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Friday, March 29, 2024

Gov’t moves to enhance logistics and connectivity

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The government unveiled its plan to improve logistics and connectivity to steer the Philippine economy towards recovery.

Logistics—or the flow of commodities from production sites to households—nearly collapsed at the start of the coronavirus pandemic after the government closed its borders to contain the spread of the disease, resulting in the shortage of products in the market.

This was remedied by the easing of the quarantine restrictions in the following weeks that allowed cargo ships and trucks to resume operations.  However, partial restrictions  continued, keeping the flow of goods below the pre-pandemic level. 

The Philippine Statistics Authority reported that merchandise exports contracted by 10.1 percent in 2020 to $63.77 billion from $70.926 billion in 2019, while imports posted a deeper decline of 23.28 percent to $85.606 billion from $111.593 billion.

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The National Economic and Development Authority said the government will prioritize the safe opening of the economy, connectivity and logistics reforms to bring down cost and improve competitiveness of the trade sector amid the pandemic.

The Organization for Economic Co-operation and Development and the Philippine Competition Commission recently launched two reports under the OECD’s Fostering Competition in ASEAN Project–the OECD Competition Assessment Review of the Logistics Sector in the Philippines and the OECD Competitive Neutrality Reviews: Small-package delivery services in the Philippines. 

“This study on the logistics sector is very timely as the pandemic restricted the flow of goods in the domestic and global supply chains and exacerbated the issues in the Philippine logistics industry, which was already lagging behind its ASEAN neighbors even before COVID-19,” said acting Economic Planning Secretary Karl Kendrick Chua. 

The virtual launch was attended by British Ambassador to the Philippines Daniel Pruce, Deputy Director of the Directorate for Financial and Enterprise Affairs of the OECD Antonio Gomes, acting head of the OECD Competition Division Antonio Capobianco, ASEAN Secretariat Deputy Secretary General Aladdin Rillo and PCC Chairman Arsenio Balisacan.

The event disseminated the key results and recommendations of the two reports to raise awareness about the importance of having a level playing field for all firms, regardless of ownership.  

“Despite the country’s improved ranking in the World Bank Logistics Performance Index from 71st place in 2016 to 60th place in 2018, more work is needed to upgrade our logistics system to approach that of our neighbors—for instance, Hong Kong and Singapore,” the NEDA chief said.

According to the latest available data from the Department of Trade and Industry and the World Bank, logistics costs in the Philippines accounted for 27.2 percent of sales of manufacturing firms in 2017.  

Meanwhile, foreign direct investment data from the Bangko Sentral ng Pilipinas showed that the share of FDI in transport and storage averaged only 0.6 percent of total FDI recorded in the period 2014-2019. 

To address the issues in the logistics sector, the government enacted significant landmark measures, including the Ease of Doing Business and Efficient Government Service Delivery Act of 2018 and the National Competition Policy through a joint memorandum circular issued by NEDA and PCC.

The administration is also investing in more infrastructure projects by continuing the “Build, Build, Build” program. The 2021 budget of P4.5 trillion includes P1.1 trillion allocated for infrastructure spending. 

Chua said the National Logistics Master Plan 2017-2022 would be updated to further improve efficiency of the national logistics system. 

The Master Plan highlights the regulations needed to boost the performance of logistics components such as customs procedures, port operations and transportation connectivity. 

The NEDA chief also highlighted the pending measures that are immediately doable to attract more investments in the logistics sector.  

“We urge our legislators to swiftly pass the amendments to the Public Service Act, the Retail Trade Liberalization Act and the Foreign Investment Act. All these are crucial in enhancing competition and creating more and better jobs in the country, especially the logistics sector, and crucial for the economic recovery from COVID-19,” he said. 

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