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In depth

Revolution in the Philippines

Monday, November 4th, 2013

With the industry meeting in Indonesia this week at the World Mail and Express Asia Pacific Conference, James Cartledge puts the questions to event speaker and Postmaster General of the Philippines Maria Josefina Dela Cruz about the transformation of PHLPost.

Maria Josefina Dela Cruz was appointed as the first female Postmaster General of the Philippines in August 2011, after serving three terms as Governor of the province of Bulacan. She brought with her the ambition to transform public service in a company facing significant threats and opportunities.

This approach has already seen the complete rebranding of the company, in the summer of 2012, changing from PhilPost to the new trading brand PHLPost.

PHLPost currently delivers about 147m items of mail each year, the majority letters for business customers. Overall, mail volumes are decreasing by 7.71% year on year, as more and more customers move to electronic communications.

The parcel business is facing fierce competition from express operators, but nevertheless offers “immense” potential thanks to the flourishing e-commerce industry and a growing need for complete end to end solutions for the delivery of goods for businesses and government. PHLPost is modernising its infrastructure and processes to provide delivery services to compete with private sector rivals, including a three year vehicle renewal programme to improve the last mile.

The company is now “very optimistic” about scaling up its parcel business, Postmaster General Dela Cruz tells MER. It is expecting to benefit from a revitalised Philippine economy, which registered 6.8% growth in 2012 and 7.6% in the first half of 2013.

The Philippines Postal Corporation has rebranded from PhilPost to PHLPost

JC: How have your background and experience contributed to your leadership of PHLPost?

PMG: Prior to my appointment as Postmaster General and CEO of PHLPost, I served the province of Bulacan as its local chief executive for three consecutive terms. Bulacan is the second largest in terms of population and one of the most progressive provinces in the Philippines today. During my term as governor, I did not stick with the traditional and usual way of governance. Rather, I dared to reinvent public service and move towards e-governance.

I have always been a firm believer that an organisation has to enable itself, through continuous development of its structure, manpower, and internal processes, to effect service excellence and to produce competitive products. With humility I can say that in the future my time at PHLPost will be described as the era when postal services and the organisation itself underwent a revolution to better serve Filipinos.

JC: What are the strategic priorities for PHLPost ?

PMG: By 2016 we envision PHLPost to be the preferred universal service provider for the delivery of communications, goods, and postal payment services. In moving towards this vision, we have started reinventing the way we do postal service so that we can credibly assert the relevance of the post in the value chain. PHLPost has to reinvent itself in the midst of advances in technology and stiff competition by private players, otherwise it will not flourish. As they say, ‘Times change and those who change with it survive’.

Our recent efforts towards modernisation include interfacing technology with our processes, developing new products and services like e-commerce and logistics, and scaling up our postal payment services, such as the migration of paper based postal money orders to electronic, bill payments, payment collection, and payouts for government social projects. Further, we will pursue the development of our network to continue to provide last mile delivery to the missionary areas where the private players cannot sustainably operate. These efforts are concrete manifestations that PHLPost will not become irrelevant during this time of IT revolution.

JC: How is PHLPost faring in its governance and regulation at the moment?

“We are waiting for positive action to establish a definite Regulatory Authority to monitor and regulate the courier industry”

PMG: The passage and implementation of Republic Act No. 7354, otherwise known as the Postal Service Act of 1992, paved the way for the corporatisation of PHLPost. The post was transformed from an entity with a bureaucratic set up and limited functions into a corporate body with certain powers, functions, and responsibilities.

PHLPost now enjoys some leeway in terms of identifying and utilising fund sources and the application and disposition of its financial and physical assets. It can directly import equipment for its operations without being charged customs duties and taxes. However, as a government owned and controlled corporation (GOCC), PHLPost is still limited by government regulations in terms of procurement, investment, entering agreements with other entities, development of new products and services, and so on.

Consequently, we cannot immediately undertake all the reforms and innovations necessary to enhance our competitiveness. PHLPost needs to be able to operate like a private corporation which can independently and immediately make business decisions, and with streamlined processes that facilitate faster implementation of business strategies. I am not referring here to privatisation, but for GOCCs like PHLPost to be governed with separate guiding principles compared to government agencies and which will give us flexibility.

JC: What other changes would you like to see in the wider environment?

PMG: We are currently supporting the lobbying to increase the “de minimis threshold” in the Philippines which will help facilitate cross border trade. This proposed reform regarding the imposition of taxes/duties to inbound parcels or merchandise is a welcome move.

In terms of regulating the courier market, we are still waiting for some positive actions to establish a definite Regulatory Authority to monitor and regulate the industry. PHLPost has lost its monopoly in mail services because of the fully liberalised/deregulated industry. While private couriers operate in the country’s commercial and profit centres, we are mandated to reach the remotest parts of the country. This unequal playing field has caused serious impacts to our operations and to our financial viability as a corporation.

PHLPost is in the middle of a three-year fleet renewal programme

We would also like the postal service system be mainstreamed in the national plan and budget to ensure its continuous development. Although since 2012 we have been reimbursed for mails delivered under the franking privilege of certain government agencies, PHLPost has no specific allocation in the national budget that can be used to invest in the development of its infrastructure.

JC: How has PHLPost responded to the decline in letter volumes?

PMG: Even as technology defines the way people and businesses communicate, I believe that the market for letters will not disappear, as there will always be certain documents that need to be physically moved. What we need to do is to improve this business by providing value added services such as the provision of delivery information.

Consequently, we have launched our add on service called the electronic business mail service (eBMS), a client file server/web based application system that facilitates the expedited, accurate, consolidation of information and provides delivery information to customers via the web. With eBMS, clients will be provided either with an electronic proof of delivery (ePOD), a slip that has a unique barcode containing the information about the delivery of a particular item, or an electronic registry return receipt (eRRR), which is a document used for mails that are accorded special security and recorded from acceptance to delivery.

We are also planning to introduce hybrid mail delivery as part of expanding our letter business.

Continued on page 2 »

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Source: James Cartledge, Post&Parcel

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