MARINA limits pioneer status incentives to shipowners with liner services

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  • Only domestic shipowners/operators offering liner services may be granted pioneer status and corresponding incentives by the Maritime Industry Authority
  • The order is contained in MARINA Memorandum Circular DS-2021-03
  • The circular effectively excludes trampers and fastcraft from availing of pioneer status incentives
  • A domestic shipowner/operator may propose to operate under pioneer status on a route with or without an existing shipping service, according to the circular
  • Incentives granted to shipowners operating pioneer status routes are good for six years
  • MC DS-2021-03 takes effect 15 days after publication on October 12

The Maritime Industry Authority (MARINA) is limiting the grant of pioneer status and the corresponding incentives to domestic shipowners/operators operating liner services.

MARINA Memorandum Circular (MC) DS-2021-03 effectively excludes trampers and fastcraft from availing of pioneer status incentives. Trampers were previously covered under MC 2015-04, which has now been repealed by MC DS-2021-03.

MC DS-2021-03 takes effect 15 days after its publication on October 12.

A liner service refers to the operation of a domestic ship operator which publicly offers its service without discrimination for the carriage of passengers and/or cargoes, has regular ports of call or destination, and has fixed sailing schedules and frequencies.

Under MC DS-2021-03, pioneer status may be granted to new and existing domestic shipowners/operators who will introduce International Association of Classification Societies (IACS)-classed brand new or newly constructed ships such as roll-on/roll-off (RoRo), RoRo passenger, cargo ship, and other similar type of ships on their respective authorized or applied routes.

No application for pioneer status will be granted to any domestic shipping company/operator without a Certificate of Public Convenience (CPC).

A domestic shipowner/operator may propose to operate under pioneer status on a route with or without an existing shipping service.

Previously under MC 2015-04, shipowners were granted route protection via a moratorium on the deployment of additional vessels or disallowing other vessels to ply on the applied link/route.

A new provision in MC DS-2021-03, which was not present in MC 2015-04, allows existing shipping operators on a route granted with a pioneer status to continue operating on the same route.

They may also be allowed to add or replace ships and change sailing schedule, provided they are brand new or newly constructed IACS-classed ship, but this is without the benefit of a pioneer status.

Domestic ships that have been granted the right to operate on pioneer status routes will be entitled to incentives. These incentives, which are applicable for a period of six years starting from the period of CPC amendment/approval, include route protection, a one-time privilege given to the specific ship and is non-transferable and non-extendable.

Shipowners/operators with ships granted pioneer status under MC DS-2021-03 will also enjoy a 50% discount on regular fees in all applications, renewals of ship documents, licenses, certificates and permits, including annual tonnage fee, for six years.

The shipowners/operators will get priority in the issuance of CPC by MARINA on the route they are proposing to operate, whether the proposed route has an existing ship operator or not.

Under MC DS-2021-03, MARINA will issue all requests for issuance of ship documents, certificates, and licenses within 15 working days provided the shipowner or operator has submitted all the required documentary requirements.

MC DS-2021-03, meanwhile, removed certain provisions under MC 2015-04 and EO 909, such as the requirement that all provisions on drydocking of classed vessels should comply with the drydocking schedule required by MARINA, and that special ramp or berthing facility in any port should be made available to IACS-classed brand new or newly constructed ships.

The processing fee for the pioneer status has been increased to P30,000 per ship from the previous P20,000.

The pioneer status may be cancelled if the shipowner fails to deploy a ship within a maximum period of one month from its CPC amendment/approval; when there is a three-month unauthorized suspension or withdrawal of service or transfer of ownership of the ship; when there is voluntary or permanent withdrawal of service within the protection period; abandonment of shipping service in the pioneer status route; or failure to maintain IACS-classed ships within the six-year route protection period.

Pre-termination of the pioneer status will now be subject to the payment of a pecuniary penalty amounting to P50,000.

To promote modernization in domestic shipping “without necessarily resulting to cut-throat competition,” MC DS-2021-03 said the MARINA Domestic Shipping Service will exercise the oversight function to review, assess, and monitor MC DS-2021-03 “to ensure adequate shipping services while protecting the investment interests of the concerned domestic shipowners/operators by the grant of incentives.”

The granting of pioneer status is pursuant to Executive Order 909 issued in 2010 to encourage ship owners and operators to invest in newlybuilt and brand-new vessels for the domestic shipping industry by providing certain incentives for six years.

MARINA earlier said the EO aims to encourage the modernization, improvement, and upgrade of the domestic merchant fleet as well as the introduction of internationally classed brand-new or newly constructed vessels in domestic shipping so as to “bring about safer and more efficient sea transport and improved quality of services.”

A Philippine Competition Commission policy note in 2020, however, recommended a review of EO 909, saying its provisions served to act as regulatory barriers by imposing bans on entry and expansion activities, allowing incumbent players to participate in entry decisions, and increasing compliance costs. – Roumina Pablo