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Davao City, Philippines

High shipping rates: Unfinished business

January 10, 2020 - Friday 4:01 AM by Jimmy Laking

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I heard it first in the early 1990s when the late businessman Pedro Durano, who made a name for himself as a copra exporter in the Davao region, railed against it.

I also remember then-Urban Poor Rep. Rey Magno Teves saying it was one of the issues that was holding back development in Mindanao.

My news story on this was distributed by the Philippines News and Features and printed in the Manila-based newspapers. It was picked up by the journalist-author Alito Malinao as one of several news examples for his book, Journalism for Filipinos.

On Wednesday at the Habi at Kape, or more than two decades later, I could not believe my ears when respected business leader Tony Peralta, the president of the European Chamber of Commerce in the Philippines, unwrapped the issue like a blast from the distant past. Nope, it has not gone away in the intervening decades. It has in fact clung barnacle-like to the economic landscape like a festering wound that refuses to heal.

As Peralta explained it, there was need to revisit the country’s Cabotage law that governs “trade or navigation in domestic waters.”

If I got it right, this law has restricted competition to a few shipping companies that also had the final say on shipping rates (to include air, shipping, and land).

To the detriment of Filipino businessmen, these rates are decidedly much higher than international rates.

As a case in point, he said, it is more expensive to ship goods to Cebu or Manila from Davao than to a foreign destination. Peralta said it is also decidedly much cheaper to import than to export.

Believe you me, I heard that said during the early days of the BIMP-EAGA from the mid-1990s onwards. Had it waited all these decades past only to resurrect in 2020 with the faint hope that the Duterte administration will address this issue once and for all?

Peralta batted for full accountability in tackling the issue especially under the Duterte administration that strives for inclusive change.

“How can the business sector ship out more products and thus create economic activities for the rural areas if the shipping rates remain prohibitive?”

“When can we move on if we are tied down to the same set of laws that have stifled growth?”

“Any chance we will open up the industry to foreign shipping to improve competitiveness?”

“With globalization just around the bend, when will we enjoy the benefits of a two-way, free economy?”

In his estimate, Peralta said prohibitive shipping costs are eating up 20 to 25 percent of the total production cost.
Peralta is pinning his hopes that the incoming logistics conference scheduled in Davao City on January 31 can provide some of the answers.

In addition to industry players, his group has invited the Department of Trade and Industry and other pertinent government agencies that could clear the issue once and for all.

By the way, Peralta is executive officer of FREEDOM, Inc., the group that pioneered the production of nipa palm sugar.

The product is made using fresh sap from nipa palm, “delicately cooked into syrup and processed as pure natural sweetener.”

The group has its first manufacturing plant in Butuan City and is looking forward to expanding its operation in the Bangsamoro Autonomous Region areas where nipa palm grooves are a common feature of the landscape.