THE lifting of the cabotage law is not a priority for the Maritime Industry Authority (Marina) considering the local shipping industry is not strong enough to compete with international vessels.
Marina administrator Vicente Suazo, Jr. said the lifting of the law at the moment may kill small- and medium-scale shipping operators. "Instead, the country should continue to look for additional incentives to be given to local operators to acquire new vessels for them to be at par with their foreign counterparts," he said.
Cabotage prohibits foreign carriers from engaging in domestic coastwise trade.
Several associations, including the Philippine Chamber of Commerce and Industry, are lobbying for the lifting of law, saying this will allow more foreign shipping investors into the country, increase port revenues, and produce more competitive services from local players. On the other hand, local players, including members of the Philippine Interisland Shipping Association, are against the lifting of the law, claiming their businesses will suffer.
According to a Marina briefing paper on the Pitfalls and Fallacies of Lifting Cabotage in the Philippines, the sectors advocating easing of the law should "seriously study" the experience of Indonesia. When that country abolished cabo-tage, its shipping industry stagnated, prompting a restoration of the law. "Theoretically, the lifting of cabotage is one essential element towards free market competitionÉ The real world, however, such as the Philippine situation, still embodies certain distortions that would prevent the free interplay of market forces towards the objective of ideal competition," the paper said.