PROBLEMS AND ISSUES IN THE PHILIPPINE SHIPPING INDUSTRY

Col. L C l Leonardo O. Odoo (Ret.) d O Od (R ) President Alabat Shipping Corporation

THE DOMESTIC SHIPPING DEVELOPMENT ACT OF 2004 (RA 9295)

- Some tax incentives - Deregulation of Rates - Cabotage Rule

STATE OF DOMESTIC SHIPPING STATEOFDOMESTICSHIPPING INDUSTRY

- Domestic fleet is older - Dependence on Second-Hand Tonnage - No shipbuilding industry - No growth no modernization growth,

WHERE IS SHIPPING IN GOVERNMENTS PRIORITIES?

Now, as head of DOTC, he said his priorities would be . . . upgrading airports and overseeing the development of a connector road linking the North Luzon and South Luzon Expressways. p y September 1, 2012 PDI report on the first public statement of Secretary-Designate Abaya.

SHIPPING ENTERPRISE IN MAJOR MARITIME COUNTRIES

Shipping treated as strategic enterprise Tax-Exempt Shipping investment capital made available Subsidies provided for shipping operation

CAPITAL AND CREDIT CONSTRAINT

SHIPPING IS CAPITAL INTENSIVE S G SC S CREDIT FACILITIES NOT AVAILING FOR SMALL PLAYERS COMMERCIAL LENDING RATES / NO DEVELOPMENTAL RATES NEED TO ESTABLISH MARITIME EQUITY FUND

SHIPBUILDING INDUSTRY
1. ABSENCE OF SHIPBUILDING ACTIVITIES

FOSTERS SECOND-HAND MENTALITY

2. SECOND HAND TONNAGE MARKET DRYING

UP FAST FAST.
3. 3 WITHOUT SHIPBUILDING, POTENTIAL SHIPBUILDING

TONNAGE SUPPLY CRISIS IN A DECADE.

COST OF DOING BUSINESS

FILIPINO SHIPOWNER PAYS ALL KINDS OF TAXES FOREIGN SHIPPING OPERATIONS IN TAX-FREE TAX FREE ENVIRONMENT COST OF MONEY UNWORKABLE FOR SHIPPING COST OF GRAFT SHOULDERED BY SHIPOWNERS HIGH COST OF DOING BUSINESS ERODING COMPETITIVENESS OF INDUSTRY

FRACTURED MARITIME REGULATORY REGIME

Many agencies involved in regulation-- speaking with discordant voices - working at cross-purposes - making life difficult for shipowners

Need to create single maritime administration

- To achieve unity of purpose - To insure coherence of policy

FUNCTIONAL CHART OF A UNIFIED MARITIME ADMINISTRATION

MARAD
Maritime Equity Fund
Fleet Planning and d Development -Shipping Industry Development D l t - Shipbuilding Industry Development - Research & Development

Flag Fl Administration -Maritime Regulation -Philippine Registry Administration

Ports P t Administration - Ports System Planning - Policy & Regulation - Regional Ports Administration

Coast G C t Guard d Administration - Port State Control - Ship Inspections - Search & Rescue - Marine Environment Protection - Law Enforcement at High Seas

Maritime Labor M iti L b Administration - Maritime Education - STCW - Overseas Seafarers Administration - Maritime Labor Code Administration

EASING BURDEN ON SHIPOWNERS

HARMONIZATION OF SHIP INSPECTIONS AND CERTIFICATIONS REVISION OF PMMRR OVERDUE COMPUTERIZATION OF APPLICATIONS FOR REGISTRATION/CERTIFICATIONS TO MINIMIZE HUMAN INTERVENTION

PMMRR REVISION
Already 8 years work in progress 1997 PMMRR has unenforceable provisions Ship operators rather pay penalties Clear and reasonable rules minimize graft

LIFTING OF CABOTAGE RULE

LIFTING MAY NOT SERVE PURPOSE OF INDUCING COMPETITION FROM FOREIGN OWNERS LIFTING WILL DAMPEN THE ALREADY LOW APPETITE FOR INVESTMENTS COMPETITION MUST BE MADE ON LEVEL PLAYING FIELD OPEN SKIES POLICY
-

Allows only increases in international flights into and out of country Does not allow international carriers, on international flights to take domestic passengers

OPEN SEAS POLICY ALREADY IN FORCE

- Foreign shipping allowed to call on international ports for foreign- trade cargo - Like international airlines, foreign lines can not take domestic cargoes from one port to the other

MARITIME LABOR CODE

Contains provisions not practicable

for small vessels

A potential disincentive to shipping investors Marina to invoke prerogative to exempt non-

convention-size, domestic ships

PARADIGM SHIFT IN MARITIME SAFETY REGIME

Safety of life and property at sea may not be attained with y p p y y Marina Circulars, administrative orders and flag advisories alone. Maritime safety is best achieved by focusing on - Modernizing the fleet; - Imposing standards of seaworthiness of each vessel in the fleet; and - Insuring that only competent seafarers man our ships. p

GROUNDING OF ENTIRE FLEET AFTER ACCIDENT

- More of a knee-jerk reaction? - A punishment without due process? - Why not apply same rule to PAL/Cebu Pacific?

POLITICAL WILL NEEDED TO MODERNIZE SHIPPING

1. Compulsory retirement of old vessels 2. Build-up of shipbuilding capability to supply

newbuildings to industry 3. Restrictions on importation of second-hand f vessels 4. 4 Initiating a Scrap-and-Build Program Scrap and Build 5. Formulating a comprehensive shipping industry development plan

PHILIPPINE MERCHANT SHIPPING BILL

A legal and policy instrument for industry

development needed to be in place.

Merchant S Shipping Bill more urgent than the

Maritime Code.