president manuel roxas, zamboanga del norte

President Manuel Roxas,

Zamboanga del Norte

An LGU-ManagedTertiary Port:

A Successful PublicEnterprise

An LGU-Managed Tertiary Port: A Successful Public Enterprise in President Manuel Roxas, Zamboanga del Norte Copyright © 2005 Philippines-Canada Local Government Support Program (LGSP) The Philippines-Canada Local Government Support Program encourages the use, translation, adaptation and copying of this material for non-commercial use, with appropriate credit given to LGSP. Although reasonable care has been taken in the preparation of this book, neither the publisher and/or contributor and/or editor can accept any liability for any consequence arising from the use thereof or from any information contained herein. Printed and bound in Manila, Philippines Published by: Philippines-Canada Local Government Support Program Unit 1507 Jollibee Plaza Emerald Ave., Pasig City 1600 Philippines Tel. Nos. (632) 637-3511 to 13 www.lgsp.org.ph This project was undertaken with the financial support of the Government of Canada provided through the Canadian International Development Agency (CIDA).

An LGU-Managed Tertiary Port: A Successful Public Enterprise PRESIDENT MANUEL ROXAS, ZAMBOANGA DEL NORTE

Philippines-Canada Local Government Support Program (LGSP)

Documentation of LGU Exemplary Practices

Replicable Practice

AN LGU-MANAGED TERTIARY PORT: A SUCCESSFUL PUBLIC ENTERPRISE IN PRESIDENT MANUEL ROXAS,

ZAMBOANGA DEL NORTE

(2ND CLASS MUNICIPALITY)

CONTENTS

Summary

2

Project Description: Seizing an opportunity

2

History: Fulfilling a long-time dream

3

Results: Making hard work pay off

4

Key Implementation Steps

6

Analysis and Lessons Learned: Where there’s a will, there’s a way

12

Annexes:

Annex A - Sanggunian Resolution Requesting PPA to turn over Port Management to the LGU

Annex B – Sanggunian Resolution fixing Wharfage Fees, Labor Rates and Port Fees

Annex C – Memorandum of Agreement between LGU and PPA

Annex D – Port Management Organizational Structure

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Summary Local government units (LGUs) manage public economic enterprises (PEEs)1 to respond to the critical needs of their constituents and earn income for development ends. Often, however, LGUs end up either losing money or subsidizing these businesses because of limited management skills and resources, corruption and unfavorable economic conditions. A few LGUs have proven, though, that this is not always true. President Manuel A. Roxas in Zamboanga del Norte is one such LGU that successfully turned an LGU-managed port into a profitable public enterprise. In January 2002, in line with the national government’s policy of devolving tertiary ports to LGUs whenever possible, Pres. Manuel A. Roxas acquired management of Roxas port, a tertiary port in its area. Since then, the LGU has been able to turn the opportunity into a successful venture. It has trained and mobilized a competent and committed port management group, implemented effective policies and services, and developed linkages with donor institutions and the private sector to generate more funds for continuous port improvement and expansion. As a result, the LGU managed to turn a once-ill-equipped three-vessel-capacity port into a bustling, profit-making enterprise, posting a 414% increase in revenues over a period of two years. The additional revenues have enabled the LGU to fund further port improvement. With more ships and companies using the port, the enterprise has also created employment opportunities; more people gained jobs and additional income as port workers and operators of related services and business enterprises. Project Description: Seizing an opportunity Pres. Manuel A. Roxas (or Roxas, as it is commonly known in the area) is a 2nd class municipality of 33,659 people in Zamboanga del Norte province. Before 2000, the LGU identified the lack of employment as one of its major problems: agriculture and fisheries – its main industries – did not provide enough jobs for the local workforce. The LGU also grappled with the problem of providing livelihood opportunities as well as basic social services given its limited income. 1 A business-like entity, wholly or partially owned by local government that sells a product or provides a service to meet a perceived specific public demand. Common PEEs in the Philippines are: public markets, slaughterhouses, bus terminals, waterworks and cemeteries.

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In 2000, however, the LGU saw an opportunity to turn things around when the national government began implementing a policy of devolving the management of tertiary ports from the Philippine Ports Authority (PPA) to local governments. The LGU successfully lobbied to gain control of Roxas port which had been operating in the municipality since 1996. Though a vital enterprise in Roxas, the LGU barely earned from the port’s operations which were then under the control of the PPA getting only indirect revenues. While the bulk of port revenues from wharfage, docking, usage, stevedoring and arrastre fees went to the PPA, the LGU earned a small, indirect fees, from issuing community tax certificates to port laborers and workers. With the port’s management in the hands of the LGU, 90% of port revenues went to Roxas, with only 10% going to the PPA. The LGU managed the port, ran its operations, provided services to port users, and generated funds for port operations, improvement and expansion. Project Objectives With the port turnover, the LGU developed its objectives on port management. These included the following: Develop the LGU’s capacity to manage and improve port services through

responsive port policies and operations Organize and train a competent and committed port management group Mobilize various stakeholders and resources for port improvement and

expansion Generate support and active participation of port workers, port patrons, the

PPA and other stakeholders in the smooth and effective operations of the port Improve the volume of port operations and revenues

Project History: Fulfilling a long-time dream

Pres. Roxas’ LGU has dreamed of managing its own port since the 1970s. It began building Roxas port in 1979; with a budget of only Php 100,000, however, it could not complete the construction. The port was finally finished only in 1993, when the Department of Transportation and Communication (DOTC) provided the

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funds for its completion. Management of the port, however, went to the PPA, which has been managing it since 1996. In 2000, after learning of the new national policy to devolve port management to capable LGUs, Pres. Roxas’ mayor took the lead in lobbying for a Sangguniang Bayan (SB) or local legislative council resolution advocating for the port’s turnover to the LGU. The resolution was then presented to the PPA General Manager and Board of Directors. The LGU then lobbied hard for two years, with the PPA, the DOTC and other national agencies, to have the port’s management turned over to the LGU. These efforts finally met with success when the PPA turned over the tertiary port to the LGU in 2002.

Basic Profile: Pres. Manuel A. Roxas, Zamboanga del Norte Location: Zamboanga del Norte province Land Area: 27,082 hectares Population: 33659

ndIncome class: 2 class No. of barangays: 22 Major industries/economic activities: agriculture, fishing, sardines making; oil mill

Getting PPA approval of the LGU port takeover was only the first step. In 2002, the LGU began the enormous responsibility of managing and improving its own tertiary port.

Results: Making hard work pay off Since then, Pres. Roxas has proved it is up to the challenge of efficiently managing its own port, increasing its revenues, and utilizing these funds for further port improvement and more development initiatives in the municipality. Increased LGU Income. In two years, the LGU-managed port was able to post a remarkable 414% increase in net port revenues, from Php 357,350 in 2002 to Php 2,224,184 in 2004. This was mainly due to the 90% increase in LGU shares in port revenues. Port revenues come from usage fees, wharfage and the 10% from arrastre and stevedoring fees.

Improved port services. The LGU has managed to put in place new facilities and services at Roxas port, including the following:

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Improved cargo loading

and unloading facilities with 15-tonner forklift, 1 3-tonner forklift, 4 12-wheeler wing vans, nylon net and tarpaulins, wooden and steel pallets) 24-hour operations Office building with

ticketing booths Arrastre accessories Public restrooms Parking area

Port personnel and workers have become more skilled at and committed to providing quality services, due to capacity development activities provided and good relations fostered by the LGU.

As a result, more consignees have started using Roxas port for its accessibility, convenience and uninterrupted loading and unloading operations. The port is now looking to gain clients such as Lite Lines, a passenger ship, Coca Cola and other cargo companies transporting fresh and processed fruits, bottled sardines, coffee beans, livestock and other agricultural products.

Improved LGU capacity for port management. Pres. Roxas’ LGU proved its capacity to manage its own port with its implementation of effective policies, provision of efficient services, and installing a competent port management team. It has also learned to conduct regular consultations and dialogues with port workers to foster good working relations in the port and ensure quality service.

Prospects for further port improvement. Through vigorous networking and fund generation activities, Pres. Roxas is poised for further port improvements with a Php 3.8 million loan from the Development Bank of the Philippines (DBP) (to be charged against Roxas’ Internal Revenue Allotment) and a Php 12.2 million grant from the Japanese International Cooperation Agency (JICA) (for the construction of the port office building, warehouse and terminal with restrooms).

More employment opportunities. More families living near the port have found employment as port laborers or have been able to earn extra income from

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operating port-related services or other businesses near the port. From 103 port workers and laborers before the turnover, the number has risen to 138. This does not include those who are indirectly employed or have gained livelihood as a result of increased port operations.

Key Implementation Steps Roxas’s success in turning port management into a profitable public economic enterprise was made possible by a number of key implementation steps that can be used as a reference in replicating the project or undertaking a similar/modified undertaking. 1. Conducting an assessment and feasibility study on port operations

Roxas first conducted a feasibility study to determine if the LGU would benefit from managing the port. The study revealed that municipal coffers would receive 90% of port revenues from the management, a big leap from the 10% it had been receiving since the PPA began operating the port. With the increased earnings, the LGU surmised that they would be able to create more jobs, improve incomes for port workers and generally improve and expand the delivery of basic services. This provided the impetus for the LGU’s strong lobby for port management. (For LGUs that are looking into building their own ports, a feasibility study may also be useful in selecting or validating the best location for a port, to ensure that the site is near populous areas, processing plants and warehouses and has the required water depth and wide plain space that can be developed for port operations.) 2. Building support and lobbying for LGU port management

The LGU, in a joint executive-legislative session, then decided to request the PPA for port management turnover. The request was expressed in the form of an SB resolution that explained the need for the LGU to increase its income by managing the port as a Public Economic Enterprise (PEE) and expressed the LGU’s readiness to manage it as a devolved service facility.

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Pres. Roxas’ mayor presented the resolution to the PPA general manager and board of directors and regularly followed-up its status with the PPA for two years. The LGU takeover was only approved with the signing of a Memorandum of Agreement on January 8, 2002 between the PPA and LGU, two years after it was submitted. The MOA provided for the following:

a) Granting the LGU sole and exclusive responsibility to manage, operate, maintain and develop Roxas Port as well as train people who would be in charge of port management and operations

b) Setting the LGU management fee at 90% of collected wharfage, port dues and dockage and usage fees and remittance of the remaining 10% to PPA

c) Allowing the LGU to collect all port revenues except fees identified earlier and localizing labor rates as set by PPA, among others.

(See Annexes A, B and C for SB Resolutions and MOA) 3. Formulating policies, systems and procedures under a PPA-approved Manual

of Operations. Having acquired management of the port, Roxas then formulated and installed the necessary policies, systems and procedures for managing the port. The SB enacted two major ordinances that set the stage for port management. These were: Ordinance No. 22 series 2003, declaring Roxas Port a Public Economic

Enterprise (PEE). The ordinance designated the PEE Department as the overseeing body of the Roxas Port and provided policies for personnel hiring, operational expenses and financial management system. The PEE Department was composed of the port supervisor, the municipal engineer, the municipal planning and development officer (MPDC), the civil registrar, the municipal treasurer and the municipal agricultural officer

Ordinance NO. 18 series of 2004, fixing cargo handling tariff rates and

domestic port charges per PPA policies. Both ordinances were drafted and passed after committee hearings and consultations with port users and handlers, port personnel, the private sector and an external consultant from the Philippines-Canada Local Government Support Program (LGSP) were conducted.

The LGU also developed two instruments:

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The Port Development and Improvement Plan which outlined the

objectives and activities to be undertaken and the corresponding resources for such activities

Port Operations Manual which specified the systems and procedures in developing, operating and maintaining the port as well as system for collecting and managing port revenues in conjunction with the LGU and PPA policies.

Both the Plan and the Operations Manual were then submitted to the PPA for approval. 4. Organizing and training a port management team

Along with Step 2 and 3 (Building support and lobbying for LGU port management), the LGU designated port management team members, first on a temporary basis, and then finalized the team composition after members had proven themselves. The initial team members were chosen from the various LGU departments; these personnel first worked on a part-time basis and received additional honoraria on top of their regular salaries; they were later designated as full-time, regular port personnel. Roxas’ criteria and process for the selection of team members included the following: Team members should be (at least) heads of LGU offices or departments Team members have proven management capacities Membership is confirmed through an SB resolution

Roxas’ port management team included the following key members: Terminal supervisor Port engineer Cashier Port operations officer Statistical assistant Accounting clerk Maintenance foreman

(See Annex D for Port Management Organizational Structure) To ensure they had the necessary skills, the LGU then sent its port management team to a training conducted by PPA-Ozamiz City; the LGU shouldered the team’s expenses. The training included the following topics:

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Implementing the PPA-approved port development plan Port services marketing Managing port operations which entails knowledge and skills in appropriate

vessels’ mooring and unmooring, cargo loading and unloading, land transport vehicle and waste management and silted water dredging

Effective port revenue collection, recording and management PPA-LGU remittance sharing

The team was also sent on exposure trips to other ports in Dapitan, Liloy, Sindangan, Dumaguete, Dumangas, Bacolod and Caticlan to enable them to gain insights on how other ports are managed.

5. Implementing the Port Development and Improvement Plan and Port

Operations Manual The port management team then set about achieving the following objectives of the plan: Undertaking port improvements, including paving of the port site for Php 150,000; and installing additional restrooms, parking areas, and docking areas Procuring additional equipment such as forklifts and other cargo loading and unloading tools

Building linkages with financing institutions like DBP to generate external resources for further port improvements Marketing port services to prospective clients Enforcing fees and other policies among port users Ensuring quality service by port personnel and workers Efficiently collecting and managing port revenues

In the meantime, the port management team also enforced the following guidelines: Vessels should be appropriately and safely moored and unmoored

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Cargo loading and unloading is handled well by equipment handlers and port laborers Land transport vehicles are given adequate parking spaces Port wastes are properly disposed of Silted water depths are dredged, when needed Effective management of port revenues from collection to LGU and PPA

shares’ remittance; Pres. Roxas allocates an annual budget of Php 400,000 for port improvement and Php 5.7 million for port operations/expenditures.

6. Organizing port workers and other personnel connected with port operations The LGU further organized workers and oriented them on their roles in port operations, port policies, labor rates and cargo damages’ charges. Dialogues were conducted that enabled workers to air their expectations on LGU management, incomes and work conditions in the port. Such consultations contributed to minimizing tension and problems between the LGU and port workers and foster good relations.

7. Conducting aggressive marketing of port services With the belief that quality service attracts more clients, thus increasing revenues, Roxas actively engendered a culture and environment of efficiency and quality service among port workers. Efficient and quality service was, in turn, used as a marketing tool to promote the port to clients and prospective users. Marketing strategies included pro-active identification of potential clients and the conduct of informal meetings with those identified. Aggressive marketing paid off by doubling the number of port consignees from 4 to 8, opening up the port to passenger ship berthing and positive indications of forthcoming port patronage by big shippers like Coca Cola and business locators at the Roxas Provincial Agro-Industrial Center (PAIC) involved in producing fresh and processed fruits, bottled sardines, coffee beans, livestock and other agricultural products. 8. Conducting regular monitoring and evaluation

Roxas’s Port Operations Manual had provisions monitoring and evaluating port operations, which enabled it to assess its work and identify areas for

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improvement. Problem areas were identified and addressed, accomplishments measured vis-à-vis targets and objectives, and future plans were made on the basis of past performance.

9. Ensure project sustainability The LGU has developed a port area use plan to ensure that further improvements follow a responsive overall design, with facilities properly located and responsive to long term port demands and challenges. New areas that can serve as warehouses, passenger terminal and public restroom were designed to ensure that proper facilities are in place while the port increases its business. Matrix of Key Implementation Steps Key Implementation Steps Expected Outputs Budget/ Resources Required 1. Conducting an assessment and feasibility study on port operations

Feasibility study Budget to acquire the services of an external consultant or a team within the LGU to conduct the feasibility study; budget for expenses in the conduct of the feasibility study

2. Building support and lobbying for LGU port management

PPA approval for LGU management Budget for lobbying, SB commitment and support, political will and sustained effort on the part of the local chief executive to lobby for LGU port takeover

3. Formulating policies, systems and procedures under a PPA-approved Manual of Operations.

Supporting SB ordinances, port development plan and operations manual

SB support and active work on passing the required ordinances, budget for plan and manual development, personnel to develop the plan and manual

4. Organizing and training a port management team

Trained port management team Salaries for the port management team; budget for training

5. Implementing the Port Development and Improvement Plan and Port Operations Manual

Plan and operations manual implemented

6. Organizing port workers and other personnel connected with port operations.

Organized and supportive group of port workers

Staff to undertake/facilitate dialogues, budget for dialogues

7. Conducting aggressive marketing of port services

New clients and port users Budget for marketing activities; staff to conduct marketing

8. Conducting regular monitoring and evaluation

Monitoring and evaluation reports Budget for monitoring and evaluation activities

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Key Implementation Steps Expected Outputs Budget/ Resources Required 9. Ensuring sustainability Analysis and Lessons Learned: Where there’s a will, there’s a way

Roxas’ project implementers cite the following key ingredients to successful port management that other LGUs wishing to replicate the LGU’s success may want to keep in mind. These include the following:

Consensus and political will is necessary for an LGU to effectively manage a port, set policies, systems and procedures, install and train the port management structure, mobilize internal and external resources to develop port site and improve facilities and operations and market port services

Capacity development activities are critical in ensuring success: an LGU has to be prepared to undertake substantial responsibilities in running port operations, generating and managing revenues, and finding other resources to finance needed port improvements. This entails identifying committed individuals and training them to manage port operations and aggressive fund generation.

A PPA-approved Port Operations Manual is a powerful tool for effective port management as it clarifies the parameters and guidelines for port operations and gives the port management team the authority and basis to confidently handle port operations

Consultations and proper orientations with and among port workers and related personnel are necessary to address any opposition to LGU management. Concerns can be identified and addressed, which in turn will improve work conditions, work efficiency as well as the quality of port services. Marketing is a critical ingredient in increasing port operations and revenues.

Uninterrupted or 24-hour port operations increases port users’ satisfaction as it allowed for fast turnover of vessels and reduced wharfage expenses

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Plowing back a portion of port revenues to port improvement will ensure sustained expansion of port services, which would result in more clients and higher revenues, as well as improve quality of service and users’ satisfaction

Working closely with the PPA will ensure that the LGU will have the right direction, the legal/official authority and prescribed plans and instruments, and are equipped with the right training for the work involved

Replicating the practice For LGUs interested in replicating Roxas’s experience, the following concerns should be taken note of: - For LGUs that want to take over management of an already existing port,

lobbying for management takeover may be a lengthy process. It took Roxas two years to get PPA approval for the takeover. Significant resources may also be required to upgrade port services and facilities and acquire new consignees and customers. External funding may have to be generated, however, as Roxas did.

- For LGUs already managing a port and interested in improving port services, then the steps undertaken by Roxas may be useful as guidelines in undertaking port improvements

Who to contact if interested in replication: Roxas Mayor Carlito A. Feras Engr. Luis Vera Calibo, Port Manager 09163434944; 09196601102 Annexes:

A. Sanggunian Resolution Requesting PPA to turn over Port Management to the LGU

B. Sanggunian Resolution fixing Wharfage Fees, labor Rates and Port Fees C. Memorandum of Agreement between LGU and PPA D. Port Management Organizational Structure Annex A. Sanggunian Resolution Requesting PPA to turn over Port

Management to the LGU

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Annex B. Sanggunian Resolution fixing Wharfage Fees, Labor Rates and Port Fees

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Annex C. Memorandum of Agreement for the Management of Nabilid Port

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Annex D. Port Management Organizational Structure

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president manuel roxas, zamboanga del norte

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