New Regulation to Ease Out Small Forwarders

Anticipating a boom in trade in the Asia-Pacific region and the entry of foreign-owned freight forwarders, the Philippine Shippers’ Bureau issued an order increasing eight-fold the required capitalization for the forwarding business. This, protested small forwarders, will kill their business. 

By Jhong dela Cruz
Bulatlat

Anticipating a boom in trade in the Asia-Pacific region and the entry of foreign-owned freight forwarders, the Philippine Shippers’ Bureau issued an order increasing eight-fold the required capitalization for the forwarding business. 

Administrative Order no. 6, published Dec.15, and with implementing rules and regulations issued Jan 2, increased the capital requirement for freight forwarders to P 4 million ($77,056 at $1: P51.91)  for non-vessel operating common carrier (NVOCC), P2 million ($38,528) for international freight forwarders, and P250,000 ($4,816) for domestic freight forwarders from the current rates of P500,000 ($9,632), P250,000 ($4,816), and P100,000 ($1,926), respectively.

Editha Muñoz, manager of Speedtrans Intl, Inc., a forwarding firm, said that only a few from her sector will be able to comply with the 4 million prescribed capital. Muñoz, also acting chair of the Alliance of Concerned Freight Forwarders (ACCFO), said the measure will kill small and medium-sized firms. 

“This measure will kill us small players,” Munoz said.  She lamented that the economic crisis has already made her type of business more vulnerable to closure.

In the implementing rules, renewal applications are allowed until Dec. 31, 2007 to comply with the new order. Applications filed in 2004 and 2005, which are for renewals this year and 2007, with paid-up capital below the required amount, shall be “conditionally” approved but will be given six months to comply.

Cartel?

ACFFO has filed a petition before the Department of Trade and Industry Undersecretary Zenaida Maglaya to recall the implementation saying it would result to the closure of small and medium forwarding firms.

ACFFO, composed of some 200 small and medium freight forwarders, opposed the manner by which the amount was determined, saying PSB arrived at the figure by getting the median of paid-up capital of accredited companies with PSB.

 “Upgrading should be left for the firms to decide. If PSB can come up with actual statistics showing that Philippine exporters and importers are prejudiced by the current P500,000 capitalization then we can jointly come with the amount sufficient to protect our transacting public,” she said.

PSB chief Vicente Pedro Mendoza said, “How can they compete with big foreign forwarders who will participate in bidding large shipments if they have inadequate capacity?”. 

The group feared a “cartel” among big local forwarders could be in the offing. ”This would mean more unemployment and the death of our business," Muñoz said. Bulatlat

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