DoTr declares support for separating PPA’s regulatory functions

THE Transportation department said on Monday that it supports proposals to separate the regulatory and operational functions of the Philippine Ports Authority (PPA).

“My first impression when I met with the PPA is that it is really both a regulator and an operator,” Transportation Secretary Jaime J. Bautista said during the Economic Journalists Association of the Philippines’ Economic Forum 2022.

“I think it’s important that we separate these two functions so that the regulatory side will not be affected,” he added.

He noted that when an agency is both a regulator and an operator, it “may not be able to really implement what regulations it wants to implement.”

A legislator recently refiled a bill seeking to reorganize the PPA by separating its regulatory and commercial functions.

Bagong Henerasyon Party-list Representative Bernadette Herrera-Dy filed on July 6 House Bill No. 1400, which aims to convert the agency into Philippine Ports Corp. and transfer its regulatory functions to the Maritime Industry Authority.

The Philippine Liner Shipping Association has expressed support for the measure.

The bill seeks to “avoid the conflict of interest arising from regulatory agencies vested in both regulatory and development or commercial functions.”

“Under no circumstances should a regulatory agency benefit from its own regulation and/or use its own regulatory powers to protect itself from competition at the expense of public interest,” according to the bill.

Ms. Herrera-Dy said in the bill’s explanatory note, “Through the years, the port users, including domestic shippers, exporters, and importers, have complained of low service levels, inefficient port operations, and ever-increasing port charges.”

“They claim that the high cost of transport serves as a barrier to increased trade (both local and foreign) and undermines the country’s competitiveness,” she added.

The PPA was established by Presidential Decree (PD) No. 505, which was subsequently amended by PD No. 857 in 1975. It is tasked with facilitating the implementation of an integrated program for the planning, development, financing, operation, and maintenance of ports or port districts.

Separation of PPA’s functions is one of the recommendations of the Organization for Economic Co-operation and Development (OECD) in its 2020 competition assessment review for the Philippine logistics industry.

The OECD said the Philippines should enact a measure to “ensure the separation of PPA’s functions, avoid conflicts of interest, and ensure that PPA is incentivized to develop, modernize and expand its ports.”

“Establishing the regulator with a degree of independence (both from those it regulates and from government) can provide greater confidence and trust that regulatory decisions are made with integrity,” it said. “A high level of integrity improves outcomes of the regulatory decisions.” — Arjay L. Balinbin