CEBU, Philippines - To better prepare for the upcoming free trade market in 2015, the Philippines needs to attract more investment to be able to modernize international ports and shipping infrastructure.
Philippine Institute for Development Studies (PIDS) senior research fellow Adoracion Navarro said the country has to prepare for the ASEAN economic integration especially in terms of infrastructure and logistics since these are considered vital in the free flow of goods and services, e-commerce, infrastructure development, enhanced participation in global supply networks.
He shared that reforms in the maritime transport are challenged with the concentrated presence of industry players with weak incentives to modernize and become competitive. This factor impedes the domestic shipping industry from meeting the standards and quality required of 21st century ocean-going vessels.
“The Philippine experience shows how hard it is to introduce policy reforms in an industry that is dominated by few firms, which exhibit oligarchic behavior, and where there are institutional weaknesses,†he said.
It was before the 1990s that the maritime transport routes were highly monopolized. Major reforms that took place in the past 30 years included the liberalization of route entry and deregulation of shipping rates.
Navarro further cited that the Philippines has to review the cabotage policy to address the need for more competitive transport and logistics in the country.
He said that cabotage is considered to be one of the major issues to be addressed in relation to the liberalization of maritime transport services in the Philippines.
Cabotage restriction is defined as a general legislation that governs maritime transport in accordance to Republic Act 9295 or the Domestic Shipping Development Act of 2004.
This law also provides the legal basis for cabotage restriction that states that no foreign vessel shall be allowed to transport passengers or cargo between Philippine ports, except upon the grant of Special Permit by the Maritime Industry Authority (MARINA).
All ships registered with MARINA must be completely manned by Filipino crew.
A special permit can be given when there is no existing vessel operating in the proposed route or area of operation; there is no available local vessel to transport the cargo to meet the shipping requirement; the proposed vessel is contracted by private or public entities; and in the case of vessel carrying or bringing in foreign tourists, operation calls at domestic ports is part of its itinerary.
Navarro explained that the pre-reform regulation was aimed to regulate route entry, bring capacity and demand into balance and protect the investment of operators by preventing ruinous competition, and to protect the public from indiscriminate charging by shipping companies.
Based on a 2010 report of the Asian Development Bank, the Philippine shipping industry facilitates 98 percent of domestic inter-island trade and accounts for about 80 million tons of cargoes every year including agri-fishery products. It also facilitates the movement of over 40 million Filipinos and foreign tourists within the country.
Philippines ranked 120th out of 144 countries in quality of port infrastructure in the Global Competitiveness Report 2012-2013 of the World Economic Forum. It also placed 98th in terms of quality of overall infrastructure and 112th in quality of air infrastructure.
There are 114 ports nationwide under the Philippine Port Authority to date. —/JOB (FREEMAN)