KEYNOTE SPEECH OF SECRETARY RAMON M. LOPEZ
2nd Logistics Services Philippines Conference, 15 July 2019
PICC, Pasay City
Introduction
Thank you. Maraming salamat po. I am very humbled by the turn of events. But really, I must say that the President was just pressured to identify the three, but all Cabinet Secretaries are really top performers. Kaya palakpakan po natin ang buong Gabinete. We’re working as one team in pursuit of the vision and goals of President Rodrigo Roa Duterte, which is improving the lives of all Filipinos. Nagkakaisa po kami d’yan.
Good morning to our logistics service providers, our micro SMEs, all the panelists and speakers, fellow workers in government, the DTI officials, regional and provincial directors who are in the hall. I must also thank Undersecretary Aldaba for a very futuristic message. And a very comprehensive update on the 10 Commitments, maraming salamat po, Ms. Alberto. And to all our friends, our distinguished guests, magandang umaga po sa inyong lahat.
Allow me to welcome you to the 2nd Logistics Services Philippines Conference, just seven months after the first Logistics Conference where we gathered all the stakeholders in this service industry. I was just telling some guys earlier, ilang taon na ang negosyo sa Pilipinas, but it’s just now that we’ve gathered all the stakeholders in the logistics industry. Only last November for the first time. Really, thanks to all our friends in the logistics sector, lahat po ng nandito, palakpakan po natin.
We’re just so happy that the DTI has been an instrument and we continue to be your partner in government, together with the Department of Transportation (DOTR) and the Department of Finance (DOF), and the Bureau of Customs (BOC) under its wing.
Speaking of the need to move ahead, we decided to transfer the 2nd LSPH Conference from December to July to allow the sector to concentrate on your business since the Yuletide season is your busiest time of the year for the industry.
Also significant is that we are holding the 2nd LSPH back-to-back with the MSME Development Summit to be held tomorrow in the same venue. This is in line with one of our advocacies to encourage our micro SMEs to focus on their core business, and to allow logistics service providers whose business is to deliver your goods to your customer at the right time, at the right cost, in the right form, as well as reliably, and worry free.
We are also confident that the 2nd LSPH exhibition is the venue for that, as we aim to bring logistics service providers closer to their potential clients—the micro, small and medium enterprises which will be attending the summit tomorrow. So the exhibits will also be around tomorrow.
Ultimately, this is for the Filipino people. By improving the logistics sector, we ensure a better business environment. This in turn impacts the ease of doing business in the Philippines. As well as lower the business costs. This means lower consumer costs as well for our people which give them better value for money. This helps give realization to the promise of President Rodrigo Roa Duterte, Tapang at Malasakit para sa ating mga kababayan. This is a government that is responsive to its people by helping them live better quality lives.
ABOUT THE 2ND LSPH
I am told by that the 2nd LSPH conference and exhibition is bigger and better, as it generated significant interest. Both events recorded more registered participants compared to last year.
I urge you to visit the exhibition at the mezzanine which showcases the entire logistics services sector–-from inland transportation, warehousing, cold storage, customs brokerage, freight forwarders, shipping and air cargo, including I.T. companies that provide tracking and tracing.
LOOKING BACK
Before we look forward, let us look and appreciate the work that has been done. Though this has been presented point by point by Ms. Alberto earlier. This began from the time the private sector and government made a pact we now refer to as our “Ten Commitments”, as reported by the Ms. Alberto there had been notable movements.
We are guided by global rankings.
● In the 2018 edition of the Logistics Performance Index (LPI) of the world bank, our country’s logistics performance improved when the Philippines’ rank increased 11 notches from 71th place in 2016 to 60th out of 167 countries last year. While we were listed in the World Bank Logistics Report as one of the top performing lower middle income economies, the country’s overall ranking still lags behind other asean economies. This means we still have a lot to do. Because as everybody knows that our global competitiveness depends on our ability to manage logistics in our business environment.
● A closer look of the logistics report will reveal that the Philippines fared well in terms of ease of arranging competitively price international shipments, and in tracking and tracing. However, we still need improvement in customs, infrastructure and logistics quality and competence and timeliness.
● More importantly, the Philippines has the highest logistics cost in the region. This was reported earlier. In the Philippines, the average logistics cost of local companies consist of 27% of the total sales as compared to Thailand (11.11%), Vietnam (16.3%) and Indonesia (21.40%). If you notice, Indonesia and Philippines have logistics cost over 20%. And I would say that this partly due to the archipelagic nature of our countries. Although this challenges us to break down the content so we can address the issues still at hand.
Thus, DTI worked closely with industry representatives on reforms to reduce logistics cost, to make doing business easier, to address our human capital requirements, and many more. Some of these have been mentioned earlier, but let me emphasize all these programs. You will be hearing a lot of updates about the Build Build Build. Infrastructure definitely is one key area that needs to addressed to lower the logistics cost in our country.
Inefficient infrastructure definitely adds to the problem. So, the Build Build Build program is a key program in the Duterte administration’s priorities and therefore, we’re just happy to report that last week, in this hall, updates on the Build Build Build program, reported by Secretary Mark Villar.
Really, you will be proud to be a Filipino when you see a lot of these infrastructures moving ahead. Roads, bridges, ports, there’s a video. I’m sure you can Google the video. It’s a proud moment because in just a few years, you can see all these programs moving ahead. You can see actual videos of the progress, these are not architectural perspectives. You see roads being built and bridges being inaugurated.
Ms. Alberto also mentioned that Secretary Art confirmed his attendance this morning. But I also got a text that said that he will not be able to make it. He was supposed to go to Cagayan de Oro to inaugurate these DOTR projects. I told him, Sec. those are really very important, kindly prioritize those. Those are big projects in logistics and also bringing comfort to the lives of many Filipinos.
‘Yun naman po ang gusto ng ating Pangulo, ang matanggal ang paghihirap, ang hassle, forming lines, inefficient port services would have to be addressed, passenger terminals. These are all being addressed, one after the other. So DOTR Sec. Art has been going around the country, pushing through with all these projects. Palakpakan po natin ulit si Sec. Art.
Now, the JAO has been mentioned. The Joint Administrative Order to address high shipping costs and port congestion. As we move, I signed it and Sec. Tugade also signed it. As we move with the signatories, I have also instructed Undersecretary Rowel Barba and Assistant Secretary Jean Pacheco to reconvene the technical working group of the DTI, DOTR and the DOF. The purpose, really, is to reconstitute the JAO into an Executive Order.
We believe that we need to address the institutional arrangements required to regulate high shipping costs, and address the problem of port inefficiencies and legal basis must be clearly established. Kaya po naisip namin, baka ‘yung JAO kailangan pa ng ngipin. And therefore it must really be an executive order that will allow us to implement in greater force, the provisions in the JAO. ‘Yan po ang aming latest decision d’yan. That is just to update you that we will submit a draft Executive Order on this.
On ease of doing business, it was reported that the law was signed last year and there’s a new Director General, Atty. Jeremiah Belgica. His appointment will pave the way for the issuance of the Implementing Rules and Regulations (IRR). Technically speaking, we already have the IRR, but it has to be officially issued by the Director General.
But I’ve been saying all along that the law has been in effect since it was signed. It’s a self-executory law. In fact a lot of the cases have been submitted to the DTI, ARTA, and the Civil Service Commission. In fact, there was a report last week that I think, more than half of these complaints have been addressed.
Those who have been surpassing the limits of 3-7-20 days (3 days for simple transaction, 7 days for complex transactions, and 20 days for highly technical transactions). If you really go beyond the 20 days, you have the right to complain. You just have to file a complaint. You can also file a request, and if you present this to the concerned agencies, these agencies really move. They know that there is really this law watching them. The law has to be implemented by the citizens and stakeholders filing complaints. That is really how it works, even if the IRR is already there.
Especially, there is one provision, the Citizen’s Charter, where all the documents listed will have to definite. In other words, all the documents required in your application are there. They can’t tell you that you still lack documents, tapos pabalik-balik na. Bawal po ‘yun and that’s also grounds for filing a complaint.
The issue also for those starting a business, asking you to buy fire extinguishers. Bawal na ‘yun. And there’s a penalty. It has a two-strike policy. Suspension first instance. Second instance, termination already. At may kulong pa, etc. I-implement po natin ‘yun.
Also while the ARTA seeks to implement EODB reforms, may I report that the MSMED council, in support of the EODB Act’s whole of government approach will prioritize 5 sectors that will adopt a horizontal and industry approach to streamlining. These are electronics, chemicals, food, furniture, and logistics services based on our initial inventory: A trucker to operate his business needs to transact with 14 government agencies, apply for 19 permits, and submit at least 126 supporting documents.
These will be streamlined and eventually automated. That is the end goal. The DTI’s competitiveness bureau has been directed to continue promoting ease of doing business in these priority sectors by actively pursuing reforms to encourage all concerned agencies to reduce the time, cost, and steps taking into account the provisions of the EODB/Efficient Government Service Delivery Act of 2018.
MOVING FORWARD
More needs to be done. DTI expects the demand for logistics services to grow exponentially due to growing urbanization, increasing consumer base and our young population’s aspirations.
Our country needs a comprehensive policy–not just in transport, infrastructure, but a strong governance structure with the capacity to execute.
Our vision is towards seamless logistics. Admittedly, this is complicated because we are an archipelago and our population is far greater than our neighbors (except perhaps for Indonesia).
But we need to hurdle our domestic challenges then leap towards economic competitiveness in the era of the Fourth Industrial Revolution. We need intelligent industries must be supported by smart logistics.
To this end, the government has adopted an Inclusive, Innovation-led, Industrial strategy (i3S), which is government’s industrial policy geared towards achieving inclusive and sustainable growth that generates more opportunities for employment and entrepreneurship in the country.
i3S aims at growing innovative and globally competitive manufacturing, agriculture, agribusiness, and services while strengthening their linkages into domestic and global value chains with innovation at the core of the country’s strategic policies and programs.
It must be emphasized that under i3S, transport & logistics is one of the 12 priority industries. A reliable, innovation-driven, and efficient logistics services serves a vital role in promoting productivity and competitiveness in the manufacturing, agriculture, and services sector.
CONVERSATIONS…THEN ACTIONS…
To all our participants here today, we hope you will find today’s conversations informative. I am sure the afternoon sessions will give birth to good ideas.
The conference was designed to spark conversations that will trigger action on what the country needs to do to. These include:
1. Improve logistics performance. Let’s drill down why we have 27% of logistics cost in sales.
2. Gear up the logistics services sector to support Industry 4.0, particularly our micro, small and medium enterprises
3. Maximize opportunities as we encourage digital transformation
I wish to underline the importance of this event by quoting Young Tae Kim, the Secretary General of the International Transport Forum who said that a well-functioning domestic and internal logistics is a precondition of national competitiveness.
During the 1st LSPH, Dr. Henry Basilio estimated the amount of investments by the government and private sector to reach PHP6.5 trillion in a span of five years. These investments are expected to generate 220,000 jobs. That’s why we invited the country’s top conglomerates today, which in recent years have made substantial investments in the logistics sector.
Our country is still supposed to be private sector driven. All these are investments are taking place already. We just need to consolidate, align, and complement each other. We need also to synergize these investments so that we move faster and efficiently move forward.
We want to hear their plans and find out how their strategic expansion will benefit their company and the country in general. We have invited representatives from these conglomerates. I thank these companies who have given their time and accepted our invitation today.
In the advent of Industry 4.0, government and private sector needs to gear up for the future. Hence, allow me to also thank our panelists from here and abroad who are here to share “whats out there”.
CLOSING MESSAGE
The government and the private sector have laid the groundwork for the transformation of a logistics services sector that is globally competitive. We have noted our accomplishments on the reforms we set out to do under the Ten Commitments, and I promise you that we will move much faster in this second round. And we thank our partners for making this happen. I want to restate the DTI will be a committed partner in this sector in taking action in these Ten Commitments.
As the new age of industrialization shapes the future of logistics, we recognize the pivotal role of logistics services sector in ensuring seamless logistics and efficient supply chains. Let me reiterate the formula to achieve our goals: Intelligent Industries + Smart Logistics = Productivity and Competitiveness.
Let us join hands in making seamless logistics in the Philippines a reality. This will lead to our goal of an interconnected nation with inclusive growth shared to our people, throughout the country. Especially to those at the bottom of the pyramid. Our President always says everything we do, para ho sa tao. Hindi ho para sa negosyo natin. Dahil kapag masaya ang tao at mas mayaman, sigurado hong mas progressive din ang ating mga negosyo.
Thank you at mabuhay po tayong lahat.