By Katrina T. Mina, July 15 2019; Business World

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THE government is drafting an executive order (EO) for the Palace addressing high shipping costs, Trade Secretary Ramon M. Lopez said.

In his speech at the 2nd Logistics Services Philippines Conference on Monday, Mr. Lopez said he plans to reconvene the technical working group that issued a joint administrative order (JAO) on the matter to work on the EO.

Mr. Lopez said measures require more “teeth,” with the EO expected to “really allow us to implement with greater force the provisions of the JAO.”

Mr. Lopez said that the target date for a draft is one month.

In a news conference at the same event, Mr. Lopez said, “The executive order will specify… the agency that will really be accountable for… the setting of shipping rates.”

The JAO, issued by Departments of Trade and Industry (DTI), Transportation (DoTr) and Finance (DoF), sought to regulate shipping costs and introduce port reforms to address inefficiencies.

The JAO will be replaced by the EO upon its effectivity.

The JAO is awaiting the signature of the DoF. Mr. Lopez said the DoF is legal issues such as which agencies will be responsible for enforcing certain provisions, and international shipping rates.

“On port congestion, wala nang issue don dahil BoC (Bureau of Customs), malinaw kanila iyon at nagawan na nga nila ng solusyon (there’s no issue on port congestion because it’s clear that the BoC has to take the lead there and they have come up with solutions), so that’s been addressed. So we’re now looking into the area (of) shipping rates.

Mr. Lopez said rates are freely set at the moment, and the government is looking at how , they can be managed to avoid overcharging.

Kaya nga maingat kami dun sa pag-issue lang nung provision (that’s why we are careful in issuing the provisions), that particular part on the international shipping rates, ano ang (what are) allowable, and ano ang (what are the) parameters.”

According to a study conducted in 2017 by the World Bank, “An Assessment of Logistics Performance of Manufacturing Firms in the Philippines,” logistics costs as a percentage of sales were estimated at 27.16%, compared with Indonesia’s 21.4%, Vietnam’s 16.3% and Thailand’s 11.11%.

Mr. Lopez said the target is to lower the cost ratio to at least 20% by the end of year. — Katrina T. Mina