Serendipitous
FIRST PERSON - Alex Magno (The Philippine Star) - August 29, 2019 - 12:00am

We simply had to do it, modernize our infrastructure. For decades, the Philippines spent about half as a percentage of GDP what our neighbors did on infra.

That showed in the decrepit logistical backbone that held our economy back and took a massive toll on our competitiveness. Finally, the Duterte administration put infrastructure modernization front and center with its “Build, Build, Build” program that will cost about P8 trillion over the next few years.

Embarking on this massive infra program proved serendipitous. Economic think tanks now observe that spending on infra will insulate us from the dampening effects of the US-China trade war.

The prestigious Oxford Economics sees three ASEAN economies with the strongest outlook despite the bleakness of a recession-imperiled world. These three are: Indonesia, the Philippines and Vietnam.

The reason for the positive outlook is the anticipated civil engineering growth in these three economies. Indonesia is looking to post a 22% growth in infra spending, the Philippines 20% and Vietnam 14%.

Investing in infrastructures has the highest multiplier effect on national economies. Economic investments create employment, improve property values, lower logistics costs and open new areas for investment.

The infrastructure program provides what economists call “counter-cyclical measures” for these emerging economies vis-à-vis adverse external factors. The infra spending drives domestic economic expansion despite the global slowdown.

We saw how effective “counter-cyclical measures” can be when the Philippine economy escaped the wave of recession created by the 2008 financial meltdown. While some of the major economies flagged, we continued to post strong growth.

The only time our growth slowed was in 2011, when the Aquino administration underspent and arbitrarily forced commandeered “savings” from government agencies. Those “savings”, we later found out, were reconstituted into a huge pork barrel at the disposal of the executive branch. The pork was used to buy support from the politicians for such partisan initiatives as ousting Chief Justice Renato Corona.

There is one drawback for the Philippines, however. Among all the ASEAN countries, the Philippines ranks lowest in the category of “business environment.”

Colorum

E-commerce is booming in our economy. Our governance systems may not be keeping up.

We have the fastest growing internet-linked populations in the world. As of January 2019, about 67% of Filipinos use the internet. By 2020, about 38.4 million will be using smartphones.

Consequently, we have seen a dramatic growth in e-commerce. From 2016 to 2020, we will see an annual growth in e-commerce of 101.4%. Revenues generated by the e-commerce market grew from P36 trillion in 2017 to P44 trillion in 2018. It is forecast to grow to P53 trillion in 2019. Heaven knows what it will be in the years after that.

E-commerce revenues for electronics and media alone is projected to reach over P100 billion this year and over P150 billion in 2020.

This is remarkable, considering that President Rodrigo Duterte is reportedly bewildered by the smartphone and the new DICT secretary had to be teased away from his old reliable analog phone.

The exponential growth of e-commerce has real-world implications for brick-and-mortar businesses, for service industries, for retail establishments and, of course, for regulatory agencies.

Rapid growth in e-commerce mirrors in the rapid growth of the courier and freight-forwarding industries that deliver the orders of the buying public. The growth has swamped the regulatory agencies, creating perils for the consuming public.

Separate government agencies oversee regulation of the logistical aspects of the booming e-commerce sector. The DICT-Postal Regulations Division oversees courier companies. The DTI oversees sea freight services while the Civil Aeronautics Board oversees air freight services. No one is really sure how privacy issues are addressed in the present arrangement, considering consumers surrender their personal data to unregulated courier services.

The separate lines of regulation have resulted in a proliferation of unlicensed couriers and freight-forwarders. These “colorum” businesses leave the consuming public exposed to lost cargo, pilferages, unreasonable delay and others.

There has been, for instance, an explosion in “on-demand delivery services” that earn from commissions from outlets taking orders from apps. Among these are Grab Delivery and Grab Food, Transportify, Angkas Delivery and Lalamove.

We do not have a system for accrediting these service providers. They could transport anything from party drugs to bombs. In May 2017, a bomb exploded in Quiapo, Manila. The device was, investigation reveals, delivered through an unwitting Grab driver.

There are labor issues, too. These courier services are not normally accredited as “independent contractors” with the DOLE, nor are they employees of whichever company uses their services. Hiring practices in this sector are weak, at best.

Even the large delivery services operate with hardly any regulation. Apart from consumer safety, some of these services are found to be violating constitutional limits on foreign ownership. Since they operate as a public service or convenience, logistics companies are supposed to be covered by the 60-40 ownership rule.

Among the largest of such companies is Ninja Express. The company is wholly owned by Ninja Logistics PTE, LTD – which is a Singaporean corporation.

Another company, J&T, is a forwarder licensed by the DTI and the CAB. But it has no DICT approval to render domestic courier services.

A company called Black Arrow Express is licensed to operate in Metro Manila. It apparently has extended its operations to the Greater Cebu area.

This list will grow longer as many courier companies fall through the cracks of a fragmented regulatory setup. It is about time our regulatory agencies get together and formulate a new framework for overseeing a booming courier and forwarding sector.

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