Philippine Institute for Development Studies

ASEAN Economic
Community: Implications for
Transport and Logistics
Adora Navarro
18 June 2014
Mindanao Shipping Conference 2014
Limketkai Luxe Hotel, Cagayan de Oro City
Outline
The AEC Blueprint and its transport
and logistics component

Opportunities and challenges

Where we are now
The AEC Blueprint and its
transport and logistics
component
Overview
ASEAN
Economic
Community
(AEC)
ASEAN Socio-
Cultural
Community
ASEAN
Political-
Security
Community
Infrastructure Development:
ASEAN Master Plan on
Connectivity
ASEAN cooperation in the transport
& logistics sector
Use of ICT in the realization of the
ASEAN community
Ensuring energy security in ASEAN
ASEAN Master Plan on Connectivity
Physical
Connectivity
Institutional
Connectivity
People-to-
People
Connectivity
Overview
ASEAN Master Plan on Connectivity
Physical
Connectivity
Institutional
Connectivity
People-to-
People
Connectivity
Physical connectivity initiatives:
Transport: ASEAN Highway Network,
Singapore-Kunming Rail Link, ASEAN
RORO Shipping Network, multi-modal
transport corridors
ICT: ASEAN ICT Masterplan 2015
Energy: ASEAN Power Grid, Trans-
ASEAN Gas Pipeline
Institutional connectivity initiatives
(among others):
framework agreements on
transport facilitation(AFAFGIT,
AFAFIST, AFAMT, MAAS,
MAFLAFS,, MAFLPAS)
ASEAN Single Aviation Market,
ASEAN Single Shipping Market
liberalization of logistics
services
Philippine Scorecard on Transport Facilitation
Transport Framework Agreement Average Score
ASEAN Framework Agreement on the Facilitation of Goods in
Transit (AFAFGIT)
47.20%
ASEAN Framework Agreement on the Facilitation of Inter-State
Transport (AFAFIST)
56.25%
ASEAN Framework Agreement on Multimodal Transport (AFAMT) 75%
Air Transport Multilateral Agreement Average Score
ASEAN Framework Agreement on the Full Liberalization of Air
Freight Services (AFAFLAFS)
100%
ASEAN Multilateral Agreement on Air Services (MAAS) 66.40%
ASEAN Multilateral Agreement on the Full Liberalization of
Passenger Air Services (MAFLPAS)
63%
Source: Aldaba et al. (2012). AEC Blueprint Midterm Review
Opportunities and challenges
Opportunities
more than
600 million
potential
consumers of
Philippine
exports

greater
transport
facilitation of
intermediate
goods
inPHPM in%
TOTALEXPORTSOFGOODS 2,428,474 100.0
Pri nci pal ExportsofGoods 1,566,309 64.5
ElectronicComponents 1,259,976 51.9
PrincipalAgriculturalProducts 73,934 3.0
Bananas,includingPlantains,FreshorDried 25,174 1.0
CoconutOil 17,846 0.7
CopraOilCakeorMeal 4,996 0.2
DessicatedCoconut 4,788 0.2
Mango,FreshorDried 1,277 0.1
PineappleandPineappleProducts 7,258 0.3
Sugar 12,596 0.5
PrincipalFisheryProducts 22,187 0.9
ShrimpsandPrawns 1,950 0.1
Tuna 20,237 0.8
ArticlesofApparelandClothingAccessories 63,398 2.6
Basketworks 2,710 0.1
Cathodes&SectionsofCathodes,ofRefinedCopper 6,826 0.3
IgnitionWiringSets 60,967 2.5
MetalComponents 66,312 2.7
PetroleumProducts 9,999 0.4
Others 862,165 35.5
2013(realterms)
Source: Philippine Statistics Authority, 2013.
Opportunities
ASEAN RORO and Short-Sea Shipping Network
Study conducted by JICA (coordinated by MARINA), completed in
March 2013
Identified Brookes Point (Palawan), Zamboanga City, General Santos
City, and Davao City as possible ports

Davao/General Santos (Philippines) - Bitung
(Indonesia) Route
Distance:
Davao Gen. Santos: 154 nautical miles (285 km)
Gen. Santos Bitung: 302 nautical miles (560 km)
General Santos-Davao-Bitung route
was recommended as priority in
ASEAN

GenSan as major hub because
Davao is congested
Private Sector Response (Logistics Services)
According to freight forwarders (2011 survey):
Barriers in setting up local operations in other ASEAN
countries
need to obtain license from a professional body
need to meet minimum capital requirements
need to adhere to administrative and legal regulations in setting up a
partnership
need to meet restrictive local labor employment regulations
Barriers in selling services once operation has been
established in other ASEAN Countries
need to account for differences in commercial practices
need to adhere to restrictive legal systems and contracting procedures
need to manage lack of transparency, inconsistencies and/or confusion in
regulations
need to manage delays in payment (banking practices and regulations)
Challenges
Challenges in the domestic landscape:
remaining restrictions: 60-40 equity rule; PD 1466 restriction on
government cargoes; cabotage issue; port regulator which is
also port operator; one port, one operator policy in ports; airport
infrastructure capacity constraints; road traffic congestion (Llanto
et al., 2013)
proposed Customs and Tariff Modernization Act is being
opposed by customs brokers (Llanto et al., 2014)
Note:
Schedule of liberalization of foreign equity participation for logistics
services in ASEAN: 49% by 2008, 51% by 2010, 70% by 2013
the 60-40 equity rule and cabotage will make 100% foreign entry in
domestic operations not possible in the near to medium term
lifting of cabotage restrictions in maritime transport: not immediate and
blanket; flexible policy is needed (Llanto and Navarro, 2014)
Where we are now
International Freight Forwarders
Source: DTI Philippine Shippers Bureau
Regional market shares in terms of number of players
Domestic Freight Forwarders
Source: DTI Philippine Shippers Bureau
Regional market shares in terms of number of players
Logistics Performance Index (2014)

Source: World Bank, 2014.
LPI Indicators
4.28
3.56
3.40
3.11
2.92
2.60
2.58
2.21
2.14
Singapore
Malaysia
Thailand
Vietnam
Indonesia
Philippines
Cambodia
Lao PDR
Myanmar
Infrastructure
Source: World Bank, 2014.
4.01
3.37
3.21
3.00
2.87
2.81
2.67
2.45
1.97
Singapore
Malaysia
Thailand
Philippines
Indonesia
Vietnam
Cambodia
Lao PDR
Myanmar
Customs
LPI Indicators (contd)
Source: World Bank, 2014.
3.70
3.64
3.33
3.30
3.22
2.87
2.83
2.50
2.14
Singapore
Malaysia
Philippines
Thailand
Vietnam
Indonesia
Cambodia
Lao PDR
Myanmar
International Shipments
3.97
3.47
3.30
3.21
3.09
2.93
2.67
2.31
2.07
Singapore
Malaysia
Thailand
Indonesia
Vietnam
Philippines
Cambodia
Lao PDR
Myanmar
Logistics Quality and Competence
LPI Indicators (contd)
Source: World Bank, 2014.
3.90
3.58
3.45
3.19
3.11
3.00
2.92
2.36
2.20
Singapore
Malaysia
Thailand
Vietnam
Indonesia
Philippines
Cambodia
Myanmar
Lao PDR
Tracking and Tracing
4.25
3.96
3.92
3.53
3.49
3.07
2.83
2.75
2.65
Singapore
Thailand
Malaysia
Indonesia
Vietnam
Philippines
Myanmar
Cambodia
Lao PDR
Timeliness
LPI Rankings
To contextualize, countries within the neighborhood
of the Philippines rank:
Country
LPI
Rank Scores
Croatia
55 3.05
Kuwait
56 3.01
Philippines
57 3.00
Cyprus
58 3.00
Oman
59 3.00
Argentina
60 2.99
Source: World Bank, 2014.
Thank you!
Philippine Institute for Development Studies
106 Amorsolo St., Makati City, Philippines
www.pids.gov.ph
(632) 893-9575 to 77 local 3012
anavarro@mail.pids.gov.ph