Shipping firms also demand incentives

Domestic shipping companies want the same incentives as domestic airlines, including tax-exempt importation and lease or charter of vessels, to allow the industry to undertake the massive refleeting needed to make it competitive.

The Domestic Shipping Association (DSA) said the first step is for government to consider offering similar incentives enjoyed by domestic shipping companies that exclusively ply foreign routes to enhance investments in domestic shipping.

At present, the DSA said domestic shipping companies plying domestic routes are discouraged by the lack of incentives that would bring down costs and encourage refleeting.

DSA president Josephine Uranza said the Arroyo administration should take steps to level the playing field, particularly access to financing. "The industry needs money to refleet, it’s that simple," she said. "But this isn’t possible without government intervention."

According to Uranza, domestic airline companies have access to key incentives such as the tax-free importation of aircraft, tax-free lease or charter of aircraft and even the tax that they pay to transfer an aircraft was minimal at six percent.

"This makes it easier for airline companies to refleet if they have to," Uranza pointed out.

In contrast, domestic shipping companies have to pay 10-percent tax on the importation of vessels, 4.5-percent tax on lease and charter of vessels and 10-percent tax on the transfer of vessels.

"It makes no sense to us because we’re the ones serving the places that are often not served by airline companies," she said. "Some airlines fly so-called missionary routes, but domestic vessels have more missionary routes because we are required to by law."

Uranza said domestic shipping companies have made a presentation to the Arroyo administration but so far, there has been no comprehensive plan on the table that could be used as the blueprint for the development of the shipping industry.

"This effort has to be comprehensive in order to succeed," she said. "It won’t do to just address specific problems, but our more immediate need is financing."

"We’re not asking for anything outrageous like subsidies. Just for government to bring the industry up to par with the rest of the transport industry," she added. Domestic shipping earlier revealed that the industry was in dire straits in the wake of the economic slowdown, making shipping companies edgy over the market prospects in the coming months.

According to Uranza, domestic shipping companies normally record between 40 and 50 percent capacity utilization during the lean months. Volumes then go up to as high as 80 to 90 percent of total capacity during the peak months.