LGU restrictions impeding trade

As early as 2021, the national government has ordered local government units (LGUs) from barangays to provinces against imposing rules and regulations and collecting fees that make it more difficult and expensive for local and foreign individuals and enterprises to do business in the country. The directive has apparently fallen on deaf ears as traders have complained about different restrictions imposed by various LGUs that cause delays and higher costs.

The United Broilers Raisers Association Inc. (Ubra) and the Philippine Chamber of Food Manufacturers Inc. said a number of LGUs have required special permits and imposed restrictions on their trucks and other transport vehicles resulting in unnecessary delays in their deliveries, thus adding to their costs. Aside from the charging of multiple, arbitrary, and often unnecessary fees on top of the already high cost of transporting vital agricultural and manufactured goods across the country that are ultimately passed on to hapless consumers, traders also complained about restrictions.

“Our main concern right now is their quarantine policies concerning the movement of animals. The requirements are not standard and it differs depending on the LGU. Some have strict requirements, others have less,” said Ubra president Elias Jose Inciong.

Pass-through fees

Inciong shared that Nueva Ecija, for example, limited the volume of goods that could be transported through the province, and that meant multiple trips, delays, and compounded fuel and manpower costs.

Such experience is likely duplicated in various forms and degrees across the country, thus canceling or offsetting the benefits of the measures passed by the national government to make it more efficient and thus cheaper to transport goods across the country.

In response to the concerns raised by Ubra, the Department of Trade and Industry revealed that the National Price Coordinating Council had formed a technical working group to be led by the Department of Justice, which will be tasked to “correct” questionable policies and procedures being enforced by LGUs that impede the free flow of basic goods from the producers to the consumers.

There are valid concerns for certain quarantine restrictions, such as containing the spread of the African swine flu and other diseases affecting the poultry and hog industries, and the government should have a closer coordination with the LGUs on handling these incidents without affecting the flow of trade.

In September last year, President Marcos issued Executive Order No. 41 that “strongly urged” the suspension of pass-through fees “such as, but not limited to, sticker fees, discharging fees, delivery fees, market fees, toll fees, entry fees, or mayor’s permit fees, that are imposed upon all motor vehicles transporting goods and passing through any local public roads constructed and funded by … LGUs.”

Unjust, excessive, oppressive

But a joint memorandum circular had already been issued as early as 2021 prohibiting the collection of unauthorized pass-through fees and taxes from vehicles transporting agricultural and manufactured goods, again spurred by the desire to lower the cost of basic goods by reducing production and logistics costs.

LGUs do have the power under the Local Government Code of 1991 to create their own sources of revenue. The idea is for these empowered LGUs to have more sources of income to fund an increased range of public services and meet their local development goals.

There is a caveat to this rule, however, as the Local Government Code clearly stated that these fees should not be “unjust, excessive, oppressive.”

Each LGU may believe their fees, rules, and regulations are small and basic, but all these add up to a substantial amount considering how many cities, provinces, and regions some truckers have to traverse just to bring products from the producers to the market.

Burden on consumers

With consumers crying out for immediate relief from high prices, the national and local governments should get on the same page. LGUs must think beyond parochial interests to appreciate the situation of the economy, that arbitrary fees and regulations lead to higher prices and make doing business prohibitive in the Philippines.

It is already hard enough to transport goods given the 7,641 islands and the scattered centers of manufacturing and crop production. The least that the LGUs should do is not to add to the already significant challenges by forcing companies to go through hoops and impose frivolous fees that all add up and burden consumers.

The national government should also stop playing nice guy and bring on the full force of the law to get the LGUs to toe the line and adhere to these laws.

The LGUs should do their share not only in facilitating fast flow of goods to help stem high prices but also in achieving the goal of making it economically viable to do business in the Philippines.