Shipping industry
against bill lifting VAT exemptions
SHIPPING industry stakeholders are
opposing a bill that proposes the lifting of value-added
tax (VAT) exemptions on certain products and services.
Under the proposed measure, imports of passenger and/or
cargo vessels of more than 5,000 tons will be slapped
a 12% VAT. Tax incentives are also in danger of being
scrapped. Shipping operators and shipbuilders presently
enjoy VAT exemption on imported ships and other spare
parts under the recently approved Domestic Shipping
Development Act of 2004. The amended Overseas Shipping
Development Act, on the other hand, exempts overseas
operators from paying income tax for ten years.
Maritime Industry Authority (MARINA) administrator Vicente
T. Suazo, Jr. said the agency is negotiating with Congress
to spare the whole shipping industry from the bill."As
a maritime nation, the government should give the shipping
sector more tax incentives to open up investment opportunities
that will then lead to its development and modernization,"
he said.
Filipino Shipowners Association Charlie Salinas, in
an interview, said the overseas shipping sector needs
a competitive fiscal regime to gain equal footing with
its regional counterparts.
"As much as possible, we would like to retain the
tax perks that were given to us because at present,
all our competitors are enjoying tax breaks and that
gives them the competitive advantage," he noted,
adding the law which granted the exemption is not yet
even effective. Salinas added a competitive fiscal regime
would help the sector deal with the volume growth forecast
this year.
He stressed incentives are necessary since the sector
is competing on a global scale. "We do not compete
here. We hope the legislators would understand what
global shipping is," he pointed out.
Philippine Interisland Shipping Association president
Doris Magsaysay-Ho said lifting the incentives would
automatically result in higher freight rates. "Please
don't scream at us when freight rates suddenly go up.
We are looking for ways to cut our costs but without
these incentives, they will only be pushed further up,"
she explained.
Commodore Feliciano G. Salonga, vice chairman of the
Bataan Shipyard and Engineering Company, appealed to
Congress not to lift the incentives for the shipbuilding
ship repair, especially now that the sector is at a
critical stage."We are asking for the VAT exemption
to be retained. It is unfair for them to just lift what
is still not in place. We need help; the SBSR is still
in a developmental stage," he pointed out.
PUC,
PCCI propose reforms to curtail corruption, smuggling
at Customs
THE Port Users Confederation (PUC)
and the Philippine Chamber of Commerce and Industries
(PCCI) have submitted reform proposals to the Bureau
of Customs (BOC) to help curb corruption and smuggling.
In the recently concluded Logistics Conference 2005
held at the Makati Shangri-la Hotel, Atty. Romeo Sto.
Tomas of the International Multimodal Transport Association
said the private sector is apt to extend its assistance
to improve current practices at the Bureau.
Both PUC and the PCCI have offered to provide the necessary
equipment for the upgrading of the BOC's system at no
cost to the government, he said."The upgrading
of the existing system is really necessary because Customs
have been losing revenues due to manual processing.
The last time it was upgraded was about 13 years ago,"
he noted.
Sto. Tomas said the private sector has also suggested
that human discretion be entirely eliminated to prevent
graft and corruption. Also proposed was the appointment
of a third-party consultant "who shall provide
a clean report of reference values on a particular importation
that the BOC will adopt." The services of the consultant
will be for the account of the importer at no cost to
the government.
"Port users are willing to pay or absorb costs
for easier importation and release of goods with valid
reference value. We need somebody to verify if reference
values declared are credible," he said. Sto. Tomas
said the database of reference value of various articles
is not current and the description of articles is generic
and vague. It does not, for instance, state the brand,
size, and assess materials by weight. This practice
leaves much discretion to appraisers and opens opportunities
for corruption, he noted. He said the private sector
has also expressed interest in providing security equipment
such as gamma rays and x-ray machines on a build-operate-transfer
scheme.
THE Cebu International Port will soon
impose a standard security policy designed to protect
the gateway from terrorist attacks. Visayan Association
of Ferryboat and Coastwise Service Operators (VAFCSO)
president Jeffrey P. Solon said streamlining port security
measures is one of the biggest priorities of the Cebu
Port Authority (CPA).
"We will be sitting down to formulate general security
guidelines, which will be applicable to all involved
in port operations," he said. According to him,
Cebu port is said to be one of the targets of terrorist
attacks. Solon said the policies - for implementation
by second quarter of this year - will also be adopted
as the domestic version of the global anti-terror policy
International Ship and Port Facility Security code.
He said CPA has facilitated the formation of security
committees composed of heads of various shipping organizations
including truckers, shipping lines, ferry operators
and all government agencies concerned. These include
the Philippine National Police-Maritime Group, the Office
for Transport Security, the Maritime Industry Authority
(MARINA) Cebu Regional Office and the CPA. Solon noted
a standard security policy will help boost emergency
responses. "There are times that the response from
the Philippine Coast Guard takes longer than usual,
so we need to prepare ourselves," he said.
The security policy will also help prove that ferry
boats and small ships - which comprise VAFCSO members
- servicing the area are safe. "Of course, they
would not let us operate if we fail to pass the security
requirements that will be specified in the general guidelines,"
he pointed out. Earlier, the MARINA has agreed to permit
existing wooden-hull ships to continue operating provided
they adhere to safety requirements.
THE Philippine Ports Authority (PPA)
should facilitate the commercialization of private non-commercial
ports to boost competition among public and private
port operators and boost operational efficiencies. University
of Asia and the Pacific (UA&P) director for Transport
and Logistics Sector Enrico Basilio said the government
should allow the conversion of ports as this will lead
to a healthy and competitive environment and lower transport
costs.
"Executive Order 170 aims to promote the private
sector investment in the shipping and ports industry,
which means building more ports. Why not just allow
the conversion of private non-commercial ports into
private commercial ports instead of building new ones,"
he pointed out. To date, there are 400 private ports
in the country, only 30 of which are operating as commercial
ports. Non-commercial port operators only handle their
own cargoes.
Basilio said if one-third of the non-commercial ports
were converted, the existing network would be expanded
by 100%. "That would mean better connections, more
freedom to move products and better efficiency, and
perhaps lower cost for the shippers," he said.
Earlier, PPA general manager Oscar M. Sevilla said private
operators usually charge shippers much higher rates.
"The industry is under a deregulated setup. If
we leave it to the private sector, the industry will
suffer," he noted. Basilio, however, countered
the argument, noting "a businessman who wants to
earn would strive to be competitive both in service
and pricing level to survive."
THE Maritime Industry Authority (MARINA)
in collaboration with the Philippine Interisland Shipping
Association (PISA) recently initiated another round
of visioning and planning workshop among various stakeholders
to pursue the creation of a concrete national policy
for the local shipping industry. At the sidelines of
the Maritime Industry Visioning and Planning Workshop
Part II held at Tagaytay City, MARINA administrator
Vicente T. Suazo, Jr. told reporters the activity is
a revisiting of the outputs of a previous meeting held
three years ago.
During the sessions, MARINA incorporated its five-year
plans for the maritime industry into the national maritime
agenda targeted to be achieved by 2010. The agency's
overall objective is to pursue shipping industry modernization,
enhance its promotional and developmental mandates,
and streamline both its regulatory and supervisory activities."During
this workshop, various agencies from domestic and overseas
shipping, shipbuilding and ship repair and manpower
sectors shared inputs, identified present concerns,
directions, concrete plans and areas wherein each agency
can help," he said.
Suazo noted each sector was also tasked to come up with
milestones and ensure that all activities strictly adhere
to the timelines. The group will also form committees
to monitor commitments made by the sectors."We
would like to make something out of this one unlike
the first visioning workshop. The manifest they signed
that time came to nothing," he stressed, noting
barely 40% of the task was accomplished.
Suazo said among priorities in the five-year program
is the modernization of the Philippine merchant marine
fleet through the development of the shipbuilding and
ship repair industry (SBSR)."The success of this
program will dictate the future of other sectors,"
he said. He noted the SBSR program is considered doable
within a year. PISA president Doris Magsaysay-Ho lauded
MARINA for initiating the workshop and realizing the
need for a national policy that emphasizes the importance
of the maritime industry in the country's economic development.
"While other countries have a clear thrust for
their shipping industry, the Philippines which has all
the advantages of a maritime nation, lacks one,"
she said. The national policy, she noted, must promote
a strong maritime industry and create a conducive environment
for investments. - Maritess R. Mesias
THE Philippine Coast Guard (PCG) has
criticized the establishment of an Office for Transport
Security(OTS) to implement the International Ship and
Port Security (ISPS) Code.The coast guard questioned
why the PCG was kept out of the implementation of the
code when the OTS is completely dependent upon it.
"The OTS is another bureaucratic layer with no
assets, resources or operating forces with which to
carry out the function," the PCG said in a paper
presented to a Congressional committee last week.
The briefing was in support of the enactment of Coast
Guard Law, which seeks to provide a safe, secure and
pro-tourism marine environment. Due to the lack of expertise
and resources, the PCG stressed the OTS has failed as
the country is still labeled by the IMO as non-compliant
to the ISPS Code.
SINGAPORE-BASED Jetstar Asia, the first
regional low-cost carrier, is planning to fly to Manila.
The airline has already submitted an application for
permit to operate with the Civil Aeronautics Board (CAB)
last month. It is still awaiting response from the regulator.
Jetstar could fly to Manila from Thailand for as low
as P3,360. It will not provide free meals but give the
standard baggage allowance of 20 kilograms.
Based on its application, Jetstar wants to serve the
Singapore-Manila route at the outset and eventually,
key cities like Cebu and Davao. Jetstar already flies
to Bangkok, Hong Kong, Taipei, Indonesia and mainland
China, among others. Two more budget carriers from Singapore
- Tiger Airways and Valuair - are also considering flying
to the Philippines. However, Singapore and the Philippines
must first expand their air services agreement to allow
for more flight frequencies between the two countries.
The Department of Trade and Industry
urged the local automotive industry to strive to attain
"an economically viable level" by scrapping
importation of second-hand vehicles. Newly appointed
Trade secretary Juan B. Santos said the continued entry
of imported used cars is undermining the viability of
the local automotive manufacturing industry and is also
affecting the downstream auto parts manufacturing.
He noted while the local automotive industry produces
only about 80,000 vehicles, the importation of second-hand
vehicles was much higher at over 100,000 vehicles last
in 2004. Meanwhile, Santos said the DTI will collaborate
with port authorities to ensure that the law prohibiting
left-hand drive vehicles will also be strictly followed.
ARREST orders were issued last week
by the Sandiganbayan against two German nationals indicted
by the Office of the Ombudsman along with former Transportation
officials in the controversial construction of the Ninoy
Aquino International Airport Terminal 3 (NAIA-3). Hans
Arthur Vogel, a director of the Philippine International
Air Terminals Corp. (Piatco), and Bernd L. Struck, a
Piatco consultant, were ordered arrested by the first
division of the Sandiganbayan.
Messrs. Vogel and Struck have not been able to post
bail, the reason the anti-graft court, as a matter of
procedure, issued arrest warrants against them.The two,
along with Piatco chairman Henry T. Go, president Cheng
Yong and consultant Alfonso Liongson were indicted by
the Office of the Ombudsman for allegedly conniving
with government officials to get the NAIA-3 contract.
Also charged were former Transportation secretaries
Vicente C. Rivera, Jr. and Pantaleon D. Alvarez, and
former Transportation undersecretary Wilfredo M. Trinidad
for allegedly giving unwarranted benefits to Piatco,
resulting in government losses. Former Transportation
undersecretary Primitivo C. Cal, who headed the bidding
committee for NAIA-3, as well as former Manila International
Airport Authority general manager Francisco E. Atayde,
who was the bidding committee vice-chairman, were also
charged by the Ombudsman. All Filipino defendants have
posted bail.
Also last week, Piatco's Yong asked permission from
the Sandiganbayan to go abroad. He said he would attend
the yearly meeting of the China International Trade
Council, of which he is a member, on Feb. 26 to 28 in
Kuala Lumpur, Malaysia.
