PPA ready for global challenges as it marks 43rd Founding Anniversary

JULY 11, 2017, MANILA—With the continuing globalization and the shift in practices from best practices to next practices, the Philippine Ports Authority (PPA) is optimistic to meet global requirements and demands.

Marking its 43rd Founding Anniversary today, 11 July 2017 with the theme “43 years of Responding to Global Challenges in Ports”, the PPA—under the new administration—pushed the reset button to align its processes and policies to these trends that are still parallel to the overall dream of the country to be one of the maritime powers of the world.

While there are several policies being pushed that threatens even its mere existence, the PPA continues to paddle hard to achieve its vision to meet global standards in its ports by 2020. 

The Evolution of the PPA

Prior to the establishment of the Philippine Ports Authority, all public ports, with the exception of the Port of San Fernando, which was then organized as a Port Authority, were all placed under the administrative and operational control of the Bureau of Customs.  

The development and maintenance of the ports, on the other hand, was vested in the Bureau of Public Works (BPW).  The Ports and Harbor Division of the said Bureau was responsible for the planning, design, construction, maintenance of all national and municipal ports and the construction and repair of ashore protection works and lighthouses.  The capital and maintenance dredging of the public ports, undertaken on its own or by contract, was the responsibility of another BPW Division called the Harbor and Dredging Reclamation Division.

The different port development and maintenance projects implemented by the BPW were funded from the Portworks fund, the source of which came from the port charges collected by the Bureau of Customs as provided in the Tariff and Customs code. The said collections were then remitted to the National Treasury and releases of such funds for BPW to implement projects were made after the Congress of the Philippines, through the approved national budget, had appropriated the same for the year.

The evolution of the Port Authority started in the 60’s with the enactment of R.A. No. 4567 in June 1965. This act created the San Fernando Port Authority, which was only made operational in 1968.  The Authority was responsible for the management and operation of the port, but the development and maintenance of its facilities were still vested in the Bureau of Public Works.

In June of 1966, another legislation was approved, R.A. 6086, creating the Cagayan de Oro Port Authority.  Although the enabling law was passed, the Authority was never organized in spite of the representations made by the late Vice President Emmanuel Pelaez, who was then a senator from Cagayan de Oro, the then Cagayan de Oro Congressman Pedro Roa and then Cagayan de Oro City Mayor Reuben Canoy.

In July 1966, the late President Ferdinand E. Marcos issued a memorandum directing the Customs commissioner to confine his activities to the collection of taxes and duties and anti-smuggling, effective 1 August 1966, while the exclusive administration of ports, government bonded warehouses, etc., would be under the direct supervision of the Special Assistant Commissioner on Port Administration, headed at the time by Ret. Navy Commodore Santiago C. Nuval.  

Acting on the Presidential Directive, the then Secretary of Finance issued Department Orders No. 49-66, dated August 1966 and No. 148-67, dated April 1967.  These Orders set down the detailed functions and responsibilities of the Office of the Special Assistant Commissioner on Port Administration (OSACPA).  However, after a period of 18 months some of its functions as contained in the memorandum of the President were returned to the Bureau of Customs.  OSACPA was changed to OSCOPA or Office of the Special Commissioner on Port Administration and was made responsible for Port Development and Utilization, Arrastre Supervision and Port Liaison.  Development funds still came from the Portworks fund and its implementing arm for the port projects was still the BPW.

Sometime in 1970, a study was undertaken by Metra/Sauti and that study strongly recommended that the Bureau of Customs be relieved of the port administration and operation responsibility and that this be transferred to a Bureau of Merchant Marine and Ports (BMMP) under the authority of an Undersecretary of Transportation.  The Bureau of Customs would then concentrate on its main responsibility of collecting taxes and duties as well as port charges.  Metra/Sauti further recommended that the maintenance, technical studies, dredging and new construction works at the national ports shall be placed under a proposed Bureau of Ports and Navigational Aids (BPNA).  These recommendations were never acted upon.

In the same period, OSCOPA, for its part, submitted its own recommendation to the Reorganization Panel No. 6 proposing the creation of the Philippine Ports and Maritime Commission instead of the Bureau of Merchant Marine and Ports and making the OSCOPA the nucleus thereof.  

In 1971, the Philippine government, under the auspices of the United Nations Development Program (UNDP) and the International Bank of Reconstruction and Development (IBRD or World Bank) conducted a study for the development of the Ports of Cagayan de Oro, Tabaco/Legaspi, Batangas and General Santos.

During negotiations for the loan agreement for the development of the Ports of Cagayan de Oro and General Santos, the World Bank made it a condition to the Loan that a Port Authority, a corporate body, should be created and made responsible for this loan so that the Bank would only have to talk to one government entity.  This was a welcome move as the Philippine Ports then were the only ones in Southeast Asia still managed and operated by Customs.

Thus, on 11 July 1974, Presidential Decree No. 505 was promulgated by then President Marcos calling for the creation of the Philippine Ports Authority (PPA), under the Office of the President.

Initial funding for the development of the Port Authority’s office was contributed by the NEDA/BPW Port Feasibility Study Project. 

The initial PPA organization was then formed and new officers and employees were hired. Heading the PPA then was Capt. Mariano Nicanor as the Acting General Manager, Maximo Nario was his Technical Assistant.  

The first Chairman of the Board was then Secretary of Finance Cesar Virata. In 1975, PPA was attached to the Ministry of Public Works, Transportation and Communications (MPWTC). On July 27, 1981, the MPWTC was split into the Ministry of Public Works (MPW) and Ministry of Transportation and Communications (MOTC).  The PPA was attached to the Ministry of Transportation and Communications.

The PPA initially set up the pilot ports of Cagayan de Oro and General Santos and after selecting the employees with the assistance of Carmencita M. Tottoc, Madeleine Cataylo (later, Abada), Alice Miranda, Geronimo Cantalejo and Orlando Ancheta,

The PPA officially took over the management and operation of the Ports of Cagayan de Oro and General Santos from the Bureau of Customs on October 1, 1975 and April 15, 1975, respectively.

Cognizant of the fact that Presidential Decree No. 505 did not give the Authority financial autonomy, Nicanor and Suazo, with the assistance of the SGV Consultants worked on drafting amendments to address this.  On the 23rd of December 1975 Presidential Decree No. 857, the revised charter of the PPA was signed into law by then President Marcos.  The promulgation of PD 857 set the pace for an aggressive approach to accomplish the task of organizing, managing and operating Philippine ports.

The Offices within the Bureau of Customs, which include the Office of the Special Commissioner on Port Administration (OSCOPA), the San Fernando Port Authority and the offices of the Bureau of Public Works, were abolished.

With the appointment of Col. Eustaquio S. Baclig, Jr. as the new General Manager in mid-1976, the management of PPA experienced some changes. Capt. Nicanor was appointed Special Assistant and other new officers were likewise appointed.  Retired Navy Captain Maximo S. Dumlao, Jr. was appointed Assistant General Manager for Operations, Engineer Benedicto S. Selirio as Assistant General Manager for Engineering and Col. Guillermo A. Cruz as Assistant General Manager for Finance and Administration.

With adequate coordination with the Bureau of Customs, P.D. 857 was finally implemented and more ports were taken over by PPA, including Cagayan de Oro, General Santos, San Fernando, La Union, Batangas, Cebu, Davao, Iloilo, Legaspi, Puerto Princesa, Zamboanga, Iligan, Tacloban, Dumaguete, Aparri, Nasipit, Jolo, Surigao, Manila, and Polloc.

The EDSA Revolution in 1986 triggered another organizational change in PPA. In 1988, PPA Management introduced a major revamp in the organization.  Part of the PPA Head Office functions was delegated to the newly organized five Port District Offices. These offices provided jurisdiction over ports in Manila and parts of Bataan, Luzon, Visayas, Northern Mindanao and Southern Mindanao.

In the same year the PPA was granted more fiscal autonomy, bringing about the faster development of ports, and the subsequent adoption of a more competitive salary structure, etc. 

Also in the same year the PPA privatization program was aggressively pursued through the initial implementation of the privatization of the Manila International Container Port (MICP) and the subsequent awarding of the contract to operate the MICP for a period of 25 years to the International Container Terminal Services, Inc.

Currently, the PPA is undergoing another major facelift after the Governance Commission for GOCCs approved the agency’s Rationalization Plan during the term of General Manager Atty. Juan C. Sta. Ana. The approved Rat Plan abolished the five Port District Offices put into place in 1988 and distributed its powers to the newly refurbished list of Port Management Offices from 24 PMOs to 26, which include:

PMO Northern Luzon, PMO Bataan/Aurora, PMO NCR-North, PMO NCR-South, PMO Batangas, PMO Marinduque/Quezon, PMO Mindoro, PMO Puerto Princesa, PMO Bicol, PMO Masbate, PMO Negros/Siquijor, PMO Panay/Guimaras, PMO Western / Southern Leyte/Biliran, PMO Eastern Leyte/Samar, PMO Bohol, PMO Negros Occidental/Bacolod/Banago/Bredco, PMO Misamis Occidental/Ozamiz, PMO Misamis Oriental/Cagayan de Oro, PMO Agusan, PMO Davao, PMO Cotabato, PMO Socsargen, PMO Zamboanga Del Norte, PMO Zamboanga, PMO Surigao, and PMO Lanao Del Norte/Iligan.

The PPA is now maintaining 115 ports nationwide, 10 of whom are considered major gateways and 16 dubbed as hub ports. These ports handle majority of domestic and foreign passage traffic as well as the country’s foreign and local trade.

Billionaires Club

PPA is also a constant member of the ‘Billionaires Club’ in terms of dividends remitted to the National Government by GOCCs.

This 2017, the PPA is in its third tranche of filling up another 25 percent of existing vacant positions based on its approved Rat Plan as they also continue to complete processing the positions approved in 2016 within the first quarter.

PPA has really continued to move on and is still moving forward towards a bright future. 

Review of Operations

In 2016, the PPA was able to handle a total cargo throughput of 249.567 mmt or some 25.895 mmt higher than the 2015 volume of 223.672 mmt. Foreign cargoes accounted for 151.604 mmt or an increase of 12.62% versus the 134.620 mmt handled in 2015 while domestic cargoes contributed 97.963 mmt from 89.051 mmt or an improvement of 10%.

Container volume also posted positive figures rising 12% to 6.574 million twenty-foot equivalent units (TEUs) from 5.861 million TEUs handled in 2015. Foreign containers inch-up 14.11% to 3.973 million TEUs while domestic boxes rose 9.28% to 2.6 million TEUs for the period in review. Total import boxes is at 2.005 million TEUs while Export containers is at 1.968 million TEUs wherein both posted increases of 15.4% and 12.8%, respectively.

Among the ports, which registered strong performance, include the Manila International Container Terminal and Manila South Harbor for international cargoes, North Harbor for domestic cargoes as well as Cagayan de Oro, Davao, and Iloilo.

Philippine exports sustained its strong performance in 2016, propelling the country’s cargo volume higher by 12% compared to its year-ago level. Export cargoes comprise 49% of the total cargo volume handled by the different ports nationwide. It increased by 23% for the entire 2016 period from 60.855 million metric tons (mmt) to 74.822 mmt registered a year earlier. Import volume, on the other hand, contributed 51% to the total after posting a 4% increase to 76.781 mmt from 73.765 mmt in 2015.

From 2010 up to the end of the first semester of 2016, the PPA was able to provide adequate facilities and services to accommodate sustained increases in cargo throughput, vessels and passengers with an annual average increase of 6.11%, 2.74% and 3.74%, respectively.

The agency was also able to complete 251 projects which have, among others, increased berth, back-up areas, passenger seating capacity and Ro-Ro berths throughout the country at a combined cost of P9.8 billion. Specifically, Ro-Ro projects facilitated the carriage of goods and people, promoted domestic tourism, reduced cargo slippage by at least 50% and cost by 30%.

PPA has likewise maintained the ports under its control in optimal operating condition at all times resulting in sustained safety and revenue growth with an average annual increase of 10%.

Port of Manila, 36th among top 100 container ports

The Port of Manila jumps two notches higher to number 36 in the raking of the top 100 Container Ports, according to a report released by Lloyd’s List and Containerization International for 2016.

The report showed that the Philippines was able to increase their ranking after the country was shielded from the slowdown in China that has hurt other emerging nations in 2015, as government stepped up efforts to unlock bottlenecks in state spending and entice investment. 

It added that the growth in the country’s Gross Domestic Product exceeded expectations anchored on the 6.1% pace posted in the third quarter for the period in review. Philippine GDP in the three months through to December for the period increased 6.3%. Manila’s economy, for the whole of the period, grew 5.8%.

“Port of Manila registered a 4.3% hike in container throughput, with principal facility the Manila International Container Terminal (MICT) posting a 4.4% increase in containers handled,” the report showed.

Among the reasons that Manila posted the favorable growth include the inauguration of Berth 7 at the MICT, which included the commissioning of four rubber-tired gantries as well as the rollout of the terminal appointment booking system (TABS) ahead of the anticipated increase in container movements prior to the Christmas holiday season as well as the revival of ICTSI’s inland container depot in Laguna.

TABS is an electronic platform for booking containers in the two international ports of Manila. The system was developed in response to restrictive road policies that were introduced to combat heave congestion of Manila ports in 2014 as a result of the truck ban imposed by the Manila City Government.

2017 and onwards

The PPA anticipates trade volume will continue to rise as the population growth and trade barriers continue to collapse, especially within the context of the ongoing Asean integration.

The agency is also aware that once volume increases, marketing of secondary ports strengthen and shipping lines become willing to divert goods major ports.

PPA also recognizes the need to integrate and align all the various port developments throughout the archipelago in order to serve the decentralization of the country. The current plan is to identify certain ports, and ensure that they are aligned in terms of standards of cargo handling.

The modernization and development of the ports of Davao-Sasa, Iloilo, Cagayan de Oro, General Santos and Zamboanga are within the medium-term plans of the PPA, and the route to their privatization will be a public-private partnership arrangement, although different modalities are being evaluated. These five ports have been identified as both strategic and commercially important, with Davao-Sasa being the priority target for development although, on a more conservative and cost-efficient level than originally planned.

PPA is also in the process of procuring vessel traffic management solutions (VTMS) equipment to cover five additional locations in addition to the ports of Batangas and Manila. However, the long-term intention is to install appropriate VTMS facilities in most of the major ports to ensure offshore safety is addressed.

In addition to fostering safety, it is best practice to use VTMS in berthing management, environmental protection and planning for cargo-handling operations.