INFRA TO ADDRESS LOGISTICS GAP
Trade official notes poor infrastructure spending has affected competitiveness rankings
INFRASTRUCTURE still remains a key challenge for the country to fully exploit its healthy economic growth and raise its bar of competitiveness in the domestic and international trade.
But the country is already beefing up its investments in infrastructure development, with the pronouncement of President Rodrigo Duterte to pour more capital outlay to narrow the logistics gap, said Jonathan Cabaltera, assistant division chief of the Supply Chain and Logistics Management Division (SCLMD) of the Department of Trade and Industry (DTI) yesterday.
DTI Cebu Provincial Director Ma. Elena Arbon underscored the critical role of the logistics sector in spurring economic growth, especially in the countryside. She 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 one points to another.
Unfortunately, the lack of a better infrastructure network has limited the SME sector from harnessing economic potential as rough roads, absence of road networks, congestion in seaports and airports mean loss of money and high logistical costs.
In the Philippines, logistics costs account for 24 percent to 53 percent of wholesale prices, with shipping and port handling costs making up eight percent to 30 percent, depending on the goods and routes, and five percent of retail price of goods.
Cabaltera said the country is lagging behind its ASEAN neighbors in competitiveness rankings because of the past governments’ underspending program on infrastructure, which was less than three percent of the gross domestic product (GDP).
He noted that it was only from 2014 to 2016 where infrastructure spending was boosted from less than three percent to five percent of the GDP or P1.8 trillion.
“A USAid Compete Study said that if we are to sustain in closing the logistics gap, the country is required to have an actual infrastructure spending of P5.7 trillion by 2020,” said Cabaltera, who was in Cebu for a roadshow dubbed “Bridging Logistics Gaps Toward Inclusive Growth” attended by exporters, importers, freight forwarders and logistics companies.
Moreover, other ASEAN countries like Indonesia are also introducing regulatory reforms in their logistics sector.
The roadshow highlighted the country’s National Logistics Master Plan (NLMP), a strategic plan that aims to achieve seamless connectivity, with the vision of advancing Philippine logistics competitiveness through a robust and resilient Philippine economy.
Cabaltera is confident the country can show progress in the logistics gap, banking on the pledge of President Duterte to boost infrastructure spending to seven percent of the GDP at the end of his six-year term.
“This administration promised a golden year for infrastructure, so we will expect more infrastructure building from this year onwards,” he said.
A Transport Intelligence Report in 2015 projected that by 2020, the Philippine transport and logistics market would grow to become a P326-billion industry, provided the right infrastructure is in place, right policies are formulated and implemented, the right regulations are implemented, and efficient institutional support is in place.
For airport infrastructure, the master plan recommends that the government develop, expand and modernize the international and secondary gateways across the country to expand capacities of airports to handle more cargo and passengers.
It also recommends to modernize domestic seaports including Cebu that will serve as regional hubs, and encourage private sector investment in international port development and expansion by issuing long-term permits to operate. It also suggests development of new roll-on and roll-off ports.
Likewise, the master plan suggests to issue a comprehensive national transport policy for a safe, secure, and environment sustainable intermodal transport system; repeal or amend the Public Service Act, separate overlapping and conflicting functions or mandates of the regulatory agencies; enact into law the proposed Omnibus Maritime Code and support the passage of the PPP Law, among others.