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PISA renews call against 100% foreign ownership in domestic shipping

The Philippine Inter-island Shipping Association (PISA) reiterated its opposition to the removal of transportation, specifically domestic shipping, from the coverage of public utilities under the bill amending the Public Services Act (PSA).

In a letter to House Speaker Alan Peter Cayetano, deputy House Speaker Ferdinand Martin Romualdez, and Committee on Economic Affairs chairman Sharon Garin and vice chairman Joey Salceda, the association said striking out domestic shipping from the list of sectors considered public utilities would open the sector up to 100% foreign ownership, adversely affecting the economy and national security.

The House of Representatives on March 10, voting 136 affirmative, 43 negative and one abstention, approved on third and final reading House Bill (HB) No. 78, which seeks to amend the definition of public service under Commonwealth Act No. 146, otherwise known as the PSA.

HB 78 limits the definition of public utility to any person or entity that operates, manages, or controls for public use the distribution of electricity, transmission of electricity, water pipeline distribution, and sewerage pipeline. It excludes transportation, telecommunications, broadcasting, and other public services from being defined as public services.

If passed into law, the measure would effectively allow 100% foreign ownership in the excluded industries, as these services would no longer be considered public services or be covered by the 60%-40% ownership principle under the Constitution.

READ: PISA: removing shipping from list of public utilities will harm riding public

The Senate version of the bill remains pending at the committee level and needs to be approved on second and third readings.

PISA said domestic shipping “is a strategic industry considering the archipelagic nature of the country.”

More than 80% of all cargoes are transported through ships and allowing “100% foreign ownership of domestic shipping will result to foreign domination of the coastwise trade,” it said.

PISA explained that because the Philippines is an archipelago, “alien control of inter-island navigation means economic control and domination of our economy by alien hands whose commitment to the trade is highly suspect.”

“In times of political instability in any country, foreigners will most likely leave and wait for better times before coming back. This happened during the 1980’s after the assassination of Ninoy Aquino, continuing in the early years of the Cory Aquino-administration, only to come back during the Ramos-administration when the political situation stabilized,” PISA pointed out.

The group added that the Philippine shipping industry is an important contributor to national security in times of national disasters, response and reconstruction, potential conflict over the West Philippine Sea or war, smuggling, drugs, illegal fishing, and piracy.

PISA said removing transportation from the coverage of public utility “will have the effect of complete deregulation of all modes of public transport.”

The group also said “there is more than enough competition in the domestic shipping industry.”

In 2003, The Strong Republic National Highway was inaugurated, prompting the entry of many new players in the short- and long-haul routes of the domestic trade.

In 2004, Republic Act No. 9295, or the Domestic Shipping Development Act of 2004, was enacted, which deregulated the liner sector and allowed newcomers into the trade.

“As a result, domestic shipowners fiercely compete against each other with services which require investments in ships, containers, container yards and warehouses, trucks, chassis, software, and land based equipment in some cases in ports and shore cranes and equipment,” PISA said.

Moreover, PISA said foreign ownership of public transport is not a guarantee of lower transport cost.

“Opening up transportation to foreign competition will not bring down domestic transport costs so long as foreign corporations will be subjected to the same operating conditions as domestic transport operators,” PISA said.

It explained that the relatively higher cost of freight in the country is due to the low volumes of trade, north-south trade imbalances, lack of clustering policies and strategies, bad production practices that prevent comingling of cargoes for bulk shipping, and poor port infrastructure, all resulting in smaller ships that need their own cranes.

In an earlier position paper submitted to the Lower House, PISA said that “high cost of operation plus higher taxes and higher regulatory fees are among the factors that contribute to the high transport cost in the domestic trade.”

Removing transportation from the coverage of public utility will render all modes of public transport as “private carriers,” which will remove the protection given to the commuting public under existing laws, PISA added.

All modes of public transport are considered “common carriers,” governed by the common-carrier provisions of the Civil Code and thus, “are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.”

The duty to be extraordinarily diligent in being vigilant over goods and passengers renders common carriers liable under virtually all circumstances in the event of damage or loss to the goods, or injury to or death of passengers.

PISA said removing this protection by converting all modes of public transport into private carriers will enable private carriers to avoid liability.

And as private carriers, they are no longer required to provide mandatory insurance for cargo and passengers, leaving the riding public uncompensated for damages in the event of financial incapability of the transport operators. – Roumina Pablo

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