Home » Customs & Trade » Foreign-flagged lines carry most gov’t foreign trade

FOREIGN-FLAGGED lines continue to carry the bulk of the government’s international trade with local vessel operators unable to offer competitive rates, according to a source from the Maritime Industry Authority (Marina). "Foreign freighters can offer very low tariff rates and can afford to give tariff discounts during the peak season; local operators cannot since they are subject to less competitive taxes and duties," the source, who requested anonymity, added. Only 5% of the 169 overseas-going Philippine-flagged fleet participate in biddings since the government shifted in May to Freight-On-Board (FOB) from Cost-Insurance-Freight (CIF) when shipping government goods headed for international shores.

Since then, only one local operator has won the bid to ship 400,000 metric tons of rice from Vietnam or the US, but that company was later disqualified due to technicalities. Earlier, the Filipino Shipowners Association (FSA) said local operators want to enjoy the same benefits as those of their foreign counterparts when bidding for the government’s international trade. The operators claim that not enjoying the same benefit renders them uncompetitive in terms of the bid price for imports. In particular, local operators want the National Food Administration to amend, if not scrap, tax requirements provided under the Terms of Reference when shipping on FOB. Foreign operators are often exempt when transporting Philippine imports via CIF. "For instance, freight shipped in FOB is subject to the 6% value-added tax (VAT) and 2% contractor’s tax.

These taxes are inputted in the bid price, thus, increasing its final value," FSA pointed out. "Foreign bidders, on the other hand, are often exempt from these taxes. So chances for Filipino overseas operators winning the bid are very minimal," the group added. Marina said that with the poor response from local operators, it is now hesitating to continue talks with other government agencies such as the National Power Corp. and the National Food Authority to give priority to local operators over their foreign counterparts. The agency continues to remain optimistic there will be enough local interest for other big government transactions.

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