SCMAP Perspective #226
December 10, 2009 by carlo
Published in Port Calls, September 28, 2009
POLITICS IN SUPPLY CHAIN
Fax 551-3207
Email lizaalmonte@yahoo.com.ph
By Ed Sanchez
SCMAP Executive Director
Politics in Supply Chain
With politics dominating the news due to the coming 2010 elections, we try to recall items we have tackled in the past that link politics to supply chain. These include supply chain connected businessmen or businesses involved with politicians or government agencies.
The clearest example of politics in supply chain that I can think of is the infamous EO 59. EO 59 was crafted during Erap’s term (December 1999) and was pushed by a consortium of powerful business interests – the giant international cargo handlers (ICTSI and ATI) and the domestic shipping lines ICTSI. They sought to monopolize services at the North Harbor”, and later on all ports of the country, under the guise of a “unified contractor”.
Stand of Government Officials on Competition
Most senators we approached years ago in battling EO59 did not seem to care, or at best appeared unable to do anything. One former secretary and a current senator (who will run for a higher position next year) was clearly anti-competition, stating that there was no evidence that two operators (competition) was better than one (monopoly) at the North Harbor
We remember just a few pro-competition government personalities, namely former Secretaries Montemayor, Lito Sarmiento and Willy Villarama, and Rep. Ed Zialcita..
We described as refreshing former NEDA chief Neri’s clear stand on competition. So far nearly all (there are a few exceptions) government executives DMAP/SCMAP has dealt with over its 20 years of existence have been anti-competition, speaking out for monopolies, or just acting indifferent. We have seen this at the President’s level, in the agencies running the transport industry and agencies running the economy (DTI). There have been several Administrators and GMs at PPA and MARINA supporting cartels and monopolies.
Sec. Neri even said boldly that the lack of competition in the ports industry is to blame for the high cost of sea transport in the Philippines. Also that the high cost of shipping goods within and from the country have been a major drag on the country’s competitiveness. Sec. Neri called for Congress to overhaul the PPA’s mandate, and to separate PPA’s commercial and regulatory functions.
Regulatory Capture
More examples of politics in supply chain were brought up in 2006 – 2007 when news of the NBN-ZTE scandal broke out. Sec. Neri stood against monopolies, and spoke out against powerful groups in the shipping and ports businesses, including Enrique Razon of ICTSI and Aboitiz. The names of Razon and Aboitiz were among the oligarchy in Neri’s diagram of the current economic-political scene..
After his pronouncements about the lack of competition in the ports as the reason for the high cost of sea transport in the Philippines, Sec. Neri followed it up with a stronger statement on the capture of state regulatory agencies by big business. According to Secretary Neri, the state regulatory agencies are working largely to benefit big business instead of protecting the interest of the people.
Are there really regulatory captives? Is there evidence? Well there are many signs. We have been writing about them in this column over the years, and in other avenues such as hearings and position papers. Some examples are”
- Renewal of contracts for MICT and South Harbor six years before their expiry in 2013
- The glee of a government official that shippers could now be investigated and sued under RA 9295
- Sham PPA hearings
Former NEDA chief Cielito Habito also echoed what Neri said, making it two personalities to speak out against the form of corruption called regulatory capture.
“Legislatory Capture”
But that is not all, for the problems in sea transport. In previous columns I have written before about DMAP’s complaints regarding two legislative shortfalls.
- Lack of legislation on competition / antitrust
- The need to repeal and replace PD 857
So we also have “Legislatory Capture”, which is the failure of lawmakers to enact appropriate legislation because they have been captured by business / commercial interests.
Executive Capture
Maybe capture goes even higher than the regulatory agencies and the lawmakers? Erap’s endorsement of the North Harbor monopoly could be an example. Or the President’s two TV ‘commercials’ prior to the elections paid for by a large cargo handling firm.
The “Uuy labing-labing” television advertisement showed President GMA announcing cheaper rice now available to the people, and was funded by the country’s largest cargo handler. This advertisement was followed by another advertisement, called the “Uuy hangin-hangin” ad. Here President GMA announces cheaper electricity now available to the people, because of what she claims to be her order to slash the purchased power adjustment from our electric bills. This ad was also released “in cooperation with ICTSI”.
Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email scmap.org@gmail.com. Those interested in SCMAP training and other activities are requested to send their e-mail addresses. Visit SCMAP’s website at:www.scmap.org
