'Liberalized cabotage is good for economy'

International liners calling at the country's ports expressed their support for the call of local importers and exporters to have the country's cabotage law liberalized even as they pointed out that they have no intention of competing with domestic liners in the transport of goods within the country.

This was clarified by Association of International Shipping Lines (AISL) general manager Julia Garcia, saying that liberalizing the country's cabotage law will greatly benefit local importers and exporters and the country's economy in general.

In a talk with the STAR, Garcia said that while they are in favor of relaxing the tariff and customs code of the country with regards to the transport of goods, he emphasized that his group will not interfere with the domestic liners' business concerns.

"We support the initiative of the Export and Development Council of the Philippines and the Philippine Exporters Confederation (Philexport) calling for the liberalization of the Tariff and Customs code of the country but my association are not interested in domestic cargoes," Garcia stressed.

Based on what is stipulated under the country's cabotage law, foreign liners are barred form engaging in the coastwise trade within the archipelago, that is, the transport of domestic good from one local port to another.

In a position paper that they came out with recently, the Philippine Interisland Shipping Association (PISA) stated that liberalizing the cabotage law will not enable the country to achieve global competitiveness in the maritime industry.

Instead, the group has asked concerned government agencies to work out a formula that will allow local shippers to achieve the same cost base as foreign lines.

Another point that the domestic shipper's raised is that the liberalization of the cabotage law will adversely affect the country's economy, pointing out transshipment or coastal trade will end up in hands of foreign liners.

It would also result in lower government revenues due to the fact that foreign liners pay much lower taxes as compared to domestic liners.

The cabotage law, PISA noted, is needed by the country to protect it from foreign domination aside from enabling it to deter the illegal entry of goods.

But exporters and importers are saying that doing their business in the country is expensive due to higher costs of moving goods between the country than getting same from another one.

In a study by FTAsia consultants, the expensive cost of doing business in the country results from high fuel cost, high insurance premium, local ports inefficiency, corruption and Customs, high taxes for domestic shipping operations, the lack of government support on the domestic shipping industry and subsidizing missionary routes.

This translates to the exporters and eventually end user's shouldering the high cost of goods that are transported from one island to another.

This study by FTAsia and Consultants concludes that relaxing the country's cabotage law will speed up the shipment of export aside from government giving domestic liners lower rates and other incentives to allow their competitiveness in the market.