02 February 2021

Logistics reforms and pro-competition regulations are needed to steer the Philippine economy towards recovery, the National Economic and Development Authority said.

On January 29, 2021, the Organisation for Economic Co-operation and Development (OECD) together with the Philippine Competition Commission (PCC), 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 Socioeconomic Planning Secretary Karl Kendrick T. 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, among others.

The event disseminated the key results and recommendations of the two reports in order 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 explained.

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 (FDI) data from the Bangko Sentral ng Pilipinas shows that the share of FDI in transport and storage averaged only 0.6 percent of total FDI recorded for 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 that is pending the President’s signature.

The administration is also investing in more infrastructure by continuing the Build, Build, Build program. For instance, the 2021 budget of 4.5 trillion pesos includes 1.1 trillion pesos allocated for infrastructure spending.

Chua said the National Logistics Master Plan 2017-2022 will also 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.

Lastly, the NEDA chief 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.