Finance Secretary Margarito Teves and Customs chief Napoleon Morales had likewise expressed confidence that with the BOC operations modernized, the government sees an increase in the collection of import duties and other taxes which dipped last year due to the global economic crisis. --Abe P. Belena, PHILEXPORT News and Features <--back

2. ASEAN-Australia-New Zealand free trade to start this February

A comprehensive free trade agreement that includes trade in goods and services between the ASEAN-10 trading bloc and Australia and New Zealand, will take into effect this year, one of the country’s negotiators, Assistant Trade Secretary Ramon Kabigting, announced.

The announcement was made to representatives of some business organizations and government as the Department of Trade and Industry, the Bureau of Customs and embassies of both New Zealand and Australia made final preparations for the formal launch of the free trade’s effectivity at the Bureau of Customs office in Manila on February 10.

The ASEAN-Australia-New Zealand free trade agreement (AANZFTA) was formally signed by the 10 members of ASEAN and their new trade partners during the ASEAN summit in February last year.

Kabigting said that the formal take-off of the agreement on February 10 will feature an announcement of the new trade and investment deal, the extent of its coverage and the expected benefits to the contracting economies. The whole afternoon will then be devoted to briefing exporters, importers, logistics companies and other stakeholders in the country’s international trade on how best they can take advantage of the new treaty.

Kabigting said that trade attaches and even the ambassadors of New Zealand and Australia will be on hand to explain how exporters can sell to their respective countries under this FTA.

Official trade records had shown that the Philippines has had minimal trade with both countries before the treaty was signed.

Kabigting said that the country’s track record in entering into new trade agreement in East Asia, especially China and Korea in recent years, had made up for a steady decline in exports to the US, Europe and Japan that went into recession in the past couple of years.

Exports to China, the fastest growing on record in this decade, had cushioned the impact of the big retreat in sales to the United States in recent years. -- Abe P. Belena, PHILEXPORT News and Features <--back

3. RP drafting transport policy agenda for next 6 years

Policy makers and other stakeholders on transport sector are currently defining the country’s transport policy agenda for the next six years aimed mainly at encouraging greater competition in the sector which can improve services and bring down costs.

According to the draft national transport policy framework (NTPF), the allocation of traffic to the least cost mode/route should be the core goal of a welfare-maximizing transport system.

“A successful transport policy will try to ensure that, where possible, the generalized cost to the customer is lowest by the least (total) cost mode,” it said. “In this way the customer will, in following his own self-interest, choose the most beneficial mode from the viewpoint of the whole economy.”

The draft NTPF was prepared by Kellogg Brown and Root Pty Ltd. in association with Transport and Transport Planners Inc. for the Philippine-Australia Partnership for Economic Governance Reforms (PEGR)-funded reform agenda on formulating a national transport plan.

It pointed out that the ‘user pays’ principle for cost recovery should be applied where appropriate, including through bus fares, freight rates, shipping, air tariffs and rail tariffs.

User charges for government-provided national road, on the other hand, shall cover at least the maintenance costs of the network.

“Pricing at the marginal cost should be the aim. Where new investment is planned, this would be medium/long run marginal cost to meet forecast demand,” it noted.

The draft NTPF also pointed out that cross subsidies should be avoided.

“Eligible subsidies should be direct, specific and transparent. There is no reason why some passengers/shippers on profitable/dense routes should be required to cross-subsidize passengers/shippers on unprofitable/low density routes through the transport operator’s pricing structure,” it said.

During the national stakeholders’ workshop last month, deputy team leader Dr. Primitivo Cal said that aside from cost recovery and subsidies, other key policy areas covered in the Plan are resource generation and allocation, regulation of passenger transport services, urban transport, transport logistics and governance.

This also includes criteria that could guide transport agencies in the identification of programs and projects in project programming and in determining project viability.

“Passenger transport policy will focus on amending the Public Service Act to put the liberalization policy in place for road, air transport and railways,” Cal noted.

In transport logistics, he said, the country is geared towards achieving a seamless, intermodal transport network to promote productivity and trade competitiveness.

The Department of Transportation and Communications (DOTC) shall be granted the power to review the transport plans of all agencies, including those agencies and authorities outside its umbrella, to ensure that their plans conform to the NTPF. -- Danielle Venz, PHILEXPORT News and Features <--back

4. NMIS, FDA strengthen partnership in regulation of the meat industry

Meat establishments shall continue to secure a certificate of accreditation from the National Meat Inspection Service (NMIS) while those producing processed non-meat products shall apply for license to operate with the Bureau of Food and Drugs (BFAD).

“In case of joint jurisdiction, close coordination between the two agencies shall be adhered to in the approval of applications for authority to operate,” according to a joint administrative order (AO) by the Department of Agriculture-NMIS and Department of Health-FDA.

The AO, signed by Agriculture Secretary Arthur Yap and former Health Secretary Francisco Duque last December 28, outlined the delineation of functions of their agencies and shared responsibilities in the regulation of meat products.

It stipulated that the NMIS shall have sole jurisdiction over meat establishments and those offering new meat products developed from new technology.

NMIS’ functions also cover implementation of product standards, registration, labeling and certification of companies under its control.

The FDA, on the other hand, shall continue to administer establishments offering processed non-meat products or those containing a relatively small proportion of meat or historically have not been considered as meat products.

But the two agencies shall have joint jurisdiction on establishments producing both meat and non-meat products, with the former focusing on areas related to the handling, preparation and production of meat products while the latter focusing on the non-meat products.

Apart from their respective functions, the two agencies shall strengthen their partnership in the regulation of the meat industry.

For one, they shall harmonize the procedures and requirements for product registration with the existing procedure of DOH-Bureau of Food and Drugs (BFAD).

NMIS and BFAD shall also closely coordinate in the labeling of meat products in compliance to Republic Act 8976, otherwise known as the Food Fortification Law.

“DA-NMIS and DOH-BFAD shall continue to coordinate and collaborate in assuring safety and quality of meat products available to the consuming public by efficient and effective delivery of services,” they stressed in the AO.

The adoption of such functions and shared responsibilities is mandated by the RA 9296, also known as the Meat Inspection Code of the Philippines. -- Danielle Venz, PHILEXPORT News and Features <--back

5. Implementation of new rules on bulk, break-bulk shipments deferred anew

The implementation of the new rules and procedures on imported bulk and break-bulk shipments has been deferred anew pending the issuance of the customs regulations on port load and port discharge surveying and in response to private sector requests.

In a recent meeting called by the Export Development Council, Bureau of Customs (BoC) Deputy Commissioner Reynaldo Nicolas said the new rules should have been effective last January 4, but has also been delayed considering the requests of the private sector.

Nicolas said Customs Commissioner Napoleon Morales relayed such requests in a letter to Atty. Narciso Santiago Jr., head of the Presidential Adviser on Revenue Enhancement who chairs the committee for accreditation of cargo surveying companies (CACSC).

He said a Technical Working Group was created to draft the customs regulation.

Nicolas said public consultations will be conducted with the affected sectors for clarification of the policy and to consider recommendations of other stakeholders.

The ruling for those who are exempted from port surveys and inspection will also be discussed, he added.

Nicolas, also a member of CACSC, said they continue to receive and process applications for accreditations from cargo surveying firms.

So far, the committee accredited Cotecna Inspection SA and Bureau Veritas to survey bulk and break-bulk cargoes arriving in the country, he said.

However, Nicolas said they would have to thresh out the issue being raised that some accredited surveyors have no presence in some countries.

Administrative Order 243-A requires a report of CACSC-accredited cargo surveying companies on imported shipments involving bulk and break-bulk cargoes. These are reputable firms with an international office network in the countries exporting to the Philippines and the ports of origin.

The report may be issued by these companies only after a full survey of the quantity, quality, grade, price or value and classification of the bulk and break-bulk cargo.

This new procedure will facilitate the proper examination, classification and valuation of bulk and break-bulk cargoes using measures compliant with customs international best practices and global trade standards. -- Danielle Venz, PHILEXPORT News and Features <--back

6. WB study shows RP a strong logistics performer

A World Bank Group study indicates that the country’s logistics performance is relatively impressive when measured against its income level, making it a strong performer alongside China, India, Uganda, Vietnam, Thailand, and South Africa.

The Report, entitled Connecting to Compete 2010: Trade Logistics in the Global Economy, is based on the most comprehensive world survey of international freight forwarders and express carriers.

The Philippines ranked 44th in the Logistics Performance Indicators (LPI) out of 155 economies, outperforming Vietnam (53) and India (47). The country, however, is lagging behind Thailand (35) and China (27).

Owing to the binding constraints faced by low-income economies in logistics services and international transit system, it is the high-income economies that are dominating the logistics rankings. The study, however, finds positive trends in developing countries in some areas which are vital to logistics performance and trade. These are modernization of customs, use of information technology, and development of private logistics services.

The trend pointed out in the Report stands apparent in the case of the Philippines, where various reforms have been undertaken to modernize and align its customs procedures and practices to global standards. As a matter of fact, the country is compliant to 55.4% of the standards and recommended practices prescribed by the Revised Kyoto Convention (RKC) based on a research work led by former Customs chief Guillermo L. Parayno, Jr.

RKC is the global blueprint for modern, simplified and harmonized Customs procedures, standards and best practices that will facilitate lower cost of cross-border transactions, enhanced administrative transparency and efficiency, and greater trade security.

The country's accession to the RKC is expected to further modernization efforts as RKC itself requires Customs to apply information technology to support the agency's operations. Such development will yield better logistics performance for the country and greater competitiveness of local products in the global supply chain.

The Senate has approved the RKC on second reading on Wednesday and is expected to ratify the treaty next week.

The World Bank study estimates that increasing logistics performance in low income countries to the middle-income average could boost trade by 15 percent and result in lower prices and better quality services to the benefit of all firms and consumers. This will translate to faster growth, enhanced competitiveness and increased investments. -- Ritchie Alburo, PHILEXPORT News and Features <--back

7. Furniture makers to implement cooperativism program

Furniture makers throughout the country will employ the “big brother-small brother” concept to help one another to address problems facing the sector.

The revival of cooperativism model is one of the priority programs of Myrna Bituin, the new Philippine Exporters Confederation, Inc. (PHILEXPORT) trustee for the furniture sector.

Bituin said she would like to reach out to members of the chapters of the furniture producers in the country, both those into the export and domestic markets.

“I am going to visit our members from north to south and get involved again with them, know them better and know their needs. I want to get a good feeling of what is happening in the industry and from there, I can get information on where we can work hard,” she said.

Bituin, who was the past president of PHILEXPORT Region 3 and a major furniture exporter, believed that the implementation of the big brother-small brother concept will enable the bigger companies provide assistance to the smaller ones in various areas, aside from subcontracting.

She said furniture exporters need to determine ways to maximize the limited government support for the sector in terms of marketing and production.

Bituin pointed out that this is important, especially as the sector is still reeling from the effects of the global crisis affecting most the United States, still the country’s biggest market.

“We have to explore new rich markets. And we don’t have to look far, we may look into Asia,” she said, citing as an example China and Korea and even Asian neighbor like India.

Bituin said most furniture exporters have also considered serving the local market as more hotels and houses being constructed here which need furniture products.

Apart from penetrating other markets, she said, manufacturers must continue implementing measures to improve their productivity to sustain business operations.

“I think we need to work harder especially today in our productivity, on our cost of materials, incentives on people to work better and ways to finish our products faster. And if possible, there should always be no defect, every product should be right,” Bituin said. -- Danielle Venz, PHILEXPORT News and Features <--back

8. RP’s BPO seen to grow 26% in 2010

Industry players will continue to aggressively promote internationally the country’s non-voice business process outsourcing (BPO) capability which is crucial in achieving the sector’s 26-percent growth target of $9.5 billion for 2010 from last year’s estimated $7.3 billion.

“Those are higher-value BPO and there are a lot of talents available in back office like finance, IT (information technology), HR (human resource) solutions, engineering and supply chain,” stressed Oscar Sañez, the Philippine Exporters Confederation Inc. (PHILEXPORT) trustee for the IT sector.

Sañez pointed out that one of the most notable trends this year that could boost the sector is outsourcing in non-voice BPO which he said is growing at a faster rate than the voice or the call center sector.

Apart from heavily promoting the country’s non-voice BPO capability, Sañez said, they will also continue conducting investment missions and attending main conferences abroad especially those targeting the United States, United Kingdom and Australia.

“And we also want to do international conferences so that we can invite the foreign clients to come here just like what we did last year,” he said.

In line with this effort, Sañez said the industry intends to work with the government on policies that will promote the growth of the industry, including getting support for education and marketing of Philippine outsourcing services abroad.

“We want to build up on our human resource pool so we have partnerships with universities to promote English proficiency because that’s an important qualifying skill and competency for our recruits. Right now, we have partnerships with 21 universities and we would like to do some more of that,” he said.

Sañez expressed optimism that the implementation of these programs could help expand the country’s global market share.

“I think, we will still be below 10 percent but our revenues are high because the total market is bigger,” he said.

Moreover, Sañez said the BPO sector is expected to receive an added boost as more multinational firms are increasingly looking for multi-location.

“For example, they set-up (operations) in India and another one in the Philippines and China because of language requirements, the differences in skills available in those markets as well as to have a security and back-up operations in different places. That trend is good for us,” he said. -- Danielle Venz, PHILEXPORT News and Features <--back