PHLPost seen to play vital role in delivery industry: report

MANILA – A report of Paris-based Organisation for Economic Co-operation and Development (OECD) and the Philippine Competition Commission (PCC) highlighted the role of the state-owned Philippine Postal Corp. (PHLPost) in the delivery industry in the country amid the robust e-commerce sector.

The OECD-PCC Small-package Delivery Services in the Philippines report released on Friday showed that the PHLPost shared 15 percent of the market in business-to-consumer for small-package delivery services in 2019.

JRS Express and LBC Express had a combined market share of 50 percent, while other players accounted for 35 percent of the domestic market.

“PHLPost has a public service obligation to deliver letters and parcels, including small packages, throughout the Philippines,” it said.

It added that PHLPost’s strength is its large network across the country and operates both non-express (postal) services and express (courier) services.

“SOEs (state-owned enterprises) or government-owned and controlled corporations (GOCCs) play an important role in the Philippine economy, including in the delivery industry,” the OECD report said.

It added that there are rights and privileges that SOEs may enjoy, which are unavailable to private competitors. These include outright subsidies, state financing and guarantees, monopoly rights and incumbency advantages, other preferential treatment by the government, no separation between regulatory and commercial function, and exemption from takeover and bankruptcy rules.

“These advantages can make the market entry or expansion more difficult for (domestic or foreign) private companies and result in a competitive obstacle,” the report read.

To uphold competition between SOEs and the private sector in small-package delivery services, the OECD listed five recommendations.

First, adequate compensation for PHLPost for its public service obligations (PSOs) and ensure accounting separation between PHLPost’s PSO and commercial activities.

Second, subjecting PHLPost’s commercial activities to licensing requirements comparable to those imposed on other players.

Third, amending the legislation to clarify that PHLPost does not exercise any regulatory powers in the sector.

Fourth, ensuring that legislation explicitly states that the sectoral regulation of the Department of Information and Communications Technology-Postal Regulation Division applies equally to PHLPost and its competitors.

Lastly, amending legislation to reflect that the state will not grant any preferential (financial) treatment to PHLPost.

“As more Filipinos continue to rely on the wonders of e-commerce and, consequently, small package delivery systems, policy reforms should be made to promote competition in the subsector, including the pursuit of competitive neutrality,” PCC chairman Arsenio Balisacan said.