The Department of Trade and Industry (DTI) will ask President Rodrigo Duterte to issue an executive order (EO) that will significantly reduce logistics costs for local companies over the next few months.
DTI Secretary Ramon Lopez said he has instructed Undersecretary Rowel Barba to reconvene the technical working group composed of the Department of Transportation, DTI, and Department of Finance to reconstitute the Joint Administrative Order (JAO) resolving high shipping costs and port congestion into an EO.
“The proposed EO is expected to bring down the average cost of logistics.”
Lopez told reporters on the sidelines of the 2nd Logistics Services Philippines Conference and Exhibition that the proposed EO is expected to bring down the average cost of logistics as a percentage of sales of local firms from about 27 percent to below 20 percent by year-end or “a few months after that” with streamlining of the process and costs of transporting goods.
Citing World Bank’s Dr. Ruth Banomyong, he said the average logistics cost of firms consist of only 11.11 percent of the total sales in Thailand, Vietnam at 16.3 percent, and Indonesia at 21.40 percent.
The trade chief said they are keen on coming up with clear guidelines on shipping fees which are currently set freely by the international shipping lines.
“Normally, ayaw nating makiaalam sa mga (we do not want to intervene in) setting rates but we have to set perhaps certain parameters by which they can move so that we avoid overcharging, unnecessary charges or fees being imposed on the importers,” the trade head said.
He also urged importers to negotiate with different suppliers who can provide the best rates.
Lopez said the proposed EO will specify the agency that will be accountable for the setting or at least having better control on shipping rates; while the Bureau of Customs (BOC) addresses port congestion.
“(Under) JAO basically right now, (it is) inter-agency cooperation. But the agency responsible for that will just have to be clarified and strengthened. But of course, we have the cooperation of the international shipping lines here,” he added.
Lopez further said the three departments will likely endorse the draft EO to the President.
“Maybe in a month’s time, we will have a draft.”
“Wala tayong control sa EO (We have no control when the EO will be issued) but on the draft, the technical working group will be reconvened. Give us maybe in a month’s time, we will have a draft on this one,” he said.
“For now, our immediate response will be the JAO and then to be followed by the EO. The EO will set the tone from then on,” Lopez added.