Streamlined registration, restored incentives, modernized ports—these are among key entries on the wish list the Philippine domestic shipping sector has for the incoming administration, according to local carrier Lorenzo Shipping Corporation’s (LSC) president Roberto Umali.
In an email to PortCalls, Umali—who is also president and chairman of the Philippine Inter-island Shipping Association (PISA), the umbrella organization of domestic shipping and shipping-related associations—said ship owners are losing a lot of money in opportunity costs because of the long “time to (recover) revenue.”
“We should follow the Panama practice or at least set a KPI (key performance indicator) of 3 days to register a new acquisition even if this starts first with a provisional registration while the permanent registration is being processed,” Umali suggested. He noted this process will need to be coordinated with the Bureau of Customs.
Panama is one of the jurisdictions widely chosen for ship registry due to its relative ease of registration and comparatively low registration fees. The nation offers competitive tariff charts, has an overnight 24/7 registration, requires no limitation on minimum tonnage, allows dual registration, and has robust regulatory protection.
Umali also suggested streamlining procedures at the Department of Finance and its attached agencies, the Bureau of Internal Revenue and BOC, for the availment of the value-added tax (VAT) exemption when importing ships. The VAT exemption is provided for under Republic Act No. 9337, or the National Internal Revenue Code.
“This exemption is already available to us, but ship owners are compelled to pay the VAT anyway because of the time it takes to process the exemption where they lose more on the opportunity costs,” Umali explained.
In this connection, the LSC chief hopes to have incentives for the shipping industry restored through the Board of Investments.
Umali said that at present, incentives only cover newly built vessels, which discourages the entry of younger second-hand ships, “so much so that because of the heavy burden of buying newbuildings, modernization slows down.”
“It is either brand new, or just continue operating the old tonnage until they are run down,” Umali noted.
He added that incentives could be applied per sector. They can be granted for newly built and 5-year-old fast craft in the roll-on/roll-off segment; for 10-year-old tankers; and for 15-year-old (even 12-year-old) container/cargo ships.
All imported vessels must also be classed under the International Association of Classification Societies (IACS), Umali said, to help in speeding up registration, since Maritime Industry Authority (Marina) need not inspect vessels already certified by the accredited organization.
To ensure safety, Umali suggested imposing the IACS class on all vessel imports, phasing out wood-hulled vessels, putting an age cap on vessels (35 years old), and having a single local class.
“There should be only one class society for easier monitoring and administration, as practiced in other countries,” he noted.
Marina recently issued Circular No. 2016-02, providing the revised rules and regulations for the phase-out of wood-hulled domestic passenger ships.
The shipping line executive also proposed that regarding the Philippine Ports Authority (PPA) Board, “it would be good if the private sector representative comes from the domestic sector/PISA, even on observer status as in the MARINA.”
The lone private sector representative of the PPA Board is an engineer.
Umali added that the port authority should continue to modernize major ports as planned by the outgoing administration.
“However, it should be the hybrid model instead, to minimize the charges to the port users. That is, the government spends for the infrastructure, while the private operator provides only the equipment and port improvements,” Umali explained.
He further stated that the Cebu Port Authority (CPA) should go ahead with its plan to construct a new port in Cebu, in the pipeline even before the Aquino administration came in. Cebu Port has been experiencing berth congestion due to the influx of trade.
A feasibility study completed last year recommended the construction of a new international terminal in Tayud, Consolacion. The study has been submitted to the Department of Transportation and Communications for endorsement to the National Economic and Development Authority Board. CPA general manager Edmund Tan earlier said that even as the current administration’s term winds down, he believes that whoever wins the presidency “will pursue this project.”
Improvement of ports in the country is also part of the wish list of 2Go Group, Inc. Sulficio Tagud, Jr., president and chief executive officer of the integrated transport solutions provider, told PortCalls earlier that “our wish list is that the government will pay attention and invest more in port infrastructure.”
He noted that the focus should not only be on major ports, but should embrace other ports as well. He batted for such improvements as additional berthing facilities at the Manila port, expansion and addition of new ports in congested Cebu, and more attention to the equally congested ports of Iloilo, Bacolod, and Davao. – Roumina Pablo