Read Part 1
Philippine Ports Authority (PPA) General Manager Jay Daniel Santiago appears to have gone on a crusade to combat smuggling. Nothing wrong with that. Any action which would help address this age-old problem should be lauded.
The controversy here however is that, in pursuit of his crusade, Santiago is aggressively pushing for a project which has ignited abhorrence in affected industry stakeholders. Santiago wants to help solve smuggling under the aegis of his pet project called “Trusted Operator Program-Container Registry and Monitoring System” (TOP-CRMS). Stakeholders, in their opposition, contend that the proposed program would do more harm than good.
During the Kapihan sa Manila Bay news forum held on February 1, Santiago boasted that the PPA has not been remiss in what he termed as “whole-of-government” approach to fight smuggling. He again pitched the use of modern technology, such as TOP-CRMS, as a viable tool to do just that. He revealed that PPA’s digitalization programs would “improve efficiency of government services and remove areas of corruption.”
What is significant to point out is his apparent backpedaling on TOP-CRMS’s original selling point: that it was designed to combat smuggling. Now, he’s admitting that going after smugglers has never been the mandate of the PPA, saying that “guarding against such kind of illegal entry and exit of goods and people must be ‘a whole of government’ work on daily basis.” He expressed confidence however that TOP-CRMS could generate information which would deter smuggling activities.
The burning issue
In mid-2021, the PPA issued Administrative Order (AO) No. 04-2021 requiring foreign containers to register in TOP-CRMS. The PPA said that the project was “part of the port authority’s efforts to digitalize processes and aims to further make port operations efficient and prevent port congestion.” In April last year, lone bidder local blockchain-based logistics joint venture company Shiptek Solutions Corporation, NextIX, Incorporation. and Union Bank won the P900-million procurement contract for TOP-CRMS and Empty Container Storage Shared Service Facility (ECSSSF). As designed, the project will install and use digital tracking system to pinpoint the whereabouts of container cargoes in real time. It was claimed that through this, cargo diversion to another warehouse – one of the notorious schemes of smugglers – will be quickly and easily detected.
Is the move a noble one? Apparently not, according to industry stakeholders. As they say, the devil is in the details, and more than 14 industry leaders saw what they say was written between the lines.
An open letter to President Ferdinand Marcos Jr., signed by, among others, George T. Barcelon, president, Philippine Chamber of Commerce and Industry (PCCI); Sergio R. Ortiz-Luis Jr., president, Philippine Exporters Confederation, Incorporated (PHILEXPORT); Pierre Carlo Curay, president, Supply Chain Management Association of the Philippines (SCMAP); Jet Ambalada, director and public relations officer, Philippine Association of Meat Processors Incorporated (PAMPI); Jun Papa, director, Alliance of Concerned Truck Owners and Organization (ACTOO); Roger C. Lalu, chairman, Alliance of Container Yard Operators of the Philippines (ACYOP); and Patrick Ronas, president, Association of International Shipping Lines Incorporated (AISL), was published on January 24 in major Manila broadsheets.
In the letter, the industry stakeholders sought the “immediate and much-needed intervention of the Office of the President, the National Economic and Development Authority, the Department of Trade and Industry, and the Anti-Red Tape Authority in the evaluation of similar programs that could potentially destroy the country’s economy.”
The opposition’s salient points
Citing that the TOP-CRMS will worsen inflation in the country, they said, “Our estimates indicate that the direct financial cost alone from the additional insurance fees, transaction fees, and trucking fees required by TOP-CRMS will result in an almost 50% increase in the cost of importing goods. In real terms, this will lead to a staggering additional annual import cost estimate of at least P35 billion.” The PPA, they noted, has failed to consider that “the ultimate victim of these additional costs is the ordinary Filipino consumer, who is already bleeding from an inflation rate of 8.1%.”
In addition, they charged that the TOP-CRMS clearly usurps the function of the Bureau of Customs. Combating smuggling and the monitoring of containers from the time of discharge from the vessel up to loading for export,” they explained, “are among the primary responsibilities of the Bureau of Customs, while the PPA’s role under its charter is the development and administration of ports falling within its administrative jurisdiction.”
There is also the issue of the container deposit which is currently being addressed by House Bill No. 04933 or the “International Maritime Trade Competitiveness Act.”
Since the PPA is not the regulator of international shipping lines, it should not preempt action being taken by the legislative branch of government. Those opposing TOP-CRMS pointed out that Congress should make the final determination in settling issues involving fees and charges imposed by international shipping lines. Under House Bill No. 04933, the Maritime Industry Authority is proposed to be the regulatory body over fees and charges imposed by international carriers.
“TOP CRMS is not the solution to port congestion,” the industry stakeholders said, “The solution to port congestion lies in the development of port infrastructure and maximizing the assets that PPA already has and not what it will still acquire, accredit or purchase.”
Department of Transportation (DOTr) Secretary Jaime Bautista also wrote the President to express his concerns about the inimical effect of TOP-CRMS to Philippine business. From what it claims to achieve, Bautista said, “The TOP-CRMS is more of a restrictive plan aimed at diverting the growing volume of containers to another location.”
These developments prompted President Marcos Jr. to convene all government agencies involved to resolve the issue. On January 25, with the concurrence of the President, the PPA Board and the DOTr, with inputs from the Private Sector Advisory Councl (PSAC) decided to indefinitely shelve the project.
Despite the agreement, Santiago issued a press statement on January 30 that the PPA is looking at a working timeline of “less than half a year until June to implement TOP-CRMS.” Two days prior, he was quoted in a Daily Tribune column accusing those opposing TOP-CRMS moves as being “funded by smugglers.” The column item attributed the statement to PPA with Santiago as the talking head.
What should be pointed out first of all to the general public is that Santiago is not the PPA. Although Santiago holds the position of vice chair and general manager, the PPA is not one individual; it is an organization composed of different government agencies, as shown below.
Majority in the PPA Board agreed to shelve Santiago’s pet project and he is sticking out like a sore thumb for going against the majority’s decision. To me, his allegation that all industry stakeholders who are against TOP-CRMS – the PCCI, PHILEXPORT, PAMPI, and other signatories to the open letter to the President, as well as the PPA Board and Secretary Bautista himself – are smugglers or in the payroll of the underworld is reckless, malicious, and libelous.
My sources tell me that these organizations are so incensed and are now in the thick of discussions on the legal remedies they could take to set Santiago right. It is perplexing to the business sector why Santiago is going out on a limb to defend a project which many best minds in business find flawed. – Rappler. com
Val A. Villanueva is a veteran business journalist. He was a former business editor of the Philippine Star and the Gokongwei-owned Manila Times. For comments, suggestions email him at email@example.com.
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