Listed port operators Asian Terminals Inc. (ATI) and International Container Terminal Services Inc. (ICTSI) have denounced the Bureau of Customs (BOC) for its haphazard and unreasonable speed in scheduling a public hearing on the implementing rules of the Customs Modernization and Tariff Act (CMTA), a law that covers how the two major port players operate in the country.
In separate letters submitted on June 10 to the BOC, the agency tasked to implement the law, the port operators questioned what they called abbreviated public hearing and a very short period allowed for stakeholders to come up with their position papers on the draft implementing rules and regulations (IRR).
ATI and ICTSI are the two international freight-handling firms at the Port of Manila, the country’s main port and where the BOC generates the bulk of its collection.
ATI, controlled by DP World and businessman Eusebio H. Tanco, said the conduct of the hearing was “premature, irregular and hasty.”
In its letter, ATI said it was active in the deliberations of the CMTA when it was being heard in the two chambers of Congress. It has, however, two versions in its possession, one each for the Senate and the House of Representatives, and the merged version was only published in the Official Gazette on June 6 and 7.
“It is, therefore, unfair, oppressive and violative of the stakeholders’ constitutional right for the BOC to demand that stakeholders participate this early in a proceeding for the drafting of the implementing rules or review the implementing rules that was already drafted by the BOC,” Andrew Hoad, ATI executive vice president, said in the company’s letter.
“At the very least, therefore, ATI and the other stakeholders are entitled to that 15-day notice period before the law becomes finally effective, which is its full opportunity to be informed, to review the new law as signed and assess its impact on its business and activities,” he said.
Hoad said the CMTA should take effect only on June 14 and “not earlier than that, assuming it was published upon approval of the President on May 30, 2016.”
ICTSI, controlled by billionaire Enrique Razon Jr., said it only received on June 6 the notice of public hearing earlier scheduled on June 9 and 10. The BOC, however, decided to cut short the two-day hearing and decided to hold it only on June 10. But it still required all stakeholders—which also included shipping lines, brokers and forwarders—to submit their respective position papers on June 8, or the same day that a copy of the draft IRR of the CMTA was given to them.
“We strongly recommend that the next public hearing be conducted at least three weeks from today [June 10] and that the stakeholders, including our company, be granted the same period of time to submit our comments on the draft IRR,” ICTSI Regional Legal Manager for Asia Pacific Lirene Mora-Suarez said in the letter.
“With all due respect to the Bureau [of Customs], should our request be denied, please consider this letter as our formal protest in the haphazard and unreasonable speed by which this present Bureau of Custom’s administration is trying to pass and issue the CMTA’s IRR, notwithstanding the change in administration in 20 days,” she said.
The BOC continued with its public hearing, though it became a consultation meeting with other stakeholders as the agency decided to hold breakout sessions with the sectors, instead of a plenary meeting with all other groups.
The port operators did not participate, though ATI and ICTSI representatives remained during the hearing. Its lawyers promised, instead, to hand their stand to the BOC.
ICTSI and ATI has been keen on the CMTA’s IRR after the BOC, through its various customs memorandum order (CMO) released last year through this year, has given the operator of the Manila North Harbor, the Manila North Harbour Port Inc. (MNHPI), to operate as an authorized customs facility (ACF). The said status, in effect, allows foreign vessels to dock at the port and turn it into an international port.
The BOC gave its MNHPI the status in December last year.
The agency’s moves, according to insiders, are linked to the CMTA, since the law gives it such powers, which it had during the World War era, but has relinquished to another agency, the Philippine Ports Authority (PPA), when various laws were passed starting in 1974.
CMO 12-2016, issued on June 2, quoted RA 10668, or the Cabotage law, or an “Act Allowing Foreign Vessels to Transport and Co-Load Foreign Cargoes for Domestic Trans-shipment and for Other Purposes,” as its reasons for giving MNHPI such ACF status.
The CMTA also gave the BOC those powers, as stated in the Authorized Economic Operators chapter of the law.
MNHPI, meanwhile, has expressed to the PPA this month its readiness to provide services to foreign vessels and cargoes.
The BOC memo has naturally gotten the ire of the PPA, a state-owned agency that, for decades, has been devising schemes to spur development in the country’s port system. Part of that scheme was to give exclusive contract to an operator for, say, 25 years, renewable for another 25 years, in exchange for investments.
That enticed operators, like ICTSI and ATI, to pour in investments and add more when it hit a certain volume of cargo, since it has enough time to recoup its investments. The PPA has that control over the bigger ports in the country, but the BOC’s recent moves hope to virtually reclaim that power that it gave up more than 40 years ago.
The PPA said in its letter to outgoing Customs Commissioner Alberto D. Lina that his issuances may open MNHPI to possible violation of its terminal contract with the agency should it decide to handle foreign cargoes.
“MNHPI’s contract was the result of the competitive public bidding in 2009, where the terms of the bid parameters limit the cargo-handling operations to domestic cargoes only,” the PPA said in its June 9 letter to the BOC, signed by the agency’s officer in charge, Raul T. Santos.
“We wish to respectfully inform the commissioner that the Manila North Harbor has always been known, and was treated as such, as a domestic port since the operations of the said port was transferred to the PPA in 1976,” it said.
The PPA then released its own Memorandum Order 08-2016, dated June 21, that counters the BOC’s memorandum order on Manila North Harbor and restricts MNHPI from accepting foreign cargoes.
“In view of this contractual limitation, MNHPI is prohibited from providing terminal services to foreign vessels at Manila North Harbor. Accordingly, foreign vessels cannot proceed to Manila North Harbor for purposes of anchorage and/or docking at its berths and unloading of their cargoes, among others,” according to the memo, a copy of which was obtained by the BusinessMirror.
The said memo, also signed by Santos, takes effect immediately.
