The Philippine Coastwise Shipping Association (PCSA) is opposing bills that propose to remove transportation services, which include domestic shipping, from the list of services considered as public utilities. Once transportation is no longer a public utility, then 100% foreign ownership in the industry will in effect be allowed.
In a recent chance interview with PortCalls, PCSA president Paul Rodriguez, said the newly established organization of Cebu-based shipping companies will push for the exclusion of domestic shipping from those to be declassified as a public utility.
At present, 10 bills—six in the Lower House and four in the Senate—have been filed in the 18th Congress proposing to amend the definition of public service in Commonwealth Act No. 146, otherwise known as the Public Service Act (PSA). The amendment seeks to change “antiquated provisions of the law to encourage competition and ensure that the public will have more choices and better services at lower prices.”
The bills also seek to fix the “ambiguity in the definition of public utility” in the PSA.
They propose exempting eight services from becoming public services: transportation, electric power generation, electric power supply, petroleum supply, gas supply, telecommunications, broadcasting, and other public services. Only electric power transmission, water pipeline distribution, and sewerage pipeline system will be considered public utilities.
If approved, the bills will effectively allow 100% foreign ownership in the eight industries as these services will no longer be considered public services and no longer covered by the 60%-40% ownership principle under the Constitution.
Similar bills were also filed in the 17th Congress but they failed to pass.
“[T]he concern here is not that we are being greedy but there are issues [on] national security,” Rodriguez said.
He said that if the Philippines opens up maritime transportation to 100% foreign ownership, foreign ship owners, particularly those from China, will come to the country.
Rodriguez said national security is “all the more important” now with the Chinese government reiterating, during President Rodrigo Duterte’s recent state visit to China, that it does not honor the 2016 Permanent Court of Arbitration ruling favoring the Philippines’ claim over the West Philippine Sea.
“China does not accept [the ruling] so all the more, if we open up public utility, they will come definitely and wala tayong laban sa kanila [we cannot compete against them],” Rodriguez said.
He noted there are currently around 5,000 vessels with capacity of 200- to 1,500-twenty-foot equivalent units (TEUs) in China that are idle because of a policy that only ships with 3,000-TEU capacity can operate.
“So they will just bring in these ships here and dump all their ships here and we’re finished,” Rodriguez said.
Citing Defense Secretary Delfin Lorenzana’s statement, Rodriguez also noted that the country has a long coastline that is hard to patrol.
Allowing 100% foreign ownership in domestic shipping might also “demolish the entire seafaring industry,” Rodriguez warned. He noted seafarers are required to undergo a two-year apprenticeship aboard domestic vessels sponsored by the ship’s owner.
“I don’t think these foreign shipping lines would be willing to accommodate Filipino seafarers for training and apprenticeship,” Rodriguez said.
Maritime Industry Authority (MARINA) officer-in-charge Narciso Vingson, in a chance interview with PortCalls, said his agency has yet to issue a formal position on the bills as it still has to check if these are similar to the bills filed in the previous Congress, which it had opposed.
The Philippine Inter-island Shipping Association had also opposed such bills, saying domestic carriers cannot compete with foreign shipping lines in terms of cost and policies. Unlike their foreign counterparts calling in the Philippines, domestic shipping operators pay certain taxes and are burdened by regulatory costs, it said. Domestic ship operators also need to comply with stricter rules, such as having to dry dock only at MARINA-registered dry docks, which charge higher fees compared to those located overseas.
The bills prescribing to amend the definition of public service in the PSA are authored by senators Grace Poe, Franklin Drilon, Francis Pangilinan, and Juan Miguel Zubiri, and Lower House representatives Joey Salceda, Victor Yap, Xavier Jesus Romualdo, Ron Salo, Luis Raymund Villafuerte Jr., and Argel Joseph Cabatbat. – Roumina Pablo