Business groups’ urgent appeal to President Ferdinand Marcos, Jr.

Business groups’ urgent appeal to President Ferdinand Marcos, Jr: Scrap PPA AO 04-2021 and stop interference of vested interests

Dear Mr. President:  

We would like to congratulate you on the achievements of your administration as you enter your second year in office.  Under your leadership, inflation has slowed from 8.7% in January 2023 to 5.4% in June 2023. Notably, reduced transportation costs were one of the main reasons for the slowdown in inflation. We attribute these gains to the careful, evidence-based decisions made by your administration this past year. 

We remain one with you in continuing to protect the purchasing power of families by ensuring food security and reducing transport and logistics costs. In this regard, we respectfully caution your administration against vested interests that could effectively erase your early gains.    

1. Vehement objections from government officials, private enterprises, and the international community

As you may recall, the PPA Board decided to indefinitely defer the implementation of PPA Administrative Order 04-2021 (PPA AO 04-2021) and the Trusted Operator Program- Container Registry and Monitoring System (TOP-CRMS) due to vehement objections from a multitude of stakeholders, economic managers, business groups, transport associations, and the international community.  The issues against the implementation of PPA AO 04-2021 and the TOP-CRMS program have been so contentious that several government offices have reportedly sent the Office of the President letters opposing the program. To reiterate, among these unresolved issues are:

1. The additional direct financial costs from the additional insurance fees, transaction fees, and trucking fees could increase the cost of importing goods by as much as 50% or at least PHP 35 Billion per year; 
2. PPA’s proposed container monitoring system duplicates existing digital container tracking and booking applications of international shipping lines, terminal/off-dock CY operators. It is merely an unnecessary additional layer of bureaucracy that has no clear benefit to the public. 
3. PPA AO 04-2021 will waste precious public funds under the guise of “digitalization” when the Bureau of Customs already has an ongoing World Bank-supported digitalization and modernization strategy to curb smuggling;
4. The PPA has no jurisdiction over the issue of container deposits. The PPA should not preempt the action being taken by the legislative branch of government via House Bill No. 04933, a.k.a. the “International Maritime Trade Competitiveness Act.” Said bill is presently deliberated by the Technical Working Group of the House Committee on Transportation. A counterpart bill on the same subject, Senate Bill No. 2147, is also pending in the Senate;  
5. PPA AO 04-2021 will potentially open the opportunity for the anti-competitive control and abuse of sensitive business data by a company that competes with other enterprises in the logistics space. To date, the PPA has undertaken no competition impact assessment of the PPA AO 04-2021, despite its clear obligation under AO No. 44; 
6. PPA AO 04-2021 was approved prematurely without understanding the sector’s issues. As admitted by PPA officials, “the system cannot be designed unless [they] know what the problem is or what the challenges are.” Sadly, after almost two years since the issuance of AO 04-2021 on September 22, 2021, PPA’s management has still not figured out the issues in 2023 as TOP-CRMS’ “objectives” and Implementing Operational Guidelines kept changing every now and then; and
7. PPA AO 04-2021 disregarded best practices in other countries with large container ports, such as Singapore, on the alternative ways to implement the supposed objectives of the program. 

Succeeding Senate investigations and public consultations further emphasized the glaring deficiencies of PPA AO 04-2021 and its draft Implementing Operational Guidelines (IOGs), with Senators expressing alarm over the flawed design of the program. Senator Grace Poe, in a press conference held immediately after the April 12 hearing called by the Senate Committee on Public Service, which she chairs, opined that the TOP CRMS should not push thru after hearing the comments and testimonies of the private stakeholders and government officials who attended the hearing.

Considering the overwhelming rejection of PPA AO-04-2021 across different public and private stakeholders, we were surprised to receive unconfirmed reports that certain vested interests have renewed their push to implement the controversial program to the detriment of Filipinos.

2. PPA AO-04-2021 will erase the administration’s gains against inflation. 

We respectfully urge the President to remain vigilant against interest groups putting pressure on his administration to implement a flawed program consistently opposed by public and private stakeholders. More alarming than the lack of a sound legal and empirical basis surrounding PPA AO 04-2021 is the additional PHP 35 billion annual importation cost that could once again drive inflation in the Philippines. This amount could easily be magnified by the port congestion that the PPA’s confusing, unnecessary, and flawed TOP-CRMS program may cause. 

The lack of transparency, misleading claims, and inaccurate reports over the status of the PPA AO 04-2021 and its ever-changing draft IOG have put a cloud of uncertainty in the logistics market. We fear that the continued ambiguity will also lead to insecurity in the supply chain of essential commodities. 

In view of the foregoing, we, the undersigned, stand in unity and appeal to the President to:

1. Urgently and explicitly confirm the repeal of PPA Administrative Order No. 04-2021; and 
2. Admonish public officials who blatantly disregard valid concerns from the private and public stakeholders and who refuse to follow your administration’s “whole-of-government approach” in public administration.

Thank you for the usual attention and support.

Respectfully,

Copy furnished:

ADVT.