Transportation Secretary Jaime Bautista highlighted the need to incentivize the country's shipping industry to increase local players and domestic shipping fleets.
"We need to give incentives to Philippine-registered shipping companies to operate internationally because we cannot compete with international players without the incentives," said Bautista during the "Economic Outlook and Strategies for 2024" panel in the 2023 Pilipinas Conference on Wednesday, Nov. 22.
Mentioned during the panel were some policies that appear to disincentive the setups for a domestic shipping line.
These include the relaxed cabotage law, which originally only allowed vessels carrying a certificate of Philippine registry to transport cargo or passengers between ports within Philippine territorial waters, except upon a special permit conferred by the Maritime Industry Authority (MARINA).
The policy requires domestic shipping fleets to have 60 percent Filipino ownership, flies the Philippine flag, and has a 100 percent Filipino crew.
The law was amended in 2015 with Republic Act. No. 10668, which gave limited rights to foreign vessels, allowing them to transport and co-load foreign cargoes for domestic shipment in order to "reduce logistics costs and decongest the country's major ports."
That has opened the domestic shipping industry to more competition with foreign shipping carriers while the revised law does not allow local and foreign shipping by the same firm to occur simultaneously.
Another issue highlighted was the payment of value-added tax (VAT) by domestic suppliers of shipping lines that are only plying international routes.
The transportation secretary stressed that the Department of Transportation (DOTr) is working closely with the private sector and the national government to resolve these concerns.
"We're working closely with the private sector on this. Last night I had a meeting [where] we set up a maritime advisory group, which is helping us identify all these problems and issues like safety," he said.
He remarked that the "need for legislation is very important and this is one of the programs that we are now concentrating so we can have more players in the Philippine shipping industry, considering you can count with your fingers new vessels that are plying the domestic line."
He also mentioned that the Marcos administration is "supporting the modernization and improvement of the Philippine shipping line."
Despite concerns on competition, Bautista maintains that the passage of the "Philippine Service Act," which is allowing foreigners to have 100 percent ownership of shipping companies and operate in the Philippines, "will help improve the present situation of the Philippine shipping industry."
As of December 2022, MARINA reported 4,423 ships that have a certificate of Philippine registry, while 3,524 have a certificate of ownership in the domestic shipping sector.
There are 19,678 consolidated registered vessels operating in the domestic sector, comprising of 2,564 merchant, 7,364 fishing, 6,004 motorbanca, and 3,746 recreational ships.
A total of 95 ships of various types such as passenger, cargo, tanker, tugs and dredger, fishing, special purpose, miscellaneous, and recreational, have a valid special permit to operate in domestic shipping.