Foreign shipping firms interested, but in no rush to enter PH

Image by Alexander Kliem from Pixabay
  • Almost two years after the Public Service Act was amended, no foreign entities have so far applied to operate in the Philippine domestic shipping trade
  • There have been some expressions of interest though, said MARINA administrator Sonia Malaluan
  • The PSA effectively allowed 100% entry of foreign companies in the domestic shipping trade

No foreign entities have so far applied to operate in the Philippine domestic shipping trade almost two years after the Public Service Act (PSA) was amended, according to the Maritime Industry Authority (MARINA).

There have been some expressions of interest since last year though, said MARINA administrator Sonia Malaluan told PortCalls in an email.

She added it is still “too early to say” why no foreign shipowner has so far applied even as MARINA has been working “on imposing initiatives to encourage foreign entities to engage in domestic shipping services.”

Domestic shipping is no longer considered a public utility, hence now open to 100% foreign ownership, following the signing into law of Republic Act No. 11659 (An Act Amending Commonwealth Act 146 otherwise known as the PSA) in March 2022.

Under the PSA, any industry not on the list of five public utilities will remain as public service and will be liberalized and not be bound by the 60%-40% ownership principle under the Philippine Constitution.

To implement the PSA, MARINA issued Memorandum Circular (MC) No. DS-2023-02 to provide guidelines that allow foreign nationals to enter the domestic shipping industry, and revised its rules on the accreditation of domestic shipping operators through MARINA MC No. DS-2023-03.

READ: MARINA allows foreign investors to engage in domestic shipping

To attract foreign investments, Malaluan said MARINA has to ensure ease of doing business through the streamlining of processes, digitalization and quality management system, and improvement of the safety record of the country.

To ensure foreign shipping lines will not unfairly compete with domestic players, Malaluan said MARINA will adopt “a non-discriminatory measure and/or practice on the processing of applications for both local and foreign entities.”

She added: “All the policies of the MARINA in relation to the amended PSA is applicable to both players with fair implementation and equally transparent regulations in order to safeguard the promotion of just competition towards a robust and progressive market.”

She said foreign and domestic players will be encouraged to participate in the policy formulation/amendment process through public consultations.

Under MC DS-2023-02, all MARINA guidelines, policies, rules, and regulations, except provisions relative to ownership or nationality requirements, will still prevail, unless revoked and/or amended.

All Philippine-flagged ships must be manned by Filipino crews unless there are no available Philippine nationals competent and willing to perform the services for which the foreign national is desired.

The hiring of foreign workers will still be pursuant to Presidential Decree No. 442, or the Labor Code of the Philippines, as amended.

Philippine Inter-Island Shipping Association president Mark Matthew Parco earlier said foreign players who enter the domestic shipping scene will face the same problems that local players experience.

These include lack of economies of scale as the country’s trade volume is small; port infrastructure issues forcing shipowners to use vessels with gears, which result in less productivity and higher costs; poor road infrastructure to and from ports, which result in higher trucking rates; and regulatory challenges such as having to deal with multiple agencies, high fuel taxes, regular tariff increases, mandatory pilotage, and various new policies that add to administrative costs. – Roumina Pablo