The Philippines should address its high shipping and logistics costs to help businesses in the country thrive, the Asian Trade Center said on Wednesday.
In a symposium organized by the Asian Development Bank, Deborah Elms, Asian Trade Center founder and executive director, called these costs “too high,” saying these posed challenges to “some amazingly innovative Philippine companies” that are already prepared to do business.
“It is impossible to get goods in and out of the Philippines at a price that is affordable for small businesses. So even really competitive firms are going to struggle trying to sell outside of the Philippines or even across the” country with these elevated costs, she added.
Elms’ remarks came after a report by the Philippine Competition Commission and the Organisation for Economic Co-operation and Development said the cost of logistics to sales remained high in the country.
According to them, this cost is approximately 27 percent higher than those in other Southeast Asian countries.
The Philippines is No. 60 in the World Bank’s Logistics Performance Index (LPI) in 2018, with timeliness and customs regarded as its two most challenging areas, and infrastructure and logistics competence scoring low.
“Island countries always have difficult logistics…but what can you do as a government to help bring down logistics costs, speed up customs issues [and] deal with returns?” Elms asked.
She said there were instances that small Filipino companies had to spend a full day at customs every week to personally manage the returns on their goods, because they couldn’t get them.
This is the kind of practical challenge that actually matters to businesses, according to the official.
“So rather than being focused on creating new platforms, and new areas where small businesses can be onboarded, get your small businesses ready to onboard on existing cloud, because that’s where the customers [and] suppliers are,” Elms said.
“I think the Philippines…has really entrepreneurial people with some great ideas who will be successful if the regulatory and policy settings are helpful for them,” she added.
In response, Rafaelita Aldaba, Trade undersecretary for the Competitiveness and Innovation Group, said proposed amendments to the Public Service Act could hopefully bring down logistics costs.
“There’s already a bill being deliberated at the House [of Representatives] is going to allow more competition, remove the 60-40 [foreign ownership] rule, where in our Constitution prevents allowing a company that will invest in this sector similar to telecommunications,” Aldaba said, referring to House Bill 78.
“So these are really crucial bottlenecks that we’re faced with. But hopefully with the passing of this [amended] Public Service Act, we would be able to liberalize the environment and allow the entry of more players that will bring down the cost of logistics, as well as of internet [access and] telecommunications,” she added.