The Prodigal Regulation

This article was originally posted on The Manila Times on December 12, 2019.

We all know the parable of the prodigal son. A son loses his way, follows the wrong path and ends up in bad company. Despondent and shamed, he returns to his father expecting the worst, and is surprised as his father welcomes him with open arms and celebrates his return.

Today, let me tell you the story of what I consider the “prodigal regulation” of sorts. Say today in 2019, if you were to establish a land-based express courier service, where would you go? Some would say the Land Transport Franchising Regulatory Board. Others say the Department of Transportation.

Would it surprise you to know that the regulatory authority of this business is actually the Department of Information and Communications Technology (DICT)?

It all begins in 1973 through Presidential Decree No. 240, series of 1973, which considered couriers as carriers disseminating mailable matter, and thus were regulated by the postmaster general. The industry was termed the “private express and/or messenger delivery services (Pmedes).”

In 1992, with the passage of Republic Act (RA) 7354 creating the Philippine Postal Corp., the regulatory powers were later transferred to the then Department of Transportation and Communications (DoTC).

Fast forward to 2016, with the enactment and passage of RA 10844 effectively splitting the functions of transportation and communications and creating the DICT, the regulatory functions over Pmedes were now transferred to the DICT.

At first glance it does appear odd, why the governmental agency in charge of information and communications technology would regulate postal delivery services. Hence, the so-called wayward son.

However, in my opinion, it is in fact the perfect situation now. Consider that the business in question in the 1970s were rightfully in the hands of the postmaster general as the carriage was at the time “mailable matter.” The focus then were actual communications – mail.

In the transfer to the now defunct DoTC, the focus actually changed, and the business was now considered as “postal delivery services” and “postal commerce”, thereby recognizing that the business model now expanded to commerce.

With the transfer to the DICT, it again looks odd at first glance. However, this is where I feel the story goes full circle, and the regulation is now the so-called “prodigal son” of sorts. While it does not go back to the original father (Office of the Postmaster General), I feel it has gone home to the right father (DICT). Allow me to expound.

At the crux of my point is the expansion of the regulation to include “postal commerce.” Ecommerce has long been a strong growth driver in certain economies, with China leading.

The ecosystem is massive as ecommerce sales increase, all the more the need for a strong logistical network. Admittedly, online shopping in China is easy and quick, the financial technology (fintech) is already established and efficient, and the physical infrastructure is long operational.

Locally, we are lacking in all those aspects. Ecommerce had a slow market penetration.

Last year alone, Filipinos spent $4.7 billion on online purchases but only $840 million were online consumer goods purchases. It is that latter category that would have required a strong logistics and courier ecosystem.

Compare that to China where in 2019, ecommerce retail sales reached $1.935 trillion, a full 36.6 percent of overall retail sales in the country.

So why do I say the prodigal regulation has come to the right home? One word. Efficiency.

It has been my experience that to create ecosystems across various government agencies often is more tedious than it need be. Multiple meetings, debates on functionality, policy changes, among others, take significant periods of time.

However now, the DICT is leading the way to improving the overall information and communication technology landscape of the country. They would be responsible for improving ecommerce and fintech, and now that they also regulate express courier services, that is the third necessary gear to get the vehicle going. All the key aspects under one roof: ecommerce, fintech and logistics. The prodigal regulation has found the right home, indeed, and with the right people in DICT, I see a digital economy that indeed looks bright.

The author is chief of staff at the Anti-Red Tape Authority and founder of Caucus Inc., a multi-industry, multi-disciplinary management consultancy firm. He graduated MBA (De La Salle University), Juris Doctor (Far Eastern University), and Masters of Law in International Commercial Law (Honours, University of Nottingham, United Kingdom). He also studied Mandarin Chinese Language and Culture in Fuzhou, China, was a Chevening-HSBC UK Government Scholar, a Confucius Institute Scholar, an alumnus of the US State Department’s International Visitor Leadership Program, and a Fellow of the Asia Global Institute- University of Hong Kong. The author may be emailed at iap@caucusinc.com.