Pimentel Institute
Image source: PimentelInstitute.org

Former Senate President Aquilino “Nene” Q. Pimentel, Jr. has addressed the Department of Transportation and Communication’s (DOTC) plan to prioritize the development of fewer, but larger ports, saying that while having large ports would allow the movement of greater volume, neglecting the development of smaller “feeder ports” would stifle the flow of goods from a significant part of the country and possibly lead to “inefficiencies across the whole ports system strategy.”

Pimentel said that while developing feeder ports would indeed entail increased operating and maintenance costs, these ports would contribute two major benefits that may help offset this increase in expense. “Primarily, these feeder ports would give more rural businesses across the country access to shipping, therefore lowering their land transportation costs. Secondly, more feeder ports would generate jobs in and around their immediate area,” he said. “This may offset increased costs or even generate more income in terms of government revenues.”

He said that localizing port services to a few, large ports in select areas promotes a “monopolistic structure” in terms of moving cargo. “Without feeder ports, the small and medium businessmen are prone to higher expenses in terms of increased fuel costs and controlled shipping prices.”

“The hub is only as good as the spokes that support it,” he said. “Transporting goods through land-based spokes cost nearly three times as much as shipping from feeder ports. The increased cost will contribute to increased prices to the consumer, or worse, lead to less volume being sent to primary ports.”

The former senator from Mindanao had earlier questioned the P400- million allocation of the PPA for the upgrade of the Cagayan de Oro port, saying that this would have been better spent in developing more feeder ports. Pimentel added that it is a misconception that fewer, bigger “and certainly more expensive” ports would require less government resources.

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“Overseas Development Assistance (ODA)-funded ports cost up to three times less in present value terms than ports that require immediate payment with local funding,” he noted.

He said that the Development Bank of the Philippines has an P11 billion Japanese ODA fund available for projects such as ports development, but added that this is deliberately underutilized because the DBP makes a spread by lending this at four times the interest rate and at about one-fourth to one half of the term.