The role of shipping in Philippine economic growth

It is disappointing to recognize that foreign shipping lines carry ALL Philippine containerized imports and exports. No Philippine flag carrier participates - for several decades already.

That could change if and once MARINA permits domestic ship owners or shipping lines to operate as Philippine flag container shipping line within Asia regionally (and eventually beyond Asia) and locally, under one registry.

In that case, local shipping lines will have to measure up and meet the international standards set forth by the International Association of Classification Societies (IACS), which may be good for all, including its crew and the public.

  It is good to see that some local shipping lines, MCC and IRIS Logistics for instance, can comply with the IACS standards. Others can as well once they fully understand the benefits of participating in the concept of the ‘Blue Philippines’.

 While Philippine neighbors have their flag shipping lines carrying their international trade, the Philippines should join now, given the fact that there are investors willing to fund a Philippine international shipping line.

What will the Philippines / the Philippine government gain by allowing Philippine flag vessels to operate domestically and internationally in one registration?

• The Philippine registered company will pay local income and other taxes for businesses done here and abroad.

Foreign registered shipping lines pay carriers taxes but no income or other taxes like substantial destination charges/services, even as they claim these charges not to be part of “freight.”  Neither do they pay taxes locally for freight income generated abroad.

• Access to foreign financing for the purchase of ships will be enabled if the ship mortgage law will be amended by the government.

• Freight revenues, profits, and taxes stay in the country instead of being remitted abroad.

• Importers will be protected from the imposition of excessive surcharges.  They will now have alternative options to import goods at lower costs due to real competition in a functioning market.

• As a consequence, local consumers will buy imported products at a reduced landed cost as frivolous surcharges are gone.

• This project will pave the way for all domestic carriers to consider going international, thereby giving work to displaced seafarers for as long as the local vessels comply with international maritime safety standards.

• Once domestic companies start to engage in international trade, foreign-flagged carriers will have competition from Philippine flag carriers.

• Government imports such as rice, sugar, G to G projects can and will be carried by Philippine flags as the flag law requires

Per research done by the United Nations Comtrade, Thailand and Vietnam exports to the Philippines in 2019 were  USD 6.47B and USD 3.46B, respectively.

In 2019, the Philippines imported USD 112.9B and exported USD 70.3B worth of goods worldwide based on data gathered.

By value, the Philippines exported 67.7% to Asian countries and imported 78.8% from their fellow Asian countries. Imagine all the possible benefits if at least some of these trading activities will be carried by Philippine flag shipping lines servicing Intra-Asia routes.

The good news is that MARINA has formed a working group to evaluate these arguments and, if found meritorious to establish what needs to be done to implement change.

In partnership with the private sector, MARINA should, as they may do already, study the best way to attract investments in shipping that will uplift the country’s flag registry and make the Philippines a leading maritime services center in the region.

Let us CREATE THE PHILIPPINE BLUE ECONOMY:

We started looking at ‘The Role of Shipping in Philippine Economic Growth’ already in 2018. Being focused on creating economic opportunities for 2021 and beyond, it makes sense to see the shipping sector as part of the Maritime Blue Philippines’ economic potential.

Why now? Shipping in ASEAN becomes more critically crucial after global trade was negatively affected by the previous American president, and Europe is looking at ASEAN and ASIA as a focus for trade and investments.

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