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New Overseas Shipping Law Gets
Industry Approval
OVERSEAS shipping operators expressed approval
over Republic Act 9301 or the new Philippine
Overseas Shipping Development Act signed last
week by President Gloria Macapagal-Arroyo.
An official from the Filipino Shipowners Association
(FSA) who requested anonymity said RA 9301,
which amended certain provisions of the Philippine
Overseas Shipping Development Act (RA 7471),
would play a big part in the development of
the overseas shipping industry, particularly
in the modernization of the overseas fleet.
The source said incentives under by the new
law - including a ten-year income tax exemption
for overseas operators - may prod ship owners
to import new ships which will, in turn, generate
greater employment, increase foreign remittances,
and boost social benefits for Filipino seafarers.
A medium-sized general cargo vessel costs at
least $50 million.
The source also lauded the broader definition
of overseas shipping under RA 9301. "Now,
it encompasses all aspects of shipping, including
the sale and purchase of a vessel," he
said.
The Maritime Industry Authority (MARINA) said
the new law will give incentives for vessel
acquisition and ownership and revise ownership
requirements for vessels engaged in overseas
trade.
The old Philippine Overseas Shipping Development
Act provided shipping companies engaged in overseas
shipping exemption from income taxes and import
duties and taxes on vessels and spare part,
as well as machinery, equipment and materials
to be used for shipbuilding and ship repair
of vessels owned by these companies.
The same law allowed less stringent conditions
as to source/mode of financing vessel acquisitions
vis-a-vis existing regulations on such transactions.
But MARINA said due to the Bureau of Internal
Revenue's "limited" interpretation
of overseas shipping, RA 7471 seemingly failed
to encourage and promote ship owning among overseas
shipping companies.
In a primer, the Philippine Interisland Shipping
Association said the revised act will allow
the Philippines to create a dynamic service
export industry that can stand side by side
with Hong Kong and Singapore.
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ATI looking
at Extra Fees Because of ISPS
Asian Terminals Inc. (ATI) is planning to
discuss with the Philippine Ports Authority
(PPA) the possible imposition of extra charges
once the total cost incurred due to the implementation
of the International Ship and Port Facility
Security (ISPS) Code has been determined.
ATI senior vice president for Outports and Logistics
Ramon R. Atayde said the company spent the most
at the port of Batangas for add-on security
equipment and training of personnel to enhance
safety and security measures within the port.
He said the Batangas Port, run by its subsidiary
ATI Batangas, Inc., formerly Aries Arrastre
Services, Inc., underwent the most stringent
preparations for the ISPS since it is an international
gateway.
One of the biggest ports in the country, the
port caters to passengers of big shipping operators
and small roll-on/roll-off vessels, rolling
cargoes, bulk and containerized cargoes.
Atayde said the costs incurred during preparation
for the ISPS varied with the size of the ports
concerned. "For instance, the Mariveles
Grain Terminal in Bataan since it is only catering
to bulk and grains did not need complex preparations,"
he said.
Earlier, ATI chair and president Richard D.
Barclay said terminal operators may have to
impose port security charges separate from cargo
handling charges to recover additional capital
and operating cost.
"The question is: who will pay? Is it the
[private] operator or the government? There
must be some means for us to recoup our costs.
This is entirely different from making profits,"
Barclay pointed out.
He noted that costs arising from the implementation
of various security measures should be absorbed
by the government and not the private sector.
But in the last few months, the government has
"passed the task [of ensuring compliance]
to terminal operators," he said.
Meanwhile, ATI pointed out that the installation
of x-ray machines at the ports is not required
by the ISPS Code. Only the Bureau of Customs
requires it as a measure to further enhance
security within the terminals in receiving cargoes
and in the process helping abate smuggling in
the country.
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AISL
chief: Freight Rate Recovery to Continue
THE freight rate recovery on all
trades is showing no signs of abating, according
to Association of International Shipping Lines
(AISL) president Octavio Katigbak.
He said the beginning of 2004 has been favorable
for the liner business with soaring export volumes
and improving freight rates.
"Customers are beginning to realize that
freight rates have been down for a very long
time now. It is time shipping lines recoup their
losses due to low freight levels," he pointed
out.
Katigbak said freight rates declined by more
than 50% at the dawn of the Asian financial
crisis in 1997. They have since gone up 10-11%.
COSCO Philippines Shipping, Inc. general manager
Virgilio Angeles said the strong East Asia and
China trades have helped international shipping
lines in the application of cost recovery measures
such as the imposition of general rate increases
(GRI).
"Shipping lines have suffered a lot. Nine
to ten years ago, the freight per twenty-footer
in Europe was at $1,800. Now, it has been slashed
by more than half, ranging from $700 to $800
per TEU," he explained, adding that the
same situation applied to freight to and from
the United States.
Angeles said shipping lines refuse to call the
current application of higher tariffs as rate
increases. "We are just recovering what
we had lost. Shippers do not even feel the pitch
of the situation," he said.
Meanwhile, China Shipping Manila Agency, Inc.
general manager Wilfredo M. Monillas said he
does not see full recovery coming any time soon
because some carriers still refuse to impose
GRIs. "For this to be realized, there must
be a collective move from the carriers' end,"
he said, adding full recovery may be achieved
in two or three years.
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Sea,
Air Port Fees to Be Rationalized
THE Department of Transportation
and Communications (DOTC) will undertake tariff
reforms, including the rationalization of airport
and seaport fees and other charges, to help
the national government balance the budget.
This is one of the strategies recently outlined
by the DOTC to support the new administration's
10-point agenda. The others are the opening
of additional international gateways; increasing
capacity of international airports and further
developing trunkline and other domestic airports;
pushing for liberalization and making the Philippines
accessible to the rest of the world without
compromising the national interest; modernizing
land and sea transport linkages and facilities
through public and private partnerships; and
ensuring full compliance with all international
air and maritime safety and security agreements.
"The DOTC will adopt the principle of gradual
full-cost recovery through the 'users pay' concept,
thereby limiting subsidy to the maintenance
and operations of rail, airport, and seaport
facilities," Transport Secretary Leandro
Mendoza said.
The department also envisions a 30% increase
in gross revenues by the end of 2005 to be achieved
through efficient collection by line agencies
such as the Land Transportation Office, Land
Transportation Franchising and Regulatory Board,
Manila International Airport Authority, Philippine
Ports Authority, Cebu Ports Authority, Air Tranportation
Office, Light Rail Transit Authority and Mass
Railway Transit Authority.
Mendoza stressed this measure is on top of the
10% reduction in administrative and operating
expenses recently ordered for all DOTC officials
and agency heads.
The DOTC has also lined up several policy reform
measures such as the creation of a Civil Aviation
Authority and the Philippine Rail Authority,
which would allow for the separation of regulatory
and operation functions. This will eventually
lead to the privatization of airport operations,
Mendoza said, adding it will open the door to
a certain level of financial autonomy to source
funds for airport development and operations
other than from the national budget.
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'K'
Line's Local Arm Sees 15% More Revenues
NEWLY LAUNCHED "K" Line
Philippines expects a 15% increase in revenue
for 2004 on the back of the country's strong
export performance and continuing freight rate
recovery, said "K" Line Philippines
president Octavio S. Katigbak.
The company was officially launched last week
under the "K" Line Group's global
brand name after 20 years of being under Transmar
Agency's representation. Transmar, a joint venture
between Rayomar Management Inc. and Kawasaki
Kisen Kaisha Ltd. ("K" Line) is the
Philippine agent of the "K" Line Group.
"This year will be a little complicated
because this is our first year as "K"
Line and we just took over the new company this
July. But overall, we are expecting an improvement
because of the soaring export volumes,"
he said.
Katigbak said the incorporation of "K"
Line Philippines was aimed at strengthening
"K" Line Group's global branding.
The partnership agreement was signed between
"K" Line Group and "K" Line
Philippines, represented by company president
Yasuhide Sakinaga and "K" Line Philippines
chairman of the Board Ramon C. Garcia.
With the recent incorporation, the new Philippine
company now belongs to the global family of
subsidiaries which include "K" Line
America, Inc., "K" Line (Europe) Ltd.
and "K" Line (Hong Kong) Ltd.
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PSAA Marks
30th Anniversary
THE Philippine Ship
Agents Association (PSAA) last week marked its
30th anniversary with a cocktail party held
at the Manila Polo Club. Present during the
event were Customs Commissioner Antonio Bernardo,
Coast Guard vice admiral Arthur Gosingan and
other port stakeholders. PSAA's president is
Agapito Capistrano.
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Neptune
Orient Lines celebrates its first 35 years
SINGAPORE Prime Minister Goh Chok Tong recently
celebrated the first 35 years of his former
company, Neptune Orient Lines - launching a
book telling the stories of NOL's growth from
humble beginnings to a US$5 billion global transportation
and logistics enterprise.
PM Goh, who was one of the early NOL pioneers,
joining the Company in 1969 and subsequently
becoming Managing Director before leaving for
politics in 1977, launched Beyond Boundaries
at a function at the landmark Fullerton Building
- where the company's first offices were located.
Among the guests at the function were former
NOL Chairmen, Michael Wong Pakshong and Lua
Cheng Eng, and the company's first Managing
Director, MJ Sayeed. In thanking the Prime Minister,
NOL Group President & CEO, David Lim said,
"The success and global scale of NOL today
is something our founding fathers could only
have dreamed about in 1968. "We started
out with relatively modest ambitions - to establish
a national shipping line, offering local shippers
fair freight rates. But it wasn't easy and Beyond
Boundaries includes stories of the unwavering
faith and tenacity of our people as the fledgling
company battled against the odds to gain a foothold
in the shipping industry," Lim said.
"NOL has through the years attracted people
who thought beyond the boundaries and the barriers
they faced, dreamed big dreams, planned and
prepared - and created the company you see today.
It is a proud tradition that we strive to maintain
today."
NOL Chairman, Cheng Wai Keung, said, "NOL
people have had the imagination to see opportunities
and the courage to seize them, and to tackle
and overcome obstacles along the way.
"Judging from our recent results, our management
and staff have lost none of that determination
to be among the very best," Cheng said.
"Today as we look forward to our next 35
years and beyond, we do so as a company that
has gone beyond its early boundaries, and now
operates in more than 140 countries around the
world. In addition, we are able today to draw
on the combined strength of a culturally diverse
and talented management and staff worldwide
to achieve our goals."
David Lim also announced the establishment of
the NOL Beyond Boundaries Trust Fund, which
aims to help youth and disadvantaged people
worldwide overcome barriers to their achievement.
"The aims of the NOL Beyond Boundaries
Trust reflect the spirit of the Company, and
the Trust itself is a natural extension of the
long-standing commitment we have to the communities
in which we operate, and our wider social responsibility
programmes," he said.
Lim said NOL was matching donations to the Trust
made at the launch three-to-one, as well as
donations contributed before the end of August
by the Company's staff globally.
The first project to benefit from the Trust
is Sailability Singapore - a sailing program
that gives people with disabilities the opportunity
to participate in the sport. Trust funding will
support a team of disabled sailors to represent
Singapore at the Athens Paralympic Games in
September. NOL volunteers have supported the
Sailabilty program since its inception in 2001.
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