Lower House oks co-loading bill

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Container ship_istockThe Lower House has approved on third and final reading a bill that will allow foreign carriers to dock at multiple Philippine ports and co-load among themselves import and export cargoes cleared by the Bureau of Customs (BOC).

On May 20, the Lower House approved House Bill (HB) No. 5610, or “An Act Allowing Foreign Vessels to Transport and Co-Load Foreign Cargoes for Domestic Transshipment and For Other Purposes.” The Senate version of the bill, authored by Senator Paolo Benigno Aquino IV, was approved on third and final reading last February.

The target is to get the measure, otherwise called the Co-Loading Bill, signed into law by June. The policy aims to lower shipping costs for containerized import and export cargoes.

Under HB 5610, a foreign vessel arriving from a foreign port will be allowed to carry foreign cargo to its domestic port of final destination after being cleared at its port of entry. A foreign vessel arriving from a foreign port will also be allowed to carry foreign cargo from another foreign vessel calling the same port of entry to the domestic port of final destination of such foreign cargo. These provisions likewise apply to loading of export cargoes.

Under the present rules, a foreign shipping line will have to transfer its shipments to Philippine-registered carriers for final delivery to local ports in observance of the country’s cabotage policy. But in cases of a deficit in bottoms, the Maritime Industry Authority (Marina) may issue a special permit to a foreign shipping line so it can deliver its cargo to domestic ports. In such a case, only the original foreign vessel and not any other may bring the cargo to its final destination.

Section 8 of HB 5610 effectively ensures the cabotage policy remains intact. The bill noted that “no foreign vessel shall be allowed to carry any domestic cargo or domestic container van, whether loaded or empty, even if such van may contain foreign cargo.”

Association of International Shipping Lines (AISL) general manager Atty. Maximino Cruz, in a text message to PortCalls, said that “most likely, some (foreign carriers) will avail of this program”. Which routes liners would operate in would “depend on where the volume is.”

During an executive briefing on HB 5610 called by Representative Mark Villar, co-author of HB 5610 and Trade and Industry Committee chairman of the Lower House, Maritime Law Association of the Philippines official Atty. Iris Baguilat noted the inclusion of Section 10 in HB 5610, a provision not included under the Senate version, as an important development. Section 10 exempts foreign vessels from taxes and fees levied by local government units.

At the same executive briefing, Atty. Pedro Aguilar, executive director of the Philippine Inter-Island Shipping Association, said that though most of the organization’s members have accepted the bill, some have issues about what they perceive to be “weak penalty provisions.”

He said the measure does not address the issue of high cost of domestic shipping, including one of its causes — the tax and duty on fuel to which local shipping lines are subjected but foreign carriers are not. Aguilar said fuel accounts for up to 40% of local shipping costs.

Under HB 5610, the transport of empty containers going to or coming from any domestic port, or going to or coming from a foreign port, and transshipped between two domestic ports will also be allowed.

The BOC and its commissioner are tasked to clear the passage of foreign vessels availing themselves of the program, as well as to impose sanctions and penalties on violators of the policy.

The bill mandates the Philippine Ports Authority (PPA) to require all foreign ship operators to submit their cargo manifests, and to ensure their compliance with the provision.

The co-loading bill has gathered support from stakeholders such as PISA, AISL, the joint foreign chambers, and government agencies such as the Marina, PPA and BOC.

The bill is a priority measure in Congress. In his 2013 State of the Nation Address, President Benigno Aquino III urged Congress to amend the country’s cabotage policy “to foster greater competition and to lower the cost of transportation for our agricultural sector and other industries.” – Roumina Pablo