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Both -- Republic Act (RA) No. 10667 or the Philippine Competition Act, and RA 10668 which eases cabotage restrictions -- have long been championed by major business groups, and Mr. Aquino noted in his speech at the enactment ceremony in Malacañan Palace that it took “more than two decades” for RA 10667 particularly to hurdle the legislative mill.

“Today, we signed into law two measures that will help ensure our economy’s continued progress,” Mr. Aquino said in Filipino.

“With these two laws... we are straightening crooked paths borne of lack of competition...”

Leaders of business groups attended the ceremony. “Both bills form part of this administration’s legacy as they create a more level playing field on the competition side and offer cost reductions in domestic shipping,” Henry J. Schumacher, executive vice-president of the European Chamber of Commerce of the Philippines, said in a text message later in the day. “Both measures will benefit the Filipino consumer, who potentially gets better goods and services at a better price.”

PHILIPPINE COMPETITION ACT
Turning to RA 10667, Mr. Aquino noted that the measure -- House Bill No. 5610 and Senate Bill No. 5610 of late -- had been stuck in Congress for “more than two decades... and at that time, it was only by chance that the market could have a level playing field.”

Among others, RA 10667 establishes a Philippine Competition Commission (PCC) -- composed of five members serving a seven-year term each -- to police the market for unfair trade schemes like cartels, price-fixing and other market-distorting practices.

The PCC will investigate complaints or launch probes on its own, and recommend cases for prosecution to the Justice department’s Office of Competition.

With the measure’s enactment, businesses now have two years to correct contracts, systems and practices that could be deemed anti-competitive.

Penalties under the law include fines of up to P250 million, with amounts to be adjusted to inflation every five years.

“The enactment of the Philippine Competition Act (PCA) promotes competition in the market,” Mr. Aquino said.

“Finally -- whether a business is big or small -- the competition will be in terms of quality and price, and will not depend on ‘under-the-table’ arrangements or who has more connections,” he added.

“We will get to the point wherein the buyer will pay the true cost of a product while the seller will be encouraged to improve quality. In the end, everyone benefits, everyone wins.”

In a mobile phone message forwarded to BusinessWorld yesterday, Francisco Ed. Lim, president of the Shareholders’ Association of the Philippines and a former president of the Philippine Stock Exchange, said this “landmark legislation... strikes a balance between the need to promote fair competition and a level playing field in the market, and the need for our businesses to respond to international competition.”

“Now that the President has signed the PCA into law, the next challenge is for him to choose the right people to wield the vast powers and discharge the... responsibilities under the law.”

CABOTAGE LIBERALIZATION
RA 10668 on the other hand -- titled: “An Act Allowing Foreign Vessels to Transport and Co-Load Foreign Cargoes for Domestic Transshipment and for Other Purposes” -- is expected to cut the cost of shipping in the country.

While it does not completely liberalize cabotage, the law allows foreign ships to transport import or export cargo directly to and from any local port other than the Port of Manila.

Before this, such cargo had to pass through Manila.

Still, foreign ships concerned cannot transport domestic cargo, even if they also carry foreign items.

In his speech, Mr. Aquino cited the currently “absurd situation in which only a few control the market.”

The new law, he said, “will result in lower cost of exporting and importing products, and in a more active market.”

Using the Cagayan de Oro City-Hong Kong route as an example, Mr. Aquino said the new system could cut shipping cost by as much as 60%.

Shippers, he noted, currently pay a total of about $1,264 per container along this route: $1,120 between Cagayan de Oro and Manila, and $144 between Manila and Hong Kong.

“Isn’t it absurd that the Philippines -- deemed the third or fourth or fifth biggest manufacturer of ships and the source of a third to a fourth of seafarers deployed worldwide -- also has one of the highest shipping costs?” Mr. Aquino asked.

With the amendment of the Cabotage law, he said, “shippers can now send cargo from Cagayan de Oro directly to Hong Kong,” paying $500 per container and saving $764 in the process.

In its letter last March supporting this measure, the Joint Foreign Chambers of the Philippines said this particular reform “will pave the way for lower production costs for Filipino producers and entrepreneurs by allowing importers and exporters to co-load in foreign ships going in or out of Philippine jurisdiction.”

Acknowledging he does not have much time left to entrench reforms before he vacates his office on June 30 next year, Mr. Aquino concluded: “Even when we are no longer in power, these laws will ensure that foundations we have laid for the transformation of our economy and business environment will not be easily dismantled.” 

Source: Business World Online