THE Philippine Economic Zone Authority (Peza) is keen on meeting its target export revenues of $100 billion this year despite the shipment delays posing risks to the supply chain.
With this goal in mind, the regulator of economic zones said it has been addressing its company locators’ worries over the constraints in the delivery of raw materials and other goods, which usually resulted in longer lead times.
Peza Director General Charito B. Plaza, in an interview with the BusinessMirror, said the investment promotion agency has been working with the Bureau of Customs, Philippine Ports Authority and other agencies handling transportation of shipments to resolve the matter.
“Peza is actively coordinating with them so that they can facilitate the goods of our companies,” she explained.
Industry sources told this newspaper earlier that shipment delays, which started around the last quarter of 2020, could range from two weeks to one month, thereby affecting the production of the manufacturers. A supply chain group warned that the delays in deliveries are expected to last even after Christmas.
As a result, the exporters’ revenues are at risk of being slashed —another challenge to be hurdled by the local industry. Some industry groups noted they have also been dealing with lack of factory workers due to lockdown protocols.
The shipment delays, industry leaders noted, have been caused by shortage of freight vessels amid container imbalance and port congestion.
On the part of ecozone locators, Plaza said that shipment delays were among the reasons behind the halt in operations of 10 percent of the 4,586 Peza-registered companies.
“Their importation or supply of raw materials from other countries [was disrupted] or [lessened],” she said.
Apart from this, Plaza flagged the inability of some employees to report to work because of the lockdown measures, forcing other ecozone firms to stop operations. The Peza chief said the provision for housing and transportation of the locators’ employees has been burning a big hole in their pockets as well.
Cargo delays, relief
The cargo delays have been costly to the company locators, Plaza said. Exporters earlier said the supply chain constraint has ultimately led to substantial surge in freight rates.
With this, Peza decided to provide some relief to aid the financial position of its company locators.
“The port charges during those period of congestion, we allowed it to be deducted from their income tax,” Plaza said.
Other Covid-related expenses such as cost of disinfecting the premises, purchase of personal protective equipment, shuttle service and housing were also deemed as deductible following the approval of the Peza board and Bureau of Internal Revenue.
Peza locators are subject to 5-percent income tax on gross income earnings, she noted.
In addressing the increasing freight fees, the Department of Trade and Industry (DTI) submitted earlier this month to the Congress and the Economic Development Cluster the draft bill of the Philippine Shippers’ Act. The proposed measure, which is currently in deliberation, seeks to grant the Maritime Industry Authority power to oversee the freight charges being imposed by the logistics service providers.
Henry Basilio, chairman of the networking committee on transportation and logistics of the Export Development Council, had previously noted that the cargo handling cost has doubled with the cranage fee amounting to P1,587, in addition to the arrastre fee of P1,575.
Cranage fee is the price paid for the use of cranes when loading and unloading ships. Arrastre fee is charged for the handling, receiving and custody of shipments.
In the first quarter, Peza reported that exports from company locators improved by 15.63 percent to $14.93 billion in the first quarter from $12.91 billion year-on-year.