Shipowners sound alarm over domestic regulatory climate

SHIPPING COMPANIES are struggling as demand continues to be weak due to the economic slowdown and lockdown restrictions. — PHILIPPINE STAR/MIGUEL DE GUZMAN

By Arjay L. Balinbin, Senior Reporter

DOMESTIC SHIPOWNERS said the current regulatory climate worsened their plight amid the coronavirus pandemic, seriously impacting their business.

“The tight liquidity position is affecting the PLSA (Philippine Liner Shipping Association) members’ decision to modernize and expand. But even more alarming is the current regulatory climate. Current government regulatory climate (policies) has significantly increased the cost to operate and do business and also unnecessarily put the Filipino ownership at risk,” PLSA President Mark Matthew F. Parco said in an e-mailed reply to questions.

Mr. Parco said the current regulations “worsened by the uncertainty brought by the pandemic” have seriously affected their business, prompting many to put off making any decisions until end-2020.

As an example, he cited the government directive to domestic shipping lines to allocate 12% of their capacity for agricultural products and provide preferential rates for such cargo.

“The private sector has been required to give discounts by as much as 40% with no government support or assistance linked,” Mr. Parco said.

Asked to comment at a briefing on Sept. 18, Maritime Industry Authority (MARINA) Administrator Robert A. Empedrad said the discounted rates and the space allocation for agricultural products were intended to help “ensure that the prices of goods are not increasing during the pandemic.”

Alam ko medyo affected kayo dito sa hiningi naming 12% (We know you are affected by the 12% requirement), but we are appealing to you to implement this, and hopefully we can also come up with programs that can help you out… We will do our best to alleviate your plight during the pandemic,” Mr. Empedrad said.

Mr. Parco also identified the high waste reception fees for ships as another problem.

Hiyasmin H. De Los Santos, manager at the Philippine Ports Authority (PPA) port operations and services department, said the appeal filed by PLSA with the agency is now pending resolution.

MARINA’s Mr. Empedrad assured domestic shippers a financial package will be allocated for them under the Bayanihan to Recover as One Act (Bayanihan II) signed by President Rodrigo R. Duterte on Sept. 11.

“We are working on it right now. I believe the PPA recommended also for the waiving of dockage, lay-up, and terminal fees on all domestic shipping vessels. These are under study. I assure you the domestic shippers will have their piece of the stimulus pie once the budget under the Bayanihan II is released by the government,” Mr. Empedrad said.

Of the P9.5 billion allotted for the Transportation department under Bayanihan II, only P2.6 billion will be used to assist the air, land and sea transport sectors badly hit by the pandemic. The law directs the Transportation department to provide direct cash or loan interest rate subsidy, grants for applicable regulatory fees, among others.

Mr. Parco said shipowners are not planning to purchase any new vessels this year, as demand continues to be weak due to the economic slowdown and travel restrictions.

“Like other industries, the local domestic shipping industry was taken by surprise by the speed and breadth of the impact of the pandemic. The reduction in cargo and continuing restrictions in passenger travel have significantly affected the profitability and liquidity of the lines,” he said.

At the same time, Mr. Parco raised concern over the proposed amendments to the Public Service Act (PSA) pending before Congress, which would open up more sectors to foreign investments.

“The proposed amendments to the Public Service Act… seeks to open shipping to foreign ownership. This will significantly affect the long-term business plans or decisions of the shipping lines,” he said.

“It could also potentially affect the shipbuilding sector in the Philippines because foreign-owned shipping companies, if allowed to enter domestic shipping, could build or bring in ships made from their home countries, thus drastically affect our local shipbuilding industry,” he added.

MARINA Deputy Administrator for Planning Arsenio F. Lingad II expressed reservations in supporting the measure, saying “we view the Filipino participation in domestic shipping as part of our national artery for trade, which must not be given to foreign owners.”

“So we maintain that we should have the 60-40 capitalization in favor of Filipinos in order to safeguard the trade in domestic shipping,” Mr. Lingad said, adding MARINA will soon submit its position paper to Congress.

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