The proposed Maritime Industry Authority policy granting Philippine-registered ships the flexibility to engage in both domestic and overseas operations may be submitted to the MARINA Board by the second quarter of 2025, according to administrator Sonia Malaluan
The draft memorandum circular is still undergoing regulatory impact assessment with the Anti-Red Tape Authority
After the RIA, there will be another public consultation before the draft goes to the MARINA management committee, and finally to the MARINA Board for approval
The proposed Maritime Industry Authority (MARINA) policy granting Philippine-registered ships the flexibility to engage in both domestic and overseas operations may be submitted to the MARINA Board by the second quarter of 2025, according to administrator Sonia Malaluan.
The draft memorandum circular (MC) is still undergoing regulatory impact assessment (RIA) with the Anti-Red Tape Authority (ARTA), Malaluan told PortCalls in a recent chance interview.
The RIA, as required by Republic Act 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, measures the positive and negative effects of proposed and existing regulations through a rigorous, well-defined, and evidence-based analysis.
After the RIA, there will be another public consultation before the draft MC goes to the MARINA management committee, and finally to the MARINA Board for approval.
The proposed MC allows Philippine-registered ships with a Certificate of Ship Operational Flexibility to ply in and out of Philippine territorial waters without securing a special permit from MARINA each time there is a need for it. The Certificate will be valid for five years and may be renewed after expiration.
The proposed policy is pursuant, among others, to Republic Act (RA) No. 11659, or An Act Amending Commonwealth Act No. 146, otherwise known as the Public Service Act (PSA), which relaxes foreign ownership in certain industries. Under the law passed in 2022, domestic shipping is no longer a public utility, opening it up to 100% foreign ownership.
So far, there is one foreign shipping line that also operates in the domestic trade.
READ: CNC launches first 100% foreign-owned shipping line in PH
The Philippine Inter-island Shipping Association (PISA), an umbrella group of domestic shipping organizations, is against the proposed order, claiming it is “being unreasonably fast-tracked and lacking (in) governance and accountability.”
In a letter dated July 31, 2024 to Senator Raffy Tulfo, chairman of the Senate Committee on Public Services, PISA said that while the proposal is “based in the guise of promoting and attracting foreign investments and warranting vessels to be Philippine registered, the fact remains that… the passage into law of RA 11659 allowing for 100% foreign ownership is tantamount to giving control, of a very important industry, to foreigners and slowly killing the Philippine domestic shipping industry.”
Even prior to the signing of RA 11659, PISA had opposed the removal of transportation services, including domestic shipping, from the list of public utilities, saying this will adversely affect the riding public and not necessarily lower shipping cost.
PISA noted that foreign shipowners have the capability to invest in and have modern technologies, larger ships, and maintain a stronger financial position to charge lower rates.
“The ability of these foreign shipowners to reduce their marginal costs and cross-subsidize their Philippine operations more so now with their capability to flexibly operate both domestic and international will put pressure on the profitability of domestic shipping firms, forcing them to cut on costs, trade on small secondary routes or to cease operation,” PISA pointed out.
“Economic liberalization goes much deeper than shipping costs or influx of foreign investments or ownership but rather merits a purposeful investigation of greater issues such as national security, the strengthening of the Philippine merchant marine, the assurance of meaningful reforms in infrastructure, i.e. ports and roads, and the capability of our government to protect its national sovereignty,” PISA added.
The association said MARINA never presented to stakeholders any studies or data to show if such “operational flexibility” has been practiced globally and is successful, its impact on national security, guidelines on how trade will be determined nor monitored in terms of tax remittances, how government will increase its revenues, how local seafarers will not be “short-changed” in terms of remuneration and work standards, among other things.
Asked about these concerns, Malaluan clarified the policy is more about “facilitation of trade and of operation…It’s not because of the ownership,” noting that the draft was prepared even before the passage into law of RA 11659.
The policy is “open to all” and not just to foreign shipowners, she added.
Instead of securing special permits each time there is a need for it, the release of which may take time, Malaluan said operational flexibility will allow shipowners to operate internationally by just informing relevant agencies such as the Philippine Ports Authority (PPA) and Bureau of Customs (BOC).
Moreover, Malaluan said the policy may address imbalance of trade and reduce logistics costs since shipping operators can service a route calling both foreign and domestic ports.
She said MARINA will coordinate with other agencies such as PPA and BOC after the policy is firmed up. – Roumina Pablo
