Development Bank of the Philippines (Philippines)
Name of Project: DBP Sustainable Logistics Development Program (SLDP)
Write up:
In line with its continuing mandate to be the lead provider of financing for the country’s sustainable growth, the Development Bank of the Philippines has launched the Sustainable Logistics Development Program (SLDP).
Anchored on a firm advocacy to seek innovative and responsive ways of addressing the developmental needs of the Philippines, the SLDP focuses on the improvement of the country’s basic infrastructure for the efficient transport of basic commodities through the introduction of modern storage handling and transport system under proper quality control management.
The SLDP, thus, is expected to spur greater economic activity in the countryside, and drastically reduce the price of basic commodities in line with the government’s poverty alleviation program and the attainment of food sufficiency at the local, regional and national levels.
This investment financing facility that seeks to address the urgent need for the efficient distribution of goods and services to towards food security and greater economic activity has the following objectives:
●to improve infrastructure which will have a direct impact on prices of basic commodities, as an anti-poverty strategy;
●to stimulate economic activity by providing sea links between islands and regions, thereby reducing transport costs and travel time;
●to provide greater mobility for commuters and open up new markets for agricultural products and tourism-oriented SME’s.
●to raise the standards of the shipping sector and its cargo handling and distribution system to make the Philippines competitive in the global arena.
the scope
The SLDP has three major components:
1. The Road RORO Terminal System (RRTS) involves the establishment of RORO terminals and ferry operations where RORO services are absent. The RRTS will form part of the national highways, providing the necessary linkage and efficiency to inter-island travel and transport.
Included in the RRTS are other vital components of a sustainable logistics system such as ship repair/shipbuilding yards, and institutional support services such as maritime schools and technical training facilities.
2. The Bulk Grains Highway addresses to problems related with spoilage and spillage and consists of investments in:
●post-harvest rice and corn processing centers, activities of which include: mechanical shelling, bulk drying and storing, bulk handling and trucking;
●terminals with silos with mechanical loading and unloading equipment;
●bulk carriers
3. The Cold Chain Highway focuses on the reduction of wastage and spoilage of fish, fruits, and vegetables and maintaining their shelf life and quality through a connected refrigerated chain from producers to consumers through investments in:
●Aggregating and processing centers
●Reefer transport
Short-term gaps in demand and supply are also addressed by the availability of continuous supply from the farms and fishing areas, thus contributing to the stabilization of commodity prices in the market.
ImplementatioN
The SLDP is being implemented specifically in support of the government’s Strong Republic Nautical Highway (SRNH) route as part of the RRTS component of the SLDP. The interconnection is expected to stimulate economic activities in the nearby areas by lowering transport costs and travel time, providing greater mobility for ordinary commuters and opening up new markets for agri-products and tourism-oriented SMEs.
The SRNH now has regular and complete runs from Batangas in Luzon to Dapitan in Mindanao.
Program Guidelines
The SLDP is available to eligible borrowers through DBP’s marketing units and network of regional management offices and branches, and participating financial institutions that includes private and government banks and financing and leasing companies.
Eligible projects under the Program are grains processing centers, bulk trucking, grains terminals, bulk carriers, and other post harvest facilities, RORO terminal facilities and vessels, and processing and marketing centers, aggregating centers, reefer vans/transport equipment, and other cold storage facilities.
Developmental impact and benefitS
The SLDP proved to be a critical component of the government’s poverty alleviation strategy given its objective of stimulating economic activity bu putting in place an efficient integrated supply and logistics system. It set the framework by which government formulated its programs and policies regarding logistics and distribution. The promotions for SLDP resulted in many initiatives from the private sector (including projects not financed by DBP) to invest in the necessary infrastructure.
Road Roll On/Roll Off Terminal System (RRTS)
In 2003, President Gloria Macapagal-Arroyo issued EO 170 and 170-A promoting private sector investment in the Road-RORO Terminal System (RRTS). The objective was to connect efficiently the various islands using “moving bridges” (i.e. RORO ships) in order to improve the transport service and eliminate unnecessary charges in order to reduce cost
The promotion and implementation of the RRTS gave birth to several undertakings from the private sector involving:
Opening up of the Mindoro-Caticlan route as a gateway to the Visayas in 2003. The huge level of cargo (on vehicles) and passenger demand for the connection has necessitated the expansion of services to now include daily RORO services from three shipping companies.
Prime player Aboitiz Transport Service (ATS) launched in the market its latest service called RRTS 2GO. Cargoes currently being shipped from Mindanao (Davao, Cagayan de Oro, Gen. Santos) to Manila via 2GO RRTS include: fruits (such as bananas, durian, pomelo, mangoes, lansones), vegetables (tomatoes, carrots, potatoes) and fresh fish. The improved transport logistics posted a net saving of 33% compared with the containerized mode of shipment.
A well known retailing conglomerate has shifted the transport of its merchandise orders from Mindanao to Manila from container vans to trucks using RORO existing connections, generating estimated savings of 32% or P 27,000 per container.
A recent UNDP studycites: “Shippers are now feeling the benefits of the RORO program. For instance, transporting tomatoes from Cagayan de Oro via RORO have reduced spoilage and resulted to a 30% cost reduction.”
Grains Highway
To shorten the supply chain by making every stage more efficient and cost-effective, the Department of Agriculture has lined up a rice milling sector development program for the milling and drying of rice, credit facilitation for corn service centers, market-matching of yellow corn in coordination with local governments for direct marketing and forward contracting, and the grains highway, including silos for bulk storage in select ports, roll-on-roll-off shipping routes and the proposed use of private ports for commercial RORO ships, for the quick and economical distribution of corn harvests (Globalization and Corporate Citizenship (Project ID 00014496) – From Seed to Shelf: A Logistical Evaluation of Philippine Agriculture, p.104)
Cold Chain
To date, there are around 52 cold storage facility operators in the country with a combined capacity of 52,000 MT. According to the Cold Chain Association of the Philippines, the current capacity is just enough to handle the demand during off-peak season. Demand increases by about 250% during peak season.
DBP strongly complements government’s plans to set up new capacities in key provinces (Pangasinan, Cebu, Iloilo, Davao and Cagayan de Oro) through NDC-Philippine Infrastructure Corporation to address the insufficiency of existing cold storage capacity. Fish and meat products coming from these provinces will be the main target of these storage facilities.
In addition, the United States Department of Agriculture (USDA) is currently reviewing a proposed program on cold chain for the Philippines, similar to what was successfully implemented in Indonesia. DBP has signified its interest as one of the key project partners making its funds available to finance cold chain projects.
The implementation of SLDP has influenced other institutions such as Department of Agriculture’s “Pork in A Box” program to promote shipments of chilled/frozen meat (in a box) from Mindanao to Manila and its BPRE in aggressively pushing its cold chain projects among LGUs; and the Cold Chain Association of the Philippines where it now plays a more active role in the promotion of cold chain system by having an increase in its membership.
Supporting Materials:
●News articles
●Powerpoint presentation