Chaotic documentation and taxation systems as well as ownership requirements are the three major challenges facing the Philippine’s overseas shipping sector, according to the Department of Transportation and Communications (DOTC).

Philippine transport undersecretary for operations Rafael Antonio Santos at a recent conference said the pace at which the issues have been addressed has been show, discouraging potential investors.

He noted there is a “need to rationalize processing of ship documentation such as registration to ease the cost and time of doing business in the country.

“A competitive ship mortgage law and taxation system should also be adopted in order to make shipowners and financing institutions priority in the payment of liens as well as in carrying the government’s foreign trade.”

In addition, Santos said the constitutional limitation on foreign equity should be revisited.

The same problems had been raised by shipowners time and time again. They noted that the Philippines should benchmark its shipping policies against those of major maritime countries. Most of the latter treat shipping as a strategic enterprise that is almost always tax-exempt. Shipping investment capital is also always available and government ready to provide subsidies.

In the Philippines, the situation is the complete opposite as Filipino shipowners pay all kinds of taxes and the cost of money is exorbitant. They also shoulder the cost of graft, resulting in the high cost of doing business which, in the process, erodes industry competitiveness.

In the carriage of government foreign trade, an uneven level playing exists with foreign-flag vessels exempt from taxes.

In the payment of liens in cases of default, financing institutions are not a priority although there are initiatives to change the situation to lure more lenders to the sector.

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