute for Development Studies (PIDS) has recommended the creation of a lead agency that would oversee the logistics and transport industry of the country.
PIDS authors revealed that in the field of logistics, the Philippines has one of the most restrictive set of regulations, which, together with other factors, are responsible for its relatively poor logistics performance.
In 2016, the Philippines’ overall logistics performance index was “way below those of the older members of the Association of Southeast Asian Nations”, the study said, adding that it was even lower than Vietnam, one of the transition economies in Southeast Asia.
The study revealed that the lack of awareness about the importance of integration and coordination in the logistics chain has resulted in “inconsistent, overlapping, and sometimes contradictory policies”.
This issue, according to the authors, has caused loss of major logistics providers and foreign investors in the country.
Furthermore, the study cited uncoordinated logistics system in the country can also be attributed to the absence of a single coordinating agency.
It noted that at present, various agencies have different sets of regulations for the transport, logistics, and distribution sectors in the Philippines, making it a roadblock for investors to seamlessly do business in the country.
The study noted that while the maritime transport is one of the important modes of transport, poor quality of port management in the country has led to higher logistics costs on the part of service providers.
In terms of the logistics industry, the authors noted the lack of effective enforcement of important regulations on the part of implementing agencies. The authors cited the continuous operation of old and outdated delivery trucks and vehicles in the country.
Moreover, the study pointed out that different local government units (LGUs) are implementing “varied, inconsistent, and unpredictable regulations,” which bring confusion and another set of costly expenses to the players. These regulations include the use of different stickers for passage to different areas, inconsistency of operating permits, and different number coding schemes between cities and provinces.
To address this, the PIDS proposed that the Department of Transportation, along with Congress, disallow the collection of pass-through fees in LGUs to prevent abuse of authority from happening in the grassroots.
It, likewise, suggested “introducing more foreign competition and improving access to the most efficient transport and logistics service providers” to accelerate the country’s overall trade performance.
The creation of a lead agency that would oversee the industries will also be helpful. PIDS said it will ensure “that the flow of information between relevant stakeholders is maintained.” Poor logistics has been a long-standing concern in the Philippines and is believed to be one of the main reasons that prevents e-commerce from fully taking off.
DTI-Cebu Director Ma. Elena Arbon, in an earlier interview, underscored the critical role by the logistics sector in spurring economic growth in the countryside.
Specifically, Arbon said having an efficient transport and logistics system can better serve the requirements of small and medium enterprises (SMEs), particularly in moving their goods from where they are to where they want their goods to be.
She added more SMEs will be attracted to join the digital platform once the logistics gap in the country is addressed, as this lowers the cost of shipment.
It would likewise make export goods competitive with the rest of its Asean counterparts, Arbon added.
In the Philippines, logistics costs account for 24 percent to 53 percent of wholesale prices, with shipping and port handling costs making up eight to 30 percent depending on the goods and routes, and five percent of retail price of goods.
According to the 2016 World Bank’s Logistic Performance Index (LPI), the Philippines ranked 71 among 160 countries.