Numbers Don’t Lie


Last September, the Philippine Ports Authority (PPA) issued an administrative order entitled “Container Tagging and Tracking System” (later on changed to “Container Registry Monitoring System” or CRMS). In that administrative order, the PPA expressed its need to install a system that monitors the movement of shipping containers from the time they enter PPA ports to the time they are exported. The purpose is to prevent the diversion of bonded cargo into the open market. In other words, to prevent smuggling of goods while in transit.

The plan may sound sensible at face value but is problematic on at least five levels. In fact, the Alliance of Philippine Customs Brokers and Trucking Association as well as numerous importers and exporters have filed a complaint about the matter to the PPA itself. Industry stakeholders argue that the PPA plan is unnecessary and only partially effective. It will exacerbate port congestion, is scandalously expensive, and that the bidding processes gives us reason to suspect graft. Let me explain.

Why is it unnecessary? It is unnecessary because the Bureau of Customs (BoC) has its own container identification and tracking system called the Cargo Targeting System. This is the same system used by members of the World Customs Organization. In addition, the BoC has also adopted a system called eTRACC. The latter utilizes GPS seals to secure and track containers to and from the port to bonded warehouses and PEZA (Philippine Economic Zone Authority) zones. With these systems in place, the PPA’s CRMS system is redundant.

Moreover, with the implementation of the CRMS system, the PPA effectively encroaches on the mandate of the BoC. Bear in mind that it is the BoC that is mandated to protect against customs tax fraud and one of the ways it does this is by monitoring the movement of containers while in transit. The PPA’s mandate, on the other hand, is confined to port administration, operation, and development. Nothing in its charter gives PPA dominion over anti-smuggling operations. In short, it has no business pursuing the CRMS project.

Why is the CRMS only partially effective? Unlike the monitoring systems of the Bureau of Customs which cover all the ports in the country, the PPA’s CRMS system applies only to containers passing through PPA ports. It lacks the mechanism to monitor containers that transit through ports and ecozones outside PPA jurisdiction such as SBMA (Subic Bay Metropolitan Authority), Clark, PEZA, Customs Bonded Warehouses, Off-Dock Container Depots, and others.

Why will the CRMS system exacerbate port congestion? At present, about 4,000 containers flow out of the Manila International Container Terminal and the South Harbor daily. Under the CRMS’s system, each container will have to be rigged with a tracking device. Assuming it takes five to 10 minutes to install the device, one can imagine the traffic this will cause at the exit gates.

There is also the added procedure of detaching the tracking devise upon re-export of the containers. This will have to be done at a site outside the port. This means shippers must make an extra land trip and an extra stop before they can export the containers, costing extra time and money. Note too that the extra trip to the detaching site will worsen vehicular traffic on our roads.

How expensive is the CRMS system? The project’s budget is P980 million but this is only for the pilot run that covers 200,000 containers. As taxpayers, I think we can all agree that to spend nearly a billion pesos of public funds for a mere pilot run (of a redundant project) is imprudent.

When the project is fully implemented, the program will affect at least 1.2 million containers a year. At P4,900 per container, PPA will have to spend about P6 billion annually on this. It is not clear whether the PPA will bear the cost or if it will be passed to the shippers. Either way, the cost will be borne by the Filipino people through the use of taxpayers’ money or by way of higher prices of imported goods.

Why does this deal give us reason to suspect graft? Because the bidding terms of references severely limit competition. First, the bidding documents specifies that the bidder must possess a 10-hectare property, accessible by major roads within a 50-kilometer radius of PPA ports. Given the scarcity of free land in Metro Manila, there is probably only one entity that can fulfill this requirement.

Second, one of the requirements of the PPA is not even relevant to the scope of work of the project. It is for the bidder to have an operable ID system. Curiously, one of the prospective bidders has a National ID contract under the Philippine Statistics Authority.

Third, some of the items in the terms of reference allude to specific suppliers. The person who drafted the terms of reference probably forgot to delete the name, giving away the identity of a favored supplier.

Fourth, the terms of reference are so vague in some parts that quantities are not even specified.

The bids were opened on March 15. True enough, only one company submitted and qualified.

Through an e-mail last March 19, I reached out to PPA General Manager, Jay Daniel Santiago, to get his side of the story. I received no response.

At a time when the country is drowning in debt, the last thing we need is a project that is redundant and unreasonably expensive. As the business sector struggles with bureaucratic red tape, the last thing we need are multiple steps and added costs to the import and export process.

Given the adverse effect on industry stakeholders and on the public in general, we hope that the higher ups of the Department of Transportation and the Anti Red Tape Authority will look into this matter.


Andrew J. Masigan is an economist

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