The Role of Logistics Companies In The Philippines and the Undertakings They Need to Commit to

Wouldn’t it be convenient if we can just ride a bus to take us to Cebu, Palawan, or Davao? For an archipelago like the Philippines, traveling has always been a disadvantage. Unlike the United States of America wherein one can easily drive from one state to another, the bodies of water surrounding our country makes this impossible. This is also a major hurdle in business. The topography of our country makes it harder for goods and products to reach other provinces without careful business planning. Luckily, there is a solution that connects us with the other islands in the Philippines.

Freight transport has been the refuge of businesses in the Philippines to overcome the topographical and geographical hurdles. Partnering with a logistics company that offers freight forwarding services, air freight, and sea freight as well as trucking services will make transporting goods easier, opening a window for a wider market. Following the principles of the law of supply and demand, a businessman can take produce that is abundant in one place to another place where that produce is needed but is scarce, and sell it for a higher price. This could lead to higher profit if utilized properly.

In plain view, the freight forwarding system seems simple. People might think that you just need to own a truck, a ship, or a plane and you can ride the freight forwarding business train. If you think it’s that easy, then you’ve never been so wrong. Let us breakdown some of the technical issues that a freight forwarding business needs to undergo.

To start off, it is important to understand that the Philippine Economic Zone Authority is the government office that is responsible for checking the services of logistics companies. A person who would like to start up a logistics business in the Philippines needs to commit to the following undertakings, as enumerated in the registration form to be an Ecozone enterprise:

1. That the applicant is capable of operating, on a sound and efficient basis, and of contributing to the objectives of the Philippine Economic Zone Authority in particular and to the development of the national economy in general;
2. That the project is economically, technically and financially sound;
3. The applicant proposes to engage, in good faith, in the creation of a market for its project/product;
4. That the applicant has installed/undertakes to install an accounting system adequate to identify the investments, revenues, costs and profits or losses of the project covered by this application separately from the aggregate investments, revenues, costs and profits or losses of the other business activities of the applicant not registered under Republic Act No. 7916, as amended by Republic Act 8748 or has established/undertakes to establish a separate entity for the project/activities covered by this application if so required by the Authority. (Applicable only if applicant is engaged or proposes to engage in undertaking or activities in addition to the project covered by this application); 
5. The exported products/services meet the standards of quality established by the Bureau of Standards or in default thereof, by the Philippine Economic Zone Authority, or by such public organization, Chamber, group or body as the Authority may designate.
6. Domestic raw materials and supplies will be used in preference to imported goods whenever these are available at comparable quality and price.
7. That the applicant shall submit periodic reports and other information, pertaining to its activities in the Ecozone that the Authority may require;
8. That the applicant has read Republic Act No. 7916, as amended, and the Rules and Regulations adopted by the PEZA and commits itself to abide by the provisions thereof as well as amendments thereto;
9. The applicant will start and operate the project covered by this application within such reasonable time as may be fixed by the Authority;
10. That the applicant's Board of Directors has authorized the filing of this application in accordance with the terms thereof if the applicant is a corporation;
11. That applicant has neither opened nor cause to be opened a letter of credit or entered into a contract for the importation of capital equipment for which tax exemption will be claimed, prior to its registration with the Authority. (Approval of the project brief containing a list of capital equipment proposed to be imported does not amount to an implied approval of the tax-free importation of said capital equipment; a separate application for this importation should be submittedfor PEZA approval.)
12. Applicant shall comply with all rules and regulations on exportation of Philippine products/services promulgated by the Central Bank, Department of Finance, Bureau of Customs and other government agencies.
13. Pursuant to the provisions of Sec. 3 and Sec. 14 of R.A. 3019 (Anti-Graft Act), the applicant-enterprise has not given or promised to give and will not give any gift to any officer or employee of the Philippine Economic Zone Authority in connection with the filing and processing of this application.
14. The applicant's Board of Directors has authorized the release of the portion of its project study entitled "Brief Description of the Project" to the public.
15. That based on the records of the applicant, no Board member or officer of the Philippine Economic Zone Authority has an investment or any other financial interest, direct or indirect, in the applicant's enterprise; and
16. That there exists no dummy relationship between any of the stockholders and/or principal officers of the applicant and any foreign individuals/business entity.