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Manila Bulletin devider Business devider Trade & Industry devider Reliance on NAIA creates bottleneck for Philippine exports, warns OECD

Reliance on NAIA creates bottleneck for Philippine exports, warns OECD

Published Dec 11, 2024 01:33 am

The Organisation for Economic Co-operation and Development (OECD) recommended that the Philippines diversify its transport options to reduce logistics costs and alleviate bottlenecks in the semiconductor and export sectors.

In a report titled "Promoting the Growth of the Semiconductor Ecosystem in the Philippines,” OECD noted that Manila heavily relies on air freight, with almost all semiconductor products exported through Ninoy Aquino International Airport (NAIA).

This reliance on a single airport creates a potential bottleneck for the semiconductor industry, which relies on just-in-time production, it said.

"Investing in Ninoy Aquino International Airport and diversifying the options for airborne freight could help reduce this potential bottleneck for the semiconductor and other industries that rely on air freight," the OECD said.

The report also raised the need for improved road infrastructure, which is currently less developed than in other Southeast Asian countries. This poses a potential delay in the internal transport of inputs.

In addition to infrastructure improvements, the OECD urged the Philippines to foster competition in the freight and logistics sector.

The country currently faces high freight and logistics costs compared to other economies in the region. This is a burden on businesses and can hinder timely delivery within global production networks.

The OECD suggested promoting regulatory independence and separating the roles of relevant authorities to encourage greater competition. This could prompt carriers to serve more airports and seaports in the Philippines, including those nearer semiconductor firms outside Metro Manila.

The OECD also emphasizes the importance of maritime freight for the Philippines, particularly for importing key semiconductor inputs. However, the sector faces barriers to competition, including potential conflicts of interest among regulatory authorities and restrictions on foreign investment.

By addressing these challenges, the Philippines can improve its logistics infrastructure and boost the competitiveness of its semiconductor industry.

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